In an economic environment that is tumultuous and in constant change, the ongoing trade wars are proving to be a significant disruptor for logistics companies who have serious supply chain concerns. How did it all start? Last summer, the U.S. put a 25 percent tariff on $16 billion in Chinese goods as reported by CNN. China retaliated on American exports in similar fashion.

This back-and-forth volleying between the Trump Administration and China has caused logistics professionals to wonder how they can secure global supply chain processes, and whether or not the resulting economic downturn will make or break impact on trade wars, bringing their worries to an end. While logistics companies cannot undo the crisis, they can help customers navigate this uncertain time for shipping and receiving goods while avoiding high tariffs, fines, or levies. Here are a few ways 3PLs are securing global supply chain and avoiding colossal expense while doing it.

 

Manage Risk With Tech

Supply chains today rely on big data. Data analysis, machine learning and artificial intelligence (AI) deliver companies with the resources and understanding to manage risk and anticipate events that could negatively impact supply chain. This data allows companies a window into what risks the company needs to plan for and what opportunities it may be missing. Blending this with other human and digital strategies, companies can make decisions in real time that will save hassle and money.

 

Create a Digital Twin for Simulations

One particular type of tech that is particularly key while dealing with the fallout from U.S. tariffs is the digital twin. The digital twin is an exact model of the supply chain. According to Global Trade Magazine, “A digital twin uses the multi-tier supply chain data to rely upon predictive outcomes and sensory response.” Basically, this means scenarios can be run through the digital twin to see what outcomes may happen. It provides information such as risk, cost, and unexpected market conditions.

 

Utilize Foreign Trade Zones

In the U.S., a foreign-trade zone (FTZ) is a physical area, in or adjacent to a United States Port of Entry. This is a place where both domestic and foreign commercial merchandise are given the same Customs treatment it would if it were outside the commerce of the United States. Shippers can import merchandise into the FTZ with reduced duties on an individual basis. FTZs are currently used for manufacturing or distribution. While it feels like a loophole in the system, a word of caution: FTZs are not a fit for every business. It’s advised to work with a logistics expert to ensure it’s a fit for your business.

 

With the on-going trade wars and the uncertainty of what will happen next, many businesses are turning to 3PLs. By consolidating supply chain with an industry expert, like Merchandise Warehouse, companies can forego the labor, process, and technology costs to navigate these unpredictable waters. With the increasing pressure surrounding tariffs, organizations will look to 3PLs to leverage their digital tools and technologies to mitigate the risk and avoidable costs associated with global supply chain today. Contact us today to learn more about how we can help.