Logistics Management Group News Editor Jeff Berman recenty spoke wiith Jeff Simpson, C.H. Robinson, Manager of North American Trade Policy & Compliance, about various topics related to the global trade environment and things shippers should keep an eye on, as 2020 comes to a close and 2021 on deck.
Logistics Management (LM): How would you assess/describe the current global trade environment?
Jeff Simpson: The one word would look back on at 2020 is tumultuous.
In my 20-plus years dealing with international trade and the global supply chain, I have never experienced anything like this in my career, whether it is from the geopolitical aspect of what is going on down to the global pandemic. Everything has been turned on its head in 2020.
LM: Prior to COVID-19, the ongoing U.S.-China trade war was perhaps the top global trade issue. What are shippers’ biggest issues now relating to the Section 301 tariffs and how are shippers navigating that environment?
Simpson: The one thing that everyone needs to remember about the use of any of these tools in the government’s toolbox, when it comes to international trade, is that in many ways it is one of the arrows in the quiver to support U.S. policy and foreign interest. So, looking at it from a much more macro level, we are trying to influence, for lack of a better word, behavior, and we are trying to influence foreign policy and national security. As far as shippers and importers go, the navigation of this has been incredibly difficult, and, quite frankly, costly, in terms of cost of goods.
LM: In what ways?
Simpson: What is happening now is many companies that we work with are looking to do apparently…is to look at other sourcing locations other than China to help influence our national security, our economy, and our foreign policy strategy.
LM: Do you think there will be a push made by shippers to diversify manufacturing locations to not have to deal with tariffs in certain geographies, amid talk that the White House may implement tariffs on countries near China?
Simpson: They are exploring putting tariffs on items coming out of Vietnam, so the biggest piece of advice for companies trying to navigate this is that they need to keep their eyes open and need to keep reading and researching because things are changing on a daily basis. I came from the importer/exporter world, for global supply chains, compliance, and operations, and part of that goal and part of the overall strategy we have always had was to get ahead of the curve with things happening. To do that is to research and to watch and to listen and to comprehend and to read the Federal Register. If I were a senior supply chain or purchasing vice president [for a shipper], I would always be looking for the “what if” and thinking about strategies for things like “what if” tariffs go into effect in Vietnam or “what if” tariffs with China get lifted after the election. It is keeping on top of world events and what is happening around you.
LM: Looking ahead, what are the most important things shippers need to keep an eye on, in regards to the global trade environment in 2021, should Trump remain in the White House or if Biden wins? What are some of the key differences that shippers need to pay close attention to?
Simpson: The current executive branch’s executive strategy is pretty well laid out, in my opinion…pressuring China and potential adversaries and using the powers within the Tariff Act. We think it would be much of the same to protect, for lack of a better word, the U.S. industries and economies. Even if a new administration comes in, I am not so sure how quickly anything would change. I don’t think anything is going to change the day after the inauguration, when a new administration comes in. There are very large geopolitical things and national security events going on around the world that this is all part of. At the end of the day, the best thing that leadership companies can do is really educate and keep abreast of what is going on, and that is where my team and C.H. Robinson in general can absolutely assist.
LM: What are your customers telling you what their “pain points” or the things they need the most help on from you?
Simpson: In my world, which is the Trade Policy group, we deal primarily with global forwarding clients, as well as some domestic clients, too. One of the biggest things we are being asked about, from these clients, on the import side is directly related to the Section 301 tariffs, and focused on how they can save money and too adjust, in order to offset the costs of these additional tariffs coming from China. We are talking about things such as utilizing bonded warehouses for imports and changing manufacturing processes, to get the most bang for the buck.
LM: Can it be hard to manage customer expectations, in some cases?
Simpson: We are trusted advisors. The way I look at it is we—me, myself, and my team—are going to tell you straight up what we think. Every client is different, every situation is different, and every supply chain is different. We look at it on a case-by-case basis, and we are truthful about what some of these options are and how successful they will be in executing some of these duty minimization plans or potential opportunities they have. Outside of my team, within Global Forwarding, there are other internal resources such as our Customs Compliance and Export Compliance teams, which are communicating constantly with clients and with potential clients about what is going on. And even outside Global Forwarding in our domestic North American Surface Transportation group, there is a team that does supply chain consulting as well.
LM: When you are dealing with customers in different verticals, with tariffs applicable to a wide variety of goods, can you provide some basic examples of the challenges an agricultural shipper, for example, may face, compare to, say, an automotive shipper or a CPG shipper, as it relates to things like tariffs, trade, and policy?
Simpson: Here is a great example that I am familiar with. I deal with a lot of power generation companies because of my background in alternative energy companies. One client of ours was looking at solar energy quite extensively, when solar safeguard tariffs came in. As we were looking at what was happening, or was going to happen actually, the client made the internal decision, based off of discussion that myself and the team had, to “pre-build” some of the base materials before they went into effect, to get them over the hump. Well, one of the client’s vendors actually set up shop and manufactured the panels here in the U.S., where it was much cheaper and easier to move the production line out of China. That is a real-world example.
LM: Looking ahead, say by the middle of 2021 there is a COVID-19 vaccine, and things are getting back to normal, or even back to pre-pandemic life. In what ways would that impact the global trade environment and what could we be in for, in terms of possibly boosting import activity even higher than it has been for the last couple of months?
Simpson: In my opinion, companies are going to need to refocus their efforts on tariffs and on their supply chains and on setting themselves up for success. This is assuming that the current geopolitical environment continues aside from COVID.
About the Author
Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman