International trade community struggles to deal with tariff revisions
Keeping up with quickly fluctuating tariffs and trade policies requires good communication and the ability to act on short notice, according to speakers at the 2019 Northeast Cargo Symposium.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
Brenda Smith of U.S. Customs and Border Protection says the agency is workinig to make communications "as predictable and detailed as possible."
President Trump's erratic approach to the imposition of tariffs on imports from China and elsewhere is making it difficult for companies to comply with U.S. trade regulations, according to government and corporate trade officials gathered at the recent Coalition of New England Companies for Trade's (CONECT) 18th Annual Northeast Cargo Symposium in Providence, R.I. The lack of predictability and sometimes insufficient advance notice is challenging importers, customs brokers, software vendors, and even U.S. Customs and Border Protection (CBP)—the agency that assesses and collects tariff payments—to stay ahead of the changes, they said during the November 6 conference.
Choosing her words carefully, Brenda Brockman Smith, CBP's executive assistant commissioner, Office of Trade, noted in a speech to the CONECT audience that the agency is working in a "very active, changeable trade environment." Because "knowing what will happen so companies can plan is critical to U.S. economic growth," CBP is devoting resources to helping the trade community manage customs compliance in this environment, she said.
CBP is working to implement a combination of automation updates and communications to the trade community that are "as predictable and detailed as possible," Smith said. The agency has set up a special team tasked with carrying out changes related to the implementation of trade remedies such as tariffs and penalties, she also said. That unit works closely with the Office of the U.S. Trade Representative and the U.S. Department of Commerce to coordinate information about the tariffs and enforcement, she added.
Customs is also communicating to policymakers in other areas of the federal government the impact that tariff changes are having on U.S. businesses' customs-compliance efforts—"an important role CBP can play," Smith said.
Ready or not ...
Any tariff revision requires communication, process, documentation, and IT programming updates, not only for CBP but also for importers, customs brokers, and providers of trade-compliance software. In some cases, though, the exact details aren't available until very late in the game.
In a separate conference panel discussion, Geoffrey Powell, chairman of the National Customs Brokers and Forwarders Association of America (NCBFAA), cited the example of tariffs President Trump said he would impose on imports from Mexico unless that country stemmed the flow of U.S.-bound migrants. In late May, Trump ordered the tariffs to be imposed with just 10 days' notice, and then suddenly canceled them by tweet the Friday night before the Monday effective date. "We found out one [business] day prior to the effective date that they were canceled. It's hard to get everything ready in those circumstances," Powell said.
One of the most effective strategies for managing compliance in an era of fluctuating trade policies, according to one panelist, is to have a highly structured process for quickly identifying what needs to change and communicating that information to all affected parties. This is critical in a large, multinational organization, said Barb Secor, senior director, trade compliance for the technical equipment manufacturer Thermo Fisher Scientific.
Secor related how she and her team had to quickly jump into action when the U.S. issued a ban on doing business with one of Thermo Fisher's customers, the Chinese tech giant Huawei. "Our company has 18 different divisions. We had to think about who would immediately need to know about this worldwide," she said. The trade-compliance team had developed a formal process for monitoring changes and then cascading information and related company policies to the relevant functions in all of Thermo Fisher's divisions. Local managers then follow a specified procedure for alerting affected organizations further down the ladder. Everyone is also advised where to go for more information or assistance, Secor said. This methodology has also proven effective for dealing with the changes in tariffs on Chinese goods, she added.
In many cases, international traders and software vendors must wait for CBP to issue instructions and reprogram its systems before they can make their own updates. That creates challenges for trade-compliance software vendors, said Celeste Catano, global product manager for BluJay Solutions and a licensed customs broker. CBP is sometimes unable to have its programming in place early enough for software vendors to fully test and deploy the update in advance of the effective date, she noted.
CBP's Smith acknowledged that it's difficult for all of the players to program, test, and implement changes on short notice; she advised any party that is not ready by the time tariffs or other trade-related policies go into effect to discuss their situation with CBP. "We will work with you if we know you are trying to comply and will try to help you find a solution," she said.
When asked how CBP has been affected by frequent changes in leadership at the agency as well as its parent Dept. of Homeland Security (DHS), Smith said that it's a challenge to navigate the interplay of government and politics, especially in the "very interesting times" the agency is working in now. She noted that former CBP Acting Commissioner Kevin McAleenan's move to Acting DHS Secretary—a position he later resigned—had caused some disruption internally (current Acting Commissioner Mark A. Morgan is the second to take that position since McAleenan went to DHS in April 2019), but that everyone recognizes the need to "evolve and change to deal with change." CBP's new leadership, she added, recognizes the agency's internal expertise and trusts the staff and career officers to "keep on going ... and get the job done."
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!