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Competing in a Consumer-Focused Age with an Agile Supply Chain

From a new couch to a week’s worth of groceries, shoppers can summon nearly anything to their doorstep, local store or delivery locker with just a few clicks. Some of the most significant consumer changes impacting supply chains include:

  • Shifting demographics. While in-store purchases still dominate among shoppers of all ages, younger consumers are continuing to migrate to e-commerce, underscoring the importance of a strong omnichannel supply chain.
  • Shifting buying patterns. Emerging trends, including subscription boxes and purchasing large-scale items like furniture online, are creating complexity and forcing businesses to reexamine their last-mile strategies.
  • Shifting technology. In a role reversal from the last few decades, consumers are pulling ahead of businesses when it comes to technologies like artificial intelligence. These tech-savvy customers expect connected yet frictionless experiences from their brands – forcing many businesses to play catch-up.

Increasing agility through technology

Faced with these pressures, business leaders recognize that agility will be the key to success in the coming years. A KPMG survey found that 68% of CEOs believe that being slow to adapt to change will lead to obsolescence, while Gartner revealed that 82% of CEOs intend to change their business models by 2020 to stay relevant.

For supply chains, a technology-enabled approach is essential to drive agility and keep up with consumer demands. According to a World Economic Forum analysis, digital transformation will generate $1.5 trillion in value for the logistics industry over the next five years. Among businesses that adopt digital supply chains, executives report a 3.2% average increase in annual earnings – the highest ROI of any business function.

As supply chain executives recognize the importance of technology investment, an analysis conducted by AGL and Logistics Trends & Insights found that total logistics IT spending will rise 17% to $87.8 billion between 2017-2022. Yet a data-driven, agile supply chain remains a dream for many businesses, with a significant number of organizations still relying on Excel and email to manage complex supply chain functions. For organizations that master digital transformation in the supply chain, the benefits are big – faster time to market, increased efficiencies and better customer experiences.

Improving Supply Chain ROI in a Tough Tariff Environment

After duties on $200 billion in Chinese goods jumped from 10% to 25% earlier this month, businesses barely had time to blink before receiving news of yet another tranche of tariffs. These duties would cover $325 billion in goods, hitting the price-sensitive apparel sector particularly hard and taking a significant bite out of business’ bottom lines.

While no timelines are available yet for the new tariffs, NRF is expecting “unusually high” import levels in the coming months as shippers scramble to beat the duties. In its latest Port Tracker report, the organization estimated that TEUs would hit 1.9 million in May – the first time ever TEUs have risen to that level before July. That surge in shipments could lead to another chaotic peak season and higher prices for shippers, who are already paying 20% higher ocean contract rates than last year.

Some businesses may also turn to more expensive airfreight to get high-profit merchandise like electronics into the country faster. And once goods cross the border, tight warehouse capacity on the West Coast could push up prices as well, creating additional supply chain pain. For businesses grappling with these issues, a focus on optimization is increasingly critical. Here’s how combining a technology-enabled supply chain with the right logistics expertise can help deliver ROI that carries you through whatever comes next.

  • Find cost-effective capacity. With ocean spot rates already 40% higher than they were a year ago, sourcing affordable spot capacity to beat impending tariffs is likely to be a challenge once again during peak season. A centralized supply chain platform makes it easier to compare carriers and routes to find the most cost-effective solution, while an experienced supply chain partner with a deep logistics network can give you extra leverage in negotiations.
  • Shift your sourcing. As the cost of doing business in China continues to climb, many of AGL’s own customers are weighing the pros and cons of moving to neighboring countries. A supply chain platform that offers an end-to-end view, from production to final destination, lets your business compare suppliers and make the right choice based on production and logistics costs, vendor reliability, and more.
  • Check your classifications. For businesses that haven’t reviewed their classifications recently, the latest round of tariffs is a good reminder to keep current. A centralized platform makes it easier to review classifications in one spot to avoid penalties and identify opportunities to substitute products not subject to duties, if possible. A partner with customs expertise can help find additional ways to save time and resources, such as improving auditing procedures.
  • Automate routine activities. A more efficient supply chain starts with understanding all the touchpoints across your operations and seeing where there’s room for improvement. By managing every shipment in a single platform, you can uncover those efficiencies more easily. Technology that enables management by exception, rather than reviewing every single shipment, can also free up significant time for large global importers.
  • React faster to disruptions. Supply chain disruptions are inevitable, but being able to make adjustments on the fly can help keep issues from ballooning into disasters. For example, when faced with fast-approaching tariffs, a technology-driven supply chain can help you decide whether shipping via airfreight or paying additional duties will ultimately be less costly.

As shippers prepare for more tariffs and a potentially wild peak season, investing in effective tools, people and processes can help offset the impact to their operations and their bottom lines.

Winning the Tariff Waiting Game

The last few months have forced many global importers into a holding pattern as they wait for the latest round of tariff headlines. The March deadline has come and gone for 25% tariffs on $250 billion in Chinese goods, and the U.S. administration has said that talks are going well with China, putting additional increases on hold indefinitely. The 10% increases imposed last year are still in effect, however, and the U.S. has hinted they may stay in place, even if the two countries make a deal. Meanwhile, trade tensions continue to flare around the world, with news of $11 billion in potential tariffs on European Union products surfacing earlier this month.

These ongoing uncertainties are having a definite impact on the $6.5 billion in goods that come through U.S. ports each day. After breaking import records in a rush to stockpile inventory last year, businesses have slowed their pace so far in 2019. U.S. ports handled 1.62 million TEUs in February, down 14.3% from January and a 4% year-over-year decrease.

While import volumes for April and May are expected to top 2018 levels, much will depend on the ultimate results of U.S.-Chinese negotiations. If tariffs do rise to 25% on some goods, many shippers will need to make major adjustments to their sourcing and transit strategies to stay afloat. No matter where duties land, however, the current environment is making businesses more aware of the power of tariffs to shape the economy – and the importance of customs compliance. Whether you have an in-house brokerage team or rely on external support, these strategies can help your business stay strong amid tariff uncertainty.

Go to the source. If your business has global production facilities, running what-if scenarios now can help you hit the ground running if massive tariff spikes require a shift in sourcing. An experienced supply chain partner can help you assess alternate transit routes and associated costs for moving production from China to Vietnam or Malaysia, for example. In addition, some shippers are turning to their vendors to handle clearance to mitigate the bite of tariffs – whatever those duties might be in six months.

Double-check classifications. While many classifications, like tires, don’t leave much room for interpretation, businesses should still review all their harmonized tariff classifications if they haven’t done so recently. A customs brokerage expert can help confirm all classifications are correct, so you’re not paying tariffs unnecessarily or putting yourself at risk for fines for missing duties. Depending on your goods, there may also be opportunities to adjust your sourcing to items that aren’t eligible for duties.

Stay on top of customs paperwork. Regardless of what the future brings for tariffs, the increased scrutiny on all U.S. imports is likely here to stay. Establishing a thorough auditing system can help your business avoid errors and fines, while cutting back on time-consuming post-summary corrections. Trading paper-based processes for automated systems can also help you improve compliance and overall efficiency.

While only time will tell whether more tariffs are in store, businesses that invest in a strong customs compliance program now will be better positioned to handle whatever comes next.

What to Look for in Your Supply Chain Partnerships

2018 has been packed with one shakeup after another, leading to one of the most uncertain environments in recent memory for shippers. The biggest headline-grabbers include:

  • Trump’s tariffs. Arguably the biggest supply chain story of the year, the U.S. and China have kept importers on their toes with a barrage of duties. With roughly $250 billion in Chinese goods now subject to tariffs, businesses have been importing record-breaking volumes as they rush to get items in hand before duties take effect. The trade war is poised to escalate further, as Trump threatens to enact tariffs on an additional $267 billion in goods.
  • The ELD mandate. The long-awaited mandate, which required truck drivers to install electronic logging devices (ELDs) that track and cap their total hours in service, has had a ripple effect across modes. The mandate reduced productivity for 83 percent of trucking companies, creating a capacity crunch and rising rates for shippers. Meanwhile, many ocean carriers have been forced to sit at port for trucks, prompting some to impose emergency intermodal fees and restrict door deliveries.
  • Ocean turmoil. The industry’s move to cancel sailings in an effort to improve profitability shocked many shippers this year, and continues to wreak havoc with capacity and rates. Total capacity has shrunk by 7 percent, leading to a 50 percent year-over-year spike in Trans-Pacific ocean rates and a scramble to secure space during peak season – even for shippers under contract. Those hefty prices are slated to continue into 2019, thanks to newly announced bunker adjustment factor surcharges.
  • Disruption from disasters. When Hurricane Florence tore up the East Coast in September, businesses across the country felt its effects. Delivery disruptions rose by 49 percent that week nationwide, despite only a 2 percent drop in shipments. With more than a month to go before hurricane season ends, more disruptions could be looming for shippers.

Dealing with supply chain disruptions

For shippers large and small, the move toward technology-enabled supply chains is helping to improve visibility, control and responsiveness when things go awry. But while a centralized platform is the cornerstone of a high-functioning supply chain, hands-on support is the key to keeping it running day after day.

That’s why more businesses are turning to external providers to help them navigate this disruption-prone environment. Freight forwarders now account for nearly 45 percent of U.S. containerized imports from Asia, a 2 percent year-over-year increase. The right partner can help businesses access scarce capacity, tackle challenges head-on and offer best practices for improving operations. Here are a few areas to consider when choosing yours.

  • Dedicated support. By assigning a single point of contact to your business, your partner can get to know your business goals, rules and requirements better, so they can make more effective recommendations.
  • A deep logistics network. The ongoing struggle to source ocean capacity underscores the importance of a well-connected partner. Look for a partner with a strong network to help find available space at the best possible rates.
  • Customs expertise. As the scope of U.S. tariffs extends to new areas like electronics, food and housewares, more businesses are bracing for the impact to their organizations. A partner with customs brokerage expertise can minimize the pain by ensuring harmonized tariff classifications are correct, helping to apply for exemptions and taking other steps to ensure customs compliance.

For supply chain professionals, dealing with disruptions is a growing part of the job. Finding the right partner can help equip these businesses to face today’s biggest challenges – and whatever comes next.

Prepping for a “Perfect Storm” This Peak Season

Peak season typically begins toward the end of summer, reaching its height during Golden Week in October as businesses work to get their goods in hand before the holidays. But thanks to a perfect storm of factors, shippers have been facing peak-like conditions for months – and the current environment is poised to become even more intense.

Chief among those factors? The significant reduction in ocean capacity this year, a move which has stunned many in the industry. Faced with lackluster financial results and persistent overcapacity, carriers across the board have cancelled lanes in an effort to wrestle back control of rates. Those cutbacks have trimmed capacity by 7 percent so far, the Journal of Commerce reports.

At the same time, businesses working to stay ahead of tariffs have ramped up importing activity, leading to record-breaking volumes at the Ports of New York and New Jersey in July. Add in potential weather disruptions, and you have a recipe for chaos this peak season. As they work to get their goods across the border, shippers are facing:

  • Soaring spot rates. Trans-Pacific spot rates have climbed more than 50 percent year-over-year, putting even more financial pressure on shippers contending with new tariffs.
  • Major service delays. Even a contract isn’t enough to ensure space during this busy season. Some carriers are rolling contracted cargo or enforcing minimum quantity commitments, only allowing shippers one week’s worth of capacity at a time. That capacity crunch promises to intensify during peak season, with ports in China and Thailand already reporting backlogs.
  • Greater need for airfreight. Shippers have already been leaning more heavily on air cargo to meet customers’ “available anytime” expectations. Scarce ocean capacity is forcing even more businesses to use expensive airfreight instead, and that increased demand is prompting China-U.S. air cargo rates to rise further.

Preparing for peak season – and beyond

The factors contributing to the busy peak season appear likely to stick around for a while, so businesses need a plan to navigate the rest of 2018 and beyond. Here are three ways to ease peak season pain.

  • Invest in a centralized supply chain platform. Information is the key to managing this uncertain environment. Supply chain software that provides visibility and control across all shipments and modes can help businesses quickly pinpoint the status of high-priority shipments and adjust allocations or carriers when needed.
  • Communicate clearly, and early, with your supply chain partners. The logistics industry is built on relationships, so a provider with a deep network and knowledge of the space can be valuable for sourcing scarce capacity. Look for providers who take the time to understand your business goals and carrier preferences, and let them know as far in advance as possible when you’ll need bookings.
  • Be open to creative solutions. When things get tight, adjusting your route or timeline can help you meet drop-dead delivery dates without sinking your budget. Talk to your provider to find the best solution, such as changing the port of discharge for cargo traveling inland, or choosing a sailing with a longer transit time to reduce the chance of getting bumped.

With the holidays fast approaching, supply chain professionals need to plan now. The right mix of technology and support can make all the difference in navigating the challenges this peak season will bring.

5 Steps for Improving Customs Efficiency

With 28 percent of U.S. GDP now related to trade, businesses across a variety of industries are wrestling with the complexities of customs brokerage. The U.S. collects $95 million in duties each day, and companies need a plan to ensure they’re not paying more than their fair share. Supply chain professionals also have to manage individual countries’ trade requirements, complete extensive documentation, and maintain accurate classifications for their imports – all while keeping up with a constantly changing environment.

While customs brokerage has a reputation for being cumbersome, growing trade tensions and a flurry of regulatory activity are making the process even more difficult. Last week’s announcement regarding a potential 25 percent tariff increase on over 6,000 products, up from the originally planned 10 percent, is just one of the most recent examples of the challenges inherent in managing the already volatile supply trade landscape. The U.S. government is increasingly scrutinizing every shipment that arrives at port, and staying current on regulations like the recent changes to duty refunds is becoming even more time-consuming for importers. Meanwhile, some ocean carriers are cutting back on service between Asia and the U.S. in response to U.S.-Chinese tariffs. That decrease in capacity prompted double-digit increases in spot rates in July, making it even more important to manage customs cost-effectively.

By establishing effective customs brokerage tools and processes, businesses can keep shipments on track, avoid paying for fines and penalties, and make the most of their time and resources. Here are five key areas to consider:

  1. Stay up to date on harmonized tariff classifications. Inaccurate classifications can leave your goods stranded at the border or subject you to hefty fines. In the wake of the U.S.’ confirmed new tariffs on nearly 800 items, now is an ideal time to review classifications. Collecting all shipment data into a single platform makes this task infinitely easier, while also allowing businesses to see shipment status easily and reroute goods as needed if a shipment gets stuck.
  2. Take a hard look at your sourcing. With the U.S.-China trade battle continuing to escalate, many U.S. companies that import Chinese goods are considering their alternatives. When vetting your vendor list, take all the pros and cons into account, including applicable duties, vendor reliability and how quickly goods can travel from a particular destination. For example, some wooden furniture importers are choosing Thailand and Vietnam for production over China, despite its strong transportation and port infrastructure, because Chinese goods are subject to AD and CV duties that can lead to retroactive changes in tariff rates and slow liquidation.
  3. Use ACE to your advantage. The Automated Commercial Environment (ACE) saved businesses $52 million in 2017 by automating filings for U.S. Customs and Border Protection and dozens of partner agencies. In addition to streamlining the filing process, ACE also gives businesses a ready-made view into all historical filing data. That means businesses no longer have to worry about losing data during brokerage or port changes, and they can also uncover information to enhance efficiency, such as ports where they’ve had a history of exams.
  4. Put the government to work for you. While it requires some time upfront, obtaining C-TPAT certification from the U.S. government can ultimately help accelerate your supply chain by reducing the amount of cargo called for exams. In addition, taking part in the U.S. Foreign Trade Zone program can help businesses significantly improve their bottom lines by deferring, reducing or even eliminating import duties. An experienced supply chain partner can help you determine which programs fit your business best and guide you through the process.
  5. Build a sound audit process. Without an established auditing program, businesses can become overwhelmed with time-consuming post-amendment entry corrections, shipment delays and even fines. Whether you manage the process yourself or rely on an external provider, make auditing a priority. Your supply chain partner can help you evaluate your internal processes, including recruiting and training people with the right skills, while providing the peace of mind that your filings are accurate.

For global importers and exporters, customs brokerage is more than just a checkpoint along the way – it’s a critical component of the supply chain. By partnering with a provider who understands your business and the rapidly evolving trade landscape, your business can boost operational efficiency as well as customs compliance.

Taking On Tariffs

On July 6, U.S. customs agents began collecting duties on more than 800 Chinese goods worth $34 billion, affecting those who import electronics, vehicle parts and accessories, chemicals, and more. A second phase of the tariffs, which must go through public review first, would levy 10 percent tariffs on an additional 280 items. China has promised to go tit-for-tat by slating $34 billion in U.S. exports for 25 percent duties, including soybeans, lobsters, sport utility vehicles and whiskey.

These tariffs come on the heels of steel and aluminum duties announced earlier this year, with many manufacturers still trying to decipher the potential impact to their organizations. Businesses have filed more than 20,000 exemption requests for steel and aluminum tariffs so far, but the U.S. government had processed fewer than 100 of them as of the end of June. As the world’s two biggest economies gear up for this latest round of tariffs, they could be just the tip of the iceberg. President Trump has threatened to unleash up to $400 billion in additional duties if China retaliates, and increased inspections on both sides could make it harder to move goods across the border.

Staying ahead in a changing environment

For U.S. importers and exporters, these tariffs are one more economic hit amid rising overall costs. U.S. business logistics costs clocked in at 7.7 percent of nominal GDP in 2017, up from 7.6 percent in 2016, as rising fuel costs and shrinking capacity put pressure on supply chain budgets. Beyond the financial impact, the current trade environment is forcing businesses to spend time and resources to ensure customs compliance – or else risk additional fines and penalties.

As Chinese tariffs go into effect, here are two steps businesses can take right away to stay compliant and minimize the financial impact.

  • Review harmonized tariff classifications. Now is the ideal time to review your list of imported goods to make sure items are classified correctly. As a best practice, businesses should review their classifications twice a year (and more often if their commodities fall into frequently updated categories). With the U.S. government scrutinizing every shipment, you could be subject to penalties if you inadvertently miss an item slated for tariffs. On the other hand, some businesses may be pleasantly surprised to find that items they thought were subject to tariffs actually aren’t. Unsure about a particular item? Request a ruling from the U.S. government. A centralized supply chain platform makes it easier to review all classifications in one spot, while an experienced customs broker can help ensure accuracy.
  • Apply for an exemption. The U.S. government recently announced that it will be accepting exemption requests for items included in the latest round of Chinese tariffs. Although there’s not an official form available yet, you can start gathering information now to make your case. Typically, the government will ask to review details on the type of product, the quantity imported, and tariff and customs-related documentation. Your supply chain partner can help you gather the appropriate materials to submit your request. Be warned, however, that exemption relief will likely take a while. For steel and aluminum tariffs, the government estimated 90 days for a response, but applications are taking longer than that to process.

Long-term considerations

While new and impending tariffs have many businesses concerned, be careful about knee-jerk reactions that could have longer-term implications. The economic effects of tariffs are significant for some industries, but the overall scope is still relatively small, considering that the U.S. trades nearly $5 trillion in goods annually, as AGL CEO Jon Slangerup recently told Journal of Commerce.

As trade tensions continue to brew, businesses will need to remain vigilant about customs compliance while also evaluating potential adjustments to their supply chains. The right partner can help you source new factories or materials, manage importing and exporting requirements, and make sure your supply chain stays competitive in an uncertain environment.

10 Ways to Enhance Supply Chain Visibility

Seeing what’s happening throughout the supply chain—and being able to make changes when things don’t go as planned—is essential in today’s always-on, omnichannel shipping environment. But even though businesses have more tools, providers, and resources than ever for supply chain management, two-thirds still report they don’t have end-to-end visibility, according to the Business Continuity Institute.

Here’s how businesses can gain the insight and control they need as they move their goods around the globe.

1. Time for technology. A robust technology platform is the linchpin of the modern supply chain. If you’re still circulating spreadsheets or relying on paper files for any part of your process, migrating to a centralized platform can help you significantly reduce siloed information, data errors, and back-and-forth between your team.

2. Every carrier, one platform. Working with multiple carriers is standard business practice today, but often requires shippers to log into each provider’s platform for shipping status. Look for a tool that pulls in data for every shipper, so you don’t have to jump from portal to portal.

3. Standardize your business requirements. Keeping track of who needs what (and when) can be a full-time job for large businesses with many points of sale. Create a standard checklist of documentation, delivery requirements, and other rules for each buyer or location, allowing you to see easily if something’s missing.

4. Manage by exception. Supply chain visibility isn’t about seeing the 999 shipments that arrived on time—it’s about spotting the one that didn’t. A technology platform built around your business rules can provide intelligent alerts and escalations to head off supply chain issues quickly and make you and your team more efficient.

5. Get your numbers right. Accurate data can be hard to come by in the logistics industry. To gain a clearer picture of operations, establish a process for scrubbing freight invoices, delivery milestones, and other supply chain information as efficiently as possible.

6. Don’t forget purchase orders. As more businesses keep inventory levels at a minimum, keeping an eye on production status is essential to meet delivery timelines and customer expectations. The right supply chain management tool can provide valuable insight into lead times, vendor performance, and more.

7. Head to the cloud. A web-based platform enables your factories, suppliers, carriers, employers, and other stakeholders to get up-to-the-minute information from any device. Look for systems with user-based permissions to make sure sensitive details stay secure.

8. Take advantage of new customs tools. The new Automated Commercial Environment (ACE) is designed to streamline the import process by automating the documentation required by U.S. Customs and Border Protection and dozens of other government agencies. By consolidating every filing in one spot, ACE also gives shippers new visibility into their customs program. Use it to see ports where you’ve had a history of exams, shipments that required extra screening, and other data that can guide smart supply chain decision.

9. Measure what matters. Many shippers have a treasure trove of logistics data at their fingertips, but lack the bandwidth to turn it into business insights. A supply chain platform with custom reporting tools lets you establish the KPIs that are meaningful to your business. For example, if an ocean carrier says it takes 25 days to travel from South China Sea but your last 10 shipments took 30 days, you can adjust your routes accordingly.

10. All under one roof. For complex global supply chains, establishing a point of contact responsible for overseeing all technology, logistics, and processes can have a huge impact on visibility. Consider a supply chain partner with the expertise and industry relationships to spot inefficiencies, eliminate duplicated efforts, and ensure everyone is marching toward the same goal.


Article written by Jon Slangerup. Jon Slangerup is the chairman and CEO of American Global Logistics and the former CEO of the Port of Long Beach. As a 4PL, American Global Logistics oversees all logistics activity for its customers with a technology platform that provides visibility for each shipment’s movement through the supply chain.

The ABCs of ACE

For large importers and exporters, improving customs efficiency and compliance is a constant goal. In today’s global economy, 28 percent of U.S. GDP is now related to trade, which means businesses need a solid strategy for moving goods across the border. The customs process is known for being time-consuming and expensive, and any breakdowns or errors along the way can impact businesses with shipping delays and regulatory penalties. In 2016 alone, CBP collected $57 million in fines for non-compliance.

ACE aims to help businesses eliminate redundancies, reduce paperwork and work faster through a consolidated, electronic filing system. The platform has automated 269 forms required by CBP and 47 partner agencies, slashing the amount of time once required to file manually.

Establishment of ACE represents a larger trend toward streamlining cumbersome customs requirements by digitizing and consolidating processes, and interest is growing. A number of other countries are looking to implement similar “single-window” systems, including Canada, Mexico and Brazil, opening up new opportunities for shippers to enter markets where customs processes have been onerous and difficult to navigate traditionally. CBP also recently announced a new electronic process for exporting vehicles from Port Everglades, the first program of its kind in the country.

Steps for success

While businesses have been migrating to ACE gradually as portions of the system become available, many are still working to bring operations online. As ACE becomes the new filing standard, implementing the system can not only help speed up the filing process, but yield powerful information to shape more efficient business practices. ACE allows you to:

  • Make decisions based on historical data. What documentation was required the last time you imported a dresser decorated with seashells? Which ports have asked you to take entry exams? ACE offers information on all your filings in one place, which you can use to spot trends that help you plan more efficient routes.
  • Take your information with you. Right now, many shippers have filing information housed with brokers or by port. By implementing ACE, they can start building a portfolio of information that stays with them through any brokerage or route changes, minimizing the time it takes to search for data

While ACE promises to reduce importing and exporting hassles in the U.S., businesses still have to contend with foreign requirements, security issues, classifications and other customs requirements. can offer customs expertise, technology and end-to-end logistics solutions to ensure your goods make it across the border.