The Art of International Logistics
Today, supply chains are global, which means that goods and materials have to travel across international borders. Recent news about border security and threats of less open borders causes concern for the international logistics and shipping industry.
Across the world, international logistics industry faces uncertainties. Since early 2019, President Donald Trump has threatened to further secure the border with Mexico, citing concerns about illegal border crossings and national security.
The Trump administration is also trying to renegotiate the North American Free Trade Agreement (NAFTA) with the United States-Mexico-Canada Agreement (USMCA).
In Europe, Britain delayed leaving the European Union earlier this year when they could not resolve how open the border would be. And while directly related to border security, an increase in tariffs on items imported from China causes experts to worry about the cost of importing Chinese goods.
While this all may seem like dire news for the international logistics and shipping industry, we constantly face challenges as global trade changes and adjusts over time. At AFP Global Logistics, we have more than 25 years of experiencing in international logistics. Here are two challenges and solutions in the current state of international shipping.
International borders remain solid, international logistics is adaptable
Many trade groups have expressed their frustration with the idea of closing the border. In April, the President and CEO of the National Retail Federation Matthew Shay released a statement expressing concerns for the retail industry.
“Closing the border for any length of time would result in significant supply chain disruptions for U.S. retailers. These disruptions would reverberate throughout the supply chain, impacting everyone from truckers to warehouse workers whose jobs depend on the two-way trade with Mexico,” he wrote.
According to the U.S. Department of Commerce, the value of goods and services traded with Mexico equaled $1.85 billion per day, almost 75% of which crossed the border by ground transportation. However, this does include a combination of freight rail and truck transportation.
In Europe, Britain is facing the prospect of increased border security unless agreements are made with the European Union during Brexit. This could make shipments take longer, cost more, and need more paperwork.
While this may seem like just a problem for Europe, according to experts many U.S. companies use the United Kingdom as a gateway to European markets.
While these are concrete problems that international logistics and shipping companies must deal with, logistics is an adaptable industry. At AFP Global Logistics, we the have experience and resources to deal with these constraints.
While many companies rely solely on one method of transportation, we offer customized solutions and a variety of shipping methods.
In addition to truck and rail ground transportation, we offer Door-to-Door and Door-to-Airport Air Freight Services. We can also provide ocean freight services throughout the United States.
We work with each customer to figure out the best shipping method, and our professionals ensure your product is delivered on time and intact.
Changes in tariffs and customs laws
In the last few months, experts have been concerned with the development of trade between the United States and other countries. First, a lot is happening.
Last summer, President Trump announced tariffs on Chinese imports, and recently, the administration announced new tariffs, with promises of retaliation from China. His administration also wants to replace NAFTA with a new North American trade agreement called the USMCA.
Although these developments leave a lot of uncertainty in global supply chains, governments often change tariffs and customs laws.
The U.S., Mexico, and Canada only agreed to NAFTA in 1994, and it replaced a previous agreement.
The Office of the United States Trade Representative asserts that, “The new United States-Mexico-Canada Agreement (USMCA) will support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.”
They believe the new agreement will actually facilitate cross-border trade and offer lower costs and improved efficiency for international logistics companies.
Experts like Geoff Pollak, the Managing Director of Alvarez & Marsal, agree. “The new United States-Mexico-Canada Agreement could make cross-border sourcing much more attractive,” he told Logistics Management.
To deal with the uncertainty of Chinese tariffs, U.S.-based shippers are currently bringing in goods at a higher volume in preparation for higher tariffs. The U.S. is currently taxing some goods at 10%, which may be hiked to 25%.
If the U.S. does choose to increase these tariffs, companies may want to consider importing goods via faster shipping methods to avoid higher taxes.
However, even as these tariffs go up, the Trump administration is engaged with ongoing trade negotiations with the European Union and Japan.
“The administration’s delayed and ongoing trade negotiations with the EU and Japan could unlock $12.40 billion and $4.16 billion of tariff reductions respectively,” Chris Rogers, a research analyst at global trade data company Panjiva told Logistics Management
At AFP Global Logistics, our personnel keep up-to-date on the latest security and legal developments, so our customers don’t have to worry about delayed shipments or incorrect processing.
We offer customs house brokerage, full documentation preparation, import-export services, and Advanced Encryption Standard compliant shipping.
For 25 years, AFP Global Logistics has adapted to changing import and export laws. We ensure our shipments clear customs easily and effectively.
If you have questions about how customs law will impact your shipment, please contact us. Our professionals are happy to discuss customs and shipment security.