The tariffs the world has been speculating about are now here. As expected, the United States outlined hefty tariffs for goods from Canada, Mexico and China this week. While many have anticipated a change, the effects of the newly imposed tariffs will be felt for much longer, especially now that all three countries have announced plans to impose retaliatory tariffs.
For businesses across industries, the stakes are high. In 2023, American imports from Canada totaled $428 billion, while imports from Mexico were even higher, at $479 billion. American businesses shipped good valued at $676 billion to these two North American neighbors in 2023 — about a third of all U.S. exports.
As the full impact of these new tariffs take shape, U.S. businesses will be conducting their own supply chain analysis to mitigate their financial impacts. They’ll be looking for new suppliers, exploring new network models, mapping new trade routes, and identifying new transportation modes and partners.
The challenge for LSPs? Delivering consistent results amid uncertainty
Obviously, logistics service providers (LSPs) will also have to make dramatic changes over the coming months, pivoting strategically along with their customers. They’ll need to sense the impacts of tariff changes, understand customer concerns, and make operational changes — sometimes big ones — in response.
For example, with 40% of manufacturers planning to increase their domestic sourcing, LSPs will see shifts in transportation and warehousing that might create excess capacity in some regions, while stretching capacity in others. Rates and costs may skyrocket as supplier networks shift. And LSPs will need to operate as efficiently as possible, because 33% of companies plan to counter the impact of tariffs by cutting their costs.
As the competitive market for logistics services expands, contracts and changes over the coming months, how will they continue to deliver consistent, reliable customer value in a landscape characterized by great uncertainty? How can they avoid supply chain disruptions that may come with new supply chain environments?