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Category: Whisper Report

  • Whisper Report: How can we manage tariff costs in our supply chain?

    Whisper Report: How can we manage tariff costs in our supply chain?

    Published to clients: February 27, 2025                 ID: 2057

    Published to Readers: February 28, 2025

    Published to Email Whispers: March 1, 2025

    Video Edition: March 2, 2025

    Analyst(s): Dr. Doreen Galli

    Photojournalist(s): Dr. Doreen Galli

    Abstract:

    To manage tariff costs in the supply chain, a two-pronged approach is recommended: cleaning up data for better decision-making and optimizing cost parameters. Digital transformation is crucial for navigating tariff challenges. Additionally, avoiding hidden costs, moving on-shore, reducing cycle costs, and leveraging free trade zones can help. Utilizing tools to understand total landed costs and diversifying suppliers and logistics providers are also key strategies.

    What is the dominant advice?

    We took the most frequently asked and most urgent questions straight to the logistics and supply chain experts in the industry. This Whisper Report addresses the question regarding how to manage tariff costs in one’s supply chain. For any professional* even tangentially involved in anything to do with fulfillment, supply chain, and logistics, it is easy to become panicked at the talk of tariffs. Beyond supply chain and logistics professionals, operations and financial executives are impacted by what is going on as are the technologists and data experts that are required to thrive in such environments. As 4flow’s Adam Poch shared, “You have to have a nimble and agile supply chain to navigate that”. Or as FreightFacts’ Lance Healy put it, “our job is to react, anticipate if we can, but apply technology. “ This suggests a two-pronged approach. Clean up your data so you can optimize costs.

    Cleaning up your Data

    Vizion’s Ben Tracy suggests and offers, “transparent and easy to access data to empower intelligent supply chain decisions. “  Yes, digital transformation is required to successfully navigate this challenge. If you have not done so there is no more time to wait. Many solutions expect the data has been collected for a technology team to clean and provide intelligence over. But logistics data is not transactional data nor does it have a history of being clean and collected like financial data. In fact, logistics and supply chain has some of the messiest data with many suggesting over 30% dirty and useless.  Research regarding a large variety of vendors involved in cleaning and digitizing logistics and supply chain can be found in Conference Whispers: Manifest 2025 and Conference Whispers: Smart Retail Tech Expo 2024. This is a significant area of expertise offered to our clients through inquiry privileges.

    Optimize and Managing Costs Parameters

    For those somewhere on the digital transformation maturity scale, the problem regarding managing tariffs costs now boils down to continuing to find ways to transform and manage supply costs. As summary of the 6 actions to manage tariff costs can be found in Figure 1.

    Avoid Hidden Costs

    Sensos’s CEO shared a story about how they onboarded a customer who was blindsided with hidden costs when products went through Africa without their knowledge. Per TrafficTech’s Hilary Ambro, “work with a customs broker with is vested in and understands your trade lanes as you are moving products so you can minimize those costs.”

    Move on-shore

    An obvious way to reduce costs associated with tariffs is to move on-shore. Hoptek’s Sean Maharai suggests, “working towards on shore, raw materials and ability to manufacture (and assemble) on shore”. Or as Mark Richards at AWI Logistics put it, “People are redesigning their supply chains. Instead of distribution in Canada or Mexico servicing the US, they are bringing the distribution back to the US.”

    Reduce part of cycle costs

    Any and every place one can reduce costs is valuable in such uncertain times. An exciting solution that can impact your cost per pallet offering next day delivery at ground shipping costs is Aeros. Aeros is a EVTOL (electric, vertical take of and landing) vehicle that appear like a blimp and hovers over urban areas with the goods to deliver, drones and related charging stations with line of sight to deliver and drone operators to operate. Rye Akervik shared that their company, Shipsi is an aggregator of last mile and middle mile networks. Shipsi’s solution is to, “rate shop those networks, find the best partner, the best SLA and manage that customer experience. “ Verity’s Taylor Wilson recommends, “utilizing free trade zones to delay the Tariffs and related payments to improve your cashflow.” Finally, if you are traveling between Canada and USA, there is a new solution coming online Fall of 2025. As Manny Paiva of the Gordie Howe International Bridge shared, “You have a Highway to Highway route connection that will allow transport trucks to get their goods across the border within ~11 seconds!”

    Reduce total landed costs                                                                                                                  

    If an organization has reached digitization maturity, they can leverage top tools to understand their total landed costs. As Yikun Shao of Alibaba.com shared, they offer solutions with “tools to provide transparency to all of costs related to cross border movement of goods so they can make more informed decisions.”  But Alibaba.com doesn’t stop there. They also provide tools to directly enable “you diversity of suppliers as well as logistic providers so you have options available. “At the end of the day, managing costs associated with Tariffs is a subset of managing the total landed costs of any goods.

    *When vendors’ names or quotes are shared as examples in this document, it is to provide a concrete example of what was on display at the conference or what we heard doing our research, not an evaluation or recommendation. Evaluation and recommendation of these vendors are beyond the scope of this specific research document.  

    Related playlists

    1. Whisper Report: How can we manage tariff costs in our supply chain?
    2. Conference Whispers: Manifest 2024

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