From manufacturers like Tesla looking to shift their sourcing, to the ongoing impact of tariffs and new trade tactics, the landscape is constantly changing. We'll also explore how these shifts might affect your holiday shopping.
Shifting Sourcing Strategies
Companies like Tesla, Apple and even toy makers are rethinking where they get their parts and products. This isn't a simple switch; it's a complex puzzle. When you move sourcing from one country to another, you don't just move everything. You're dealing with new combinations of shipping routes and carriers.
Generally, as sourcing moves west, U.S. port calls tend to shift to the East Coast. Conversely, East Asian sourcing often means West Coast ports. This creates more permutations, making the process of getting goods into the U.S. more complicated than it used to be.
To handle this, shippers are looking at diversification. This can mean rethinking where manufacturing happens or how assembly is done. Many are also re-evaluating their purchasing processes, like their DDP (Delivered Duty Paid) programs, to see if they should take more or less control over their supply chain based on where goods originate.
The Impact of the De Minimis Ruling Change
There's a significant shift coming for how small packages are handled, thanks to changes in the de minimis ruling. In simple terms, there's a threshold, currently $800, below which imports don't have to pay duties. This has been a way for e-commerce businesses to ship directly to consumers in the U.S. without incurring tariffs.
However, this is changing, and it's creating financial headwinds for companies that rely on this model, like Temu and Shein. The trade-off between air freight costs, delivery speed, storage and now duties is being re-examined.
Companies also need to rethink what they ship by air versus what they hold in inventory. Some goods might shift from air freight to ocean freight, or a combination of ocean freight plus physical distribution within the U.S. Instead of a package flying directly from origin to your doorstep, it might go into a container, to a U.S. port, then to a distribution center, and then out to the consumer.
This requires a different approach to inventory management and forecasting. We're even seeing partnerships between e-commerce players and traditional retail spaces, suggesting a move towards using physical brick-and-mortar locations for distribution.
Navigating Tariff Uncertainty
One big pitfall is falling for false narratives or making rushed decisions. For example, a claim that a product can be sourced from Vietnam "tomorrow" might be unrealistic, as setting up new sourcing takes time. It's important to be wary of claims that sound too good to be true.
Companies are exploring strategies like holding goods in bonded facilities or Foreign Trade Zones (FTZs) to delay customs entry and duties. This allows them to wait and see how the situation evolves before making a final decision.
When planning for holidays like Halloween or Christmas, businesses face a tough challenge. They need to decide on inventory orders months in advance, with lead times of 30 to 90 days for manufacturing and another 30 days for shipping, plus time for store setup. This means decisions made today are for events months down the line, all while facing tariff uncertainty.
