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U.S. Importers: 6 Strategies to Navigate the U.S.-China Trade Dispute Impacting the Life Science Industries

Posted By Keegan Coats, Logistics Engineer, eShipping LLC, Friday, September 14, 2018

Over the past six months, it is unlikely you’ve been able to avoid hearing terms like “trade war” or “tariff increases.” While the North American Free Trade Agreement (NAFTA) negotiations and 301 tariffs with China have dominated 2018 news cycles, what is significantly more challenging is figuring exactly how these changes are impacting (or will soon impact) your own supply chain spend.

The renegotiation of NAFTA is a developing story, and one that all U.S. companies that trade with our border neighbors should be paying close attention to. It is the trade disputes with China, however, that have caused more immediate pain for U.S. importers. The steel and aluminum proclamation earlier this year, and more recently the 301 tariffs, have caught some importers flat-footed and scrambling to understand the financial impact and what options are at their disposal to mitigate further damage as the dispute continues to escalate.


90-Day Recap of U.S.-China Tariffs:

-          Proclamation # 9705: On March 8, 2018 the U.S. announced that an additional 25% duty be added to the existing duty rate of all raw steel and aluminum imports – applicable to all countries and went into effect May 1, 2018.

-          301 Tariffs, Round 1: In response to counter tariffs by China on products like soy and pork, the U.S. implemented a 25% tariff increase on 818 HTS codes for products imported from mainland China. This represented roughly $34B in trade of mostly finished, manufactured goods and went into effect July 6, 2018.

-          301 Tariffs, Round 2: The U.S. added another 243 HTS codes to the list of Chinese products that are subjected to a 25% duty increase. This represented roughly $16B in Chinese trade and went into effect Aug 23, 2018.

-          301 Tariffs, Round 3: The largest tariff increases to date by the U.S., targeting nearly $200B in trade from China. This round was originally proposed as an additional 10% duty but has since been bumped to 25% and will be applied to roughly 6,000 HTS codes right across the board from consumer goods to electronics, textiles etc. No confirmed roll-out date yet, but the public comment period ended September 6th, clearing the path for an effective date to be announced. Likely implementation is mid-September to early October, 2018.


Knowing the financial impact of these changes is an important first step for all U.S. importers of product from mainland China. But more importantly, here are six strategies you can take now to effectively manage your product, minimize your personal risk, and make sound business decisions during uncertain times:

1.       Initiate:  Complete a high-level overview of your existing Harmonized Tariff Schedule (HTS) database, confirming which product lines are/will be impacted, and when.  

2.       Budget:  Apply your unit costs for each product code and the annualized import volume of those products in order to forecast the full financial impact of the tariff changes. This is particularly important as you budget for Q4 2018 and 2019.

3.       Refine:  Conduct an in-depth audit of your HTS database to determine 1) the accuracy of your classifications and 2) whether or not there is legitimate cause to shift any product code(s) to a classification that reduces your duty outlay. Many companies haven’t audited their HTS database in years, despite the Customs database being adjusted regularly.  

4.       Evaluate:  Seek out alternative options to source similar products from non-impacted regions. This may mean selecting a new supplier entirely OR using your global supply chain to allow for a shift in your country of origin (within the legal parameters established by Customs).

5.       Appeal:  Consider filing a Product Exclusion request with the U.S. Trade Department to have the additional duty waived on the grounds that your product is irreparably harmed by these tariff changes. The application period for Round 2 of the 301 tariffs ends on Oct 9, 2018. 

6.       Prepare:  If the lead time allows, work with your freight forwarder to expedite an import of high value products that are listed for Round 3 tariff increases. Begin preparing your inventory levels for any subsequent waves of tariff increases that may still be announced before the end of 2018.

As a licensed freight forwarder, NVOCC, Indirect Air Carrier, and U.S. Customs Broker, our eShipping team proactively educates and advises clients on trade-related matters currently affecting their business as well as unforeseen variables that could impact future business. Should you have questions regarding how the tariff changes may impact you, contact solutions@eshipping.biz or 816.505.5040 for a commitment-free Impact Assessment Report.  

Keegan Coats, Logistics Engineer, eShipping LLC.

 

eShipping is an all-modes transportation management company and US Customs Broker based in Parkville, MO. Visit us online at www.eShipping.biz.

Tags:  Education  Supply Chain 

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Supply chain lessons learned from this hurricane season

Posted By Journal of Healthcare Contracting, Friday, October 13, 2017

Repertoire/JHC Editor Mark Thill on Oct. 4 spoke with Scott Nelson, senior vice president of supply chain, North America, Cardinal Health; and Mike Wallin, operations manager, Penske Logistics. (Penske provides trucks and drivers for Cardinal Health’s medical segment, and helps optimize hospital delivery routes.) Here are notes from the Q&A with Scott Nelson. Click here for Penske Logistics storm stories and photos.

Thill: Any lessons learned to share with supply chain colleagues?

Nelson: Plan early and involve your customers and key business partners in that process. Look beyond what could come up as an immediate need during the situation itself and plan for multiple contingencies. Without the joint planning I described earlier between Cardinal, Penske and the providers we serve, this story would have had a very different ending.

Communicate realistic expectations with your customers. We were committed to being fully operational as quickly as possible; however we set a clear foundation that it would not be “business as usual” and there would be challenges with inbound freight and outbound volume surges from the backlog. That candor and opportunity to jointly prioritize actions to achieve stabilization built a stronger relationship with our partners.

Lastly, take care of your employees first and they will make sure that the customer is taken care of. The Penske drivers were rock stars throughout this ordeal. They were so willing to put their personal challenges aside and safety in question so our customers would get what they need.

READ THE ENTIRE STORY AT JHCOnline HERE......

Want to hear more about these topics?  Join us next week at our 2nd Annual Life Science & Healthcare Supply Chain Summit.  

Tags:  Connect  Education  Supply Chain 

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Supply Chain: Sprout Solutions - The answer to new FSMA regulations

Posted By Casey Chasteen - Sprout Solutions, Friday, September 22, 2017

As we approach our 2nd Annual Life Science & Healthcare Supply Chain Summit on October 17th, we wanted to highlight a few companies and organizations that will be in attendance and presenting on current trends, challenges and opportunities in life science, agricultural and healthcare supply chains.  Sprout Solutions is one of those companies, and has developed technology to help companies comply with requirements for the FDA Food Safety Modernization Act.  We'll hear from CEO Gretchen Henry during the Supply Chain Summit.  Read below for a glimpse into Sprout Solutions, and get REGISTERED to attend the Supply Chain Summit to hear more.

Sprout Solutions - The answer to new FSMA regulations

At Sprout Solutions, our mission is to help you advance agriculture through technology.
 
We’ve developed a customizable software solution for both feed mills and commodity traders – one that helps you gain Safe Feed/Safe Food Certification and creates transparency in the production and delivery of animal feed.

Our two products, CommodiTrade and Milling Station, provide mills and merchandisers with accurate, Web-based tools and systems to ensure the food they produce is not only safe, but traceable – from the farmer to the end user.


This full-service solution eliminates the need for your own IT and gives you the freedom to access the product anywhere, from a computer, tablet or your mobile device.

Long-term objectives

Efficient farm management and resource efficiency – Fewer farmers have to produce more for a growing population. Technology can have a significant impact in streamlining processes for feed mills and commodity traders.

Traceability – People want to know what is in their food and where it comes from, requiring tools that manage, monitor, trace and report food safety and product quality.

Optimize daily processes – Feed mills and farmers no longer have to notify milling operations on manufacturing requirements and recipe usage. We take care of daily logistics, automatically generating bill of lading and batching documentation.

Interested in learning more? I would love to connect and talk more about your experience and potential technology solutions that can help your business become more efficient, more agile and more profitable.

Feel free to reach out to me directly or visit our website to set up a time for a free demo.
 
Thanks for your time,
Casey Chasteen
Business Development Manager, Sprout Solutions

Tags:  Connect  Education  Entrepreneurship  Supply Chain 

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