Business will have to adjust to the new trade era the administration in Washington is crafting for the nation which could impact some local businesses in our area.
The status quo is no longer the norm. Business enterprises will have to deal and adjust to a new set of metrics. This will be especially true for those who operate in the distribution and supply chain of goods. Understanding change is a constant and businesses large and small must be innovative and adapt to survive. Our nations supply chain professionals are going to feel the brunt of this change in direction while being expected to generate efficiencies for their organizations.
I understand the pressures as the writer spent a 40 year career in providing logistics solutions on a global scale. However, business should look forward to the change, embrace it, and prepare for it as an opportunity.
Major international giants such as Carrier, General Motors, Ford and Fiat Chrysler including others have all made a business decision to invest in new jobs and facilities in America. Previously, these investments where made in China, Mexico or elsewhere. It is impossible to not notice the current trend.
The balance of trade is changing to favor U.S. export activity. The Trans-Pacific Partnership is dead, and the U.S. will be focused on renegotiating bi-lateral trade agreements in favor of multi-lateral trade. NAFTA may remain in place, however, it is reasonable to expect it will be renegotiated to seek a sharp reduction in U.S. job loss while we encourage more domestic production which will impact the flow of manufactured products in the supply chain.
The trade imbalance between exports and imports has been the norm for decades as business executives favored investing overseas with inexpensive labor, lower operating costs, and fewer regulatory requirements including overburdening environmental regulations.
When ships are importing high volumes of cargo into our country, but are leaving our shores with low volumes of manufactured exports this creates a major imbalance in the supply chain. Shipping containers are not in the right locations at the right times which trickle down to all modes of transport. No one benefits when we are compensating for the flow of trade which generates empty backhauls or trade in one direction. It adds to the overall cost within the supply chain to reposition empty equipment overseas.
How this will impact local businesses within our community will be interesting to follow. Certainly, the big box retailers will feel the pressure and will make the necessary adjustments. The local small business owner should not be impacted and may benefit by the change of direction in trade policy. The local companies involved and operating within the supply chain may also benefit as more freight transportation of goods to market will come directly from factories in America instead of through ports such as Long Beach, California where we have experienced major bottlenecks and delays in the supply chain previously in getting goods to market. Crafting the right trade balance makes a lot of sense and could be a good solution.