This week’s supply chain risk news
A key deadline on tariffs has passed. A lot is still undecided.
While the United States and some of its trade partners have recently announced deals over tariffs, they’ve often left key details to be clarified later. As we discuss in our Risk Center, that work is ongoing, and specific exemptions on goods from steel to cars to pharmaceuticals could still be worked out in the weeks ahead.
Meanwhile, with the deadline for talks between Washington and Beijing extended into November, U.S. tariffs on most Chinese goods remain at 30 percent, while Chinese tariffs on U.S. goods remain at 10 percent. A crucial sticking point has been the chips that are crucial for advanced artificial intelligence. While companies like Nvidia and Advanced Micro Devices Inc. now have permission to export to China, some restrictions remain, and both sides are watching closely.
In addition to taking a 15 percent cut of Nvidia and AMD’s Chinese profits, the U.S. government has suggested the unusual move of taking part ownership of the chipmaker Intel. For semiconductor manufacturers—and anyone who depends on them, perhaps including anyone with a smartphone—the road ahead winds ever onward.
You can’t import everything. Where would you put it?
Since opening in 1907, the Port of Los Angeles has never seen a month as busy as this past July, when the port handled over a million container units. That’s measuring in TEUs, or twenty-foot equivalent units, if you were wondering, and the total represents some 85 thousand more TEUs than the same time last year. (The only other month when the port surpassed a million TEUs was in May 2021.)
Port officials attribute the latest uptick to retailers and manufacturers stockpiling what they can before higher tariffs take hold. As for handling that massive stockpile—that is, paying someone to warehouse all that inventory for the time being—well, that’s getting more expensive. And that cost will soon flow downstream to consumers in the form of higher prices, per a professor of supply chain management.
In the meantime, will August mark another record for the port? Officials there doubt it, but say they’re still on track for around 850 to 900 thousand units, 20 feet at a time.
As if electric vehicle supply chains weren’t tangled enough
Even before tariffs came to dominate the shifting landscape of international supply chains, electric vehicles were hard to pin down, with many new competitors joining the fray in recent years. Further complicating the picture, last year Chinese electric carmakers invested more abroad than at home, new research finds.
While batteries have been a main focus, overseas vehicle assembly is also growing rapidly, the Rhodium Group researchers say. Still, most of the production capacity remains in China, and investments elsewhere tend to represent riskier, slower, and more expensive bets, as “overseas cancellation rates are twice as high and only 25% of investments are completed, compared to 45% domestically.”
Notably, the report suggests China’s “domestic overcapacity and price wars are pushing firms to look abroad for profit.” But with global demand for electric cars cooling, along with other factors like regulatory pushback in markets like the EU, it’s not at all certain that such hefty outbound investment from Chinese firms will continue.
U.S. vegetable prices jumped almost 40 percent in July. Are tariffs to blame?
Prices in July rose sharply for vegetables, along with everything from meats and eggs to diesel and jet fuel, the U.S. Bureau of Labor Statistics reports.
The U.S. imports more than a third of its vegetables, and as President Donald Trump’s tariffs start taking effect, it’s reasonable to wonder how much they might drive up prices. But analysts who spoke to ABC News were reluctant to draw hasty conclusions, because wholesale vegetable prices can also fluctuate due to weather events, say, or supply chain blockages. An easy comparison might be U.S. coffee prices, which have ticked up some 14 percent over the last year, owing largely to droughts in Brazil and Vietnam.
“This could be the impact of tariffs, but it could be a whole host of things,” one food economist told ABC. Still, vegetable importers can’t stockpile produce for long—and the tariffs are just getting started.
On logistics risks foretold—and potential costs forestalled
Delayed or missing shipments can disappoint customers and cost organizations money. But what if you could plan around such risks ahead of time? Even when major disruptions are unavoidable, if you know about the potential impacts, you can act decisively and save considerable money on logistics. That’s the value of predicting logistics risk.
This may sound like witchcraft—who could have foretold a tragic and costly bridge collapse in the Port of Baltimore, for instance? But while such unlikely events are hard to divine, their impacts on logistics are not hard to predict.
Whether a disruption stems from a truly unforeseen event, or an event with unpredictable timing, or something fairly commonplace like a hurricane or a winter storm, you want to quickly understand the potential impacts to your materials and shipments, and get moving before everyone else to lock in alternative routes and options at low rates, before demand spikes.
This can save your company money on expedited freight costs, replacing lost or damaged goods, potential penalties, and so on. And because some disruptions are inevitable, these potential savings can add up significantly, as we detail on our blog.
