Politicians need to rethink their international trade policies to be more in line with the modern global supply chains, said Andres Gallo, an economics professor and the director of the international business flagship program at the University of North Florida’s Coggin College of Business.
He said Friday during a roundtable event at the university that politicians think about international trade in terms of the 1940s or 1950s, when an entire supply chain was mostly integrated within a single country. Now supply chains are international with parts for products being produced throughout the world, Gallo said.
“If you look at the supply chain in the 1950s, most products have either two or three countries participating. Now with this knowledge between 20 and 40 countries ... collaborate in making a product,” Gallo said. “That relies on having trade agreements that reduce costs and make simpler for companies to move across borders and to be able to operate. I think that’s what makes our economies move.”
Ross Burnett, director of logistics sales for Crowley Logistics, said tensions in the Middle East, trade barriers with China and newly announced tariffs have driven prices up, which slows the movement of goods. President Trump tweeted Thursday that the U.S. will impose a 5% tariff on all goods from Mexico starting June 10. The tariffs could reach as high as 25% by Oct. 1 unless Mexico takes satisfactory action to halt the migrants, The Wall Street Journal reported.
Cargo processing by CBP has improved since the initial backups, customs brokers told American Shipper in mid-May, but the speed still is not ideal.
“Operations are almost back to normal to a certain degree in our area [for truck traffic], to about three hours from the Mexican tollbooth to the CBP primary booth,” said A.E. Neto Roser, in charge of U.S. Customs compliance for Brownsville, Texas-based Roser & Cowen Logistical Customs Services, according to the American Shipper article. “It usually takes about two hours from that distance. That’s a big change from when it was about five hours.”
Jim Wagstaff, vice president of operations at TOTE Maritime Puerto Rico, said, “The trade agreements are designed to reduce complexity. ... When they start to break down, when we start to see these delays, we start to see the complexity start to slip back in and cost and those types of things start to add up, which we as consumers it’s passed on to.”
Companies need to not only focus on making their supply chains efficient but also agile and flexible, said David Swanson, an associate professor of transportation and logistics at UNF. Companies can embrace Lean Six Sigma — a method that relies on a collaborative team effort to improve performance by reducing waste and reducing variation — to make lower costs, but they also need to be willing to move and be flexible, he said.
“You try something new and it forces competition and improves your competitiveness and drives out costs, makes the company more agile,” he said. “Embrace it, utilize it and become stronger by it.”
The ways in which a company leverages technology ultimately will determine its success, Gallo said.
“I think that is where it needs to be understood that efficiencies nowadays in the 21st century come from the use of technology and the use of ideas across the globe,” Gallo said. “The companies that are able to integrate and make them work in an efficient way are the companies that are going to be successful.”
“The graduate 10 to 15 years from now is going to have to have the tools and the ability to compete in today’s market and it’s going to be a matter of doing a lot more than I was able to do when I finished my MBA,” he said. “The jobs are still there. Technology is not going to take over those jobs, but we’re all having to elevate what we learn and what we apply.”