The Trump administration recently levied significant tariffs against primary U.S. trading partners, including the European Union, Canada, and Mexico. Additional tariffs have been enacted against China and Russia as well. Ranging from 10 to 25 percent, reports Ben Ames of DC Velocity, the markets have stood leery of this action. Although a trade war has not yet come to fruition, the possibility remains. Warehouses obtaining supplies, products, and raw materials from affected countries could see similar rises in average production and purchase price for finished products. Meanwhile, the prospects of another spike are on the horizon. But warehouse managers can do something about it by using warehouse automation.
Tariff Spikes Threaten to Undermine Existing Trade Agreements
The potential impact of new tariffs under the Trump Administration could directly result in increased overhead costs for warehouses, supply chains, and retailers across the country. China has already responded with retaliatory tariffs, further increasing the risk of a trade war. However, the supply-chain risks of new tariffs can be overcome with new technologies.
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Efficiency in the Warehouse Is Essential for Reducing Impact of Retaliatory Tariffs
Retaliatory tariffs have the effect of increasing costs, so the solution is to reduce inefficiencies and increase productivity in the warehouse. This will result in a net-positive gain regardless of new tariffs. New technological deployment, including the use of a robust WMS and slotting optimization system, increases productivity in the warehouse. As explained by Bob Trebilcock of Logistics Management, warehouse automation has driven double-digit growth in warehousing over recent years. With increased consumer demand, using warehouse automation is necessary, and the same technology can be leveraged to overcome the challenges of new tariffs. Orders are filled faster and moved to the dock with fewer errors, improving customer experiences and increasing the number of repeat purchases.
How Using Warehouse Automation Provides Additional Benefits Beyond Combating Tariff Spikes
Warehouse automation is an extensive aspect of modern warehouse management, which includes new, software-as-a-service WMS platforms, systems connected to the Internet of Things, slotting optimization programs, and robotics. According to Supply Chain 24/7, using warehouse automation achieves “four-wall” savings through automated putaway, retrieval, picking, sorting, and palletizing. With looming tariffs, automation can push existing costs to their limits, freeing capital for use in paying such tariffs. Automation increases warehouse space utilization, breaks barriers, eliminates organizational data silos, increases the speed of order fulfillment and shipping, and increases visibility.
Take Advantage of the Benefits of Warehouse Automation in Your Facility Now
The possibility of trade wars and changes in tariffs around the globe represents a significant threat to both traditional and omnichannel supply chains, as well as e-commerce fulfillment. Due to uncertainty in the existing market, warehouse managers should start working to reduce overhead expenses and improve efficiency. Working with a third-party integrator, or supply chain systems integrator can help.