January 23, 2017
On Trump’s first full day in office, he backed out of TPP, as expected – and promised. The concept behind this Trans-Pacific Partnership was to deepen economic ties among countries that border the Pacific Ocean. Will this have an effect on trade?
At the same time, I just so happened to go on a tour of LA Port on Friday (see my APICS colleagues pictured below as we sail past a container ship). Southern California’s ports bring in 40% of U.S. imports, and so we are the “big daddy” of the ports. Thus, any trade changes will affect our ports in some way. The question is how…..
What Should We Consider and/or What Impacts Could Arise?
Certainly, since the ports and trade are tied together, it makes sense that some sort of change will occur; however, I don’t think it will be noteworthy. Since the Southern CA ports are able to accept big ships (which isn’t that common) and they are located in a prime spot for trade, the impact will not be substantial near-term.
Of course, the prices and tariffs will be impacted; however, for commodity items, it will still make sense to bring them in from lower labor cost countries. For non-commodity items, we’ll see a resurgence of manufacturing and automation / use of technology take place in North America. We will need to be more nimble and agile – including our “big daddy” ports if we wish to be competitive.
Are you prepared to leverage additional technology to remain competitive? And do you know how your partners will be impacted? If you are not incorporating those likely impacts into your strategy, you will be left in the dust for those who are thinking ahead.