Facing the Tariff Era: Insights from Shipwell & AlixPartners Roundtable

Written by: Jason Traff–President & Co-founder & Jon Xiu–Vice President of Sales

Few topics spark more uncertainty—or demand more immediate action—than tariffs in today’s volatile trade environment. With policy direction unclear and disruption accelerating, no two organizations are responding the same way. 

Shipwell’s Jason Traff, President & Co-founder, and Jon Xiu, Vice President of Sales, recently brought together supply chain leaders as well as Venky Ramesh and Abhijit Boora, both Directors at AlixPartners specializing in supply chain management, to discuss the ongoing challenges and opportunities presented by tariff variability. 

With a focus on actionable tariff strategies, AlixPartners shared their expertise on the complexities of navigating tariffs and preparing for supply chain disruption. Below, we recap the key takeaways from the discussion. For deeper insights into how organizations are responding to tariffs, explore the results of Shipwell’s recent survey.

Watch a replay of the discussion, or read on.

The Tariff Landscape: A Roller Coaster of Change

The impact of tariffs on logistics is unprecedented in its scope. The use of tariffs as a geopolitical tool has created significant disruptions, particularly in industries reliant on raw materials like steel, aluminum, and automotive components. For example, tariffs on automotive imports remain at 25% for non-USMCA-compliant goods, while raw materials like steel and aluminum continue to face Section 232 tariffs.

China, in particular, has borne the brunt of these measures, with tariffs on imports ranging from 30% to as high as 145% in recent years. While some exemptions remain for industries like pharmaceuticals and semiconductors, the overall tariff burden has created a ripple effect across global supply chains.

The result? A volatile environment where businesses must navigate fluctuating costs, shifting trade policies, and capacity constraints—all while maintaining operational efficiency.

The Impact of Tariffs on Logistics and Freight

Suffice to say, new governmental tariff strategies are reshaping logistics and freight markets. Each mode of transportation—ocean, air, trucking, rail, and parcel—has been affected differently:

• Ocean Freight: The suspension of certain tariffs has led to a surge in demand as companies rush to build inventory during the temporary reprieve. This has caused ocean freight rates to spike, creating a "pull-forward" effect that strains capacity.
  
  
• Air Freight: The cancellation of the de minimis rule, which previously exempted parcels under $800 from tariffs, has reduced demand for air freight. While rates remain elevated compared to pre-tariff levels, they are expected to decline further as demand softens.
  
  
• Trucking and Rail: These modes have remained relatively stable, though oversupply in the trucking market has kept rates soft. Rail demand has also sustained year-over-year, but potential tariff increases could introduce new challenges.
  
  
• Parcel and Warehousing: Parcel carriers are facing their first revenue decline in seven years due to reduced volumes, prompting them to introduce surcharges to offset losses. Meanwhile, warehousing demand has surged as companies stockpile inventory, emphasizing the need for strategic network optimization.

Navigate the Near-Term with These Tariff Strategies

AlixPartners outlined a four-step approach to help businesses address immediate tariff challenges:

1. Set Up a Tariff Portal: Visibility is critical. Companies must map their imports at the HTS (Harmonized Tariff Schedule) code level to understand their tariff exposure. This granular view enables businesses to identify hotspots, exemptions, and total cost of ownership across their supply chains.
   
   
2. Focus on Cash Preservation: In times of uncertainty, liquidity is king. Scrutinize discretionary spending and maintain a lean approach to G&A expenses to ensure financial flexibility.
   
   
3. Leverage No-Regret Levers: These are strategies that can reduce tariff burdens without requiring significant changes to the supply chain. Examples include:
   
   
   • First Sale Mechanism: Tariffs are applied to the ex-works cost of goods, not the fully landed cost. By working with customs brokers and suppliers, companies can ensure they are only paying tariffs on the manufacturing cost, potentially reducing their burden by 8-10%.
   • HTS Code Optimization: Exploring alternative HTS codes for products can lead to lower tariff rates, provided the changes comply with trade regulations.
4. Revisit Pricing Strategies: Companies should evaluate how much of the tariff burden can be absorbed, passed on to customers, or negotiated with suppliers. This ensures competitiveness while managing costs.

Preparing for Supply Chain Disruption with Technology

One of the recurring themes in the discussion was the critical role of technology in navigating tariff volatility. Access to advanced digital tools and data analytics has become a key differentiator between supply chain leaders and laggards.

For example, leveraging AI and machine learning can help companies forecast demand, optimize inventory, and identify inefficiencies in their supply chains. Tools like Shipwell’s TMS (Transportation Management System) enable businesses to gain real-time visibility into their operations, empowering them to make faster, data-driven decisions.

Navigating Tariffs in the Long Term

While immediate actions are necessary, AlixPartners stressed the importance of preparing for the future through scenario planning. With tariffs likely to remain a key geopolitical tool, businesses must develop simulations to evaluate the impact of various outcomes.

Companies should consider:

• The cost implications of staying with current suppliers versus shifting to alternative markets like Vietnam or Mexico.
• The potential benefits of nearshoring or reshoring manufacturing operations.
• The long-term effect of tariff engineering strategies on overall competitiveness.

By modeling these scenarios, businesses can create a roadmap for navigating future disruptions with agility and confidence.

Turning Crisis into Opportunity

The discussion concluded with a powerful reminder: every crisis presents an opportunity. Companies that invest in preparing for supply chain disruption using visibility, leverage technology, and adopt proactive strategies will be better positioned to weather the storm and emerge stronger.

The clear and critical differentiators for supply chain competitiveness are:

1. Agility: The ability to quickly adapt to changing circumstances, whether through supplier diversification, inventory adjustments, or transportation mode shifts.
2. Intelligence: Building a robust data infrastructure that enables real-time decision-making and long-term planning.

Businesses that embrace these principles will not only mitigate risks but also unlock new opportunities for growth.

It’s impossible to underscore the importance of a proactive, technology-driven approach to managing tariff volatility. By combining short-term actions with long-term planning, businesses can transform their supply chains from reactive cost centers into strategic assets.

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