Beyond the Chaos:

Tackling Tariffs, Trucking, and Inventory Optimization

By Noah Hoffman, VP for Retail Logistics, C.H. Robinson

As we saw during the first Trump presidency, we expect trade policy to be somewhat of a rollercoaster again in 2025. Even before taking office, a number of tariff proposals were floated and it’s hard to predict which will come to fruition and how other countries may retaliate. Mexico has already responded to tariff threats by banning duty-free imports of clothing and other textiles bound for the United States.

In this environment, retailers should be ready for both tariff changes and greater scrutiny of compliance with country-of-origin requirements.

We’re advising the 7,500 retailers C.H. Robinson serves to run risk scenarios for decision-making now and to make plans that can quickly be put in place for new tariffs on goods from Mexico or Canada, higher China tariffs or across-the-board tariffs. Steps to include:

Customs analytics tools can help you get a handle on your current duties down to the SKU level and determine where your exposure lies. Retailers don’t always have complete visibility into the origin of their goods, because your suppliers may manufacture in multiple places. This kind of analysis can close that gap.

• Identify where to consider alternative suppliers: Sourcing analytics tools can crunch global data to surface options for switching some of your supply to countries with more preferential trade agreements.
  
  
• Apply your data: If your logistics provider has those two types of technology, you’ll be armed with the right data to make decisions, devise flexible freight transportation plans, and ensure you have access to enough ocean and air shipping capacity in all the places you might need.
  
  
• Avoid costs and seek refunds: If your logistics provider also handles customs brokerage, you’ll be in a good position not only to marry your customs strategies with your ocean, air and domestic shipping plans. It can also help reduce the chances of shipments being detained for non-compliance, help avoid fines and help you identify where you’re eligible for tariff exclusions or refunds.

When tariffs change abruptly or often, it’s especially important to work with experts who can serve as an extension of your team.

After pulling inventory forward in advance of the U.S. port strike in October, in advance of the port strike averted in January or because of impending tariffs, some retailers may need to assess whether they have the right inventory mix for a healthy 2025.

Maybe you pulled the trigger on fashion before you had time to test it in different markets. Maybe you made a big bet on home decor that isn’t as popular as you forecast. Or you might be sitting on accessories for electronics that will soon be replaced by newer models.

Carrying costs are still going up because of inflation and the price of labor. So compare the cost of carrying inventory with the cost of liquidation. If the numbers point to liquidation, make the decision sooner rather than later and develop a cost-effective reverse logistics plan.

The availability of trucks and the cost of moving your goods by truck are influenced by many factors, but broadly speaking, the trucking market operates in cycles. For nearly three years, retailers have enjoyed a record-long cycle of ample trucking supply and low rates. When rates are at or below the cost of operating a truck for a prolonged time, trucking companies leave the market and the tighter supply pushes rates back up.

C.H. Robinson’s data indicates that trucking supply is on a path to decrease to historic norms sometime between May and October. Our latest forecast for trucking rates is that they’ll grow 9% year over year. Still, there are plenty of strategies to optimize your truck shipping and stay within your transportation budget. We’re advising the retailers we serve to:

Take advantage of procurement tools that reveal which of your freight you should put out to bid, which you should award directly to a single carrier and which is best suited for the spot market.

• Minimize trucks, total shipments and miles traveled: Advanced technology can do this by determining the right combination of route, method, carrier and day for shipping your freight. Shippers save 8% on average and can save up to 30%.
  
  
• Expand your use of drop trailer: Retailers are already keeping their warehouse labor and space down by having trailers dropped off to be loaded or unloaded gradually or during downtimes. But many retailers believe they’re doing as much drop trailer as they can, because they work with trucking companies that can tie up only so many trailers. A third-party logistics provider can expand your use of drop trailer through a wider set of carriers that can offer attractive rates because they already have drop pools near your facilities, are looking for business on a specific route or are trying to increase their trailer utilization.
  
  
• Explore freight consolidation: If you’re a retail supplier, a third-party logistics provider with the right technology, facilities and services can cost-effectively consolidate a variety of your products for shipping to multiple retailers or consolidate your products with the products of others going to the same retailer. If you’re a retailer, you can develop a consolidation strategy to deliver products from your distribution centers for store fulfillment.

Inefficiencies in transportation networks are just waiting to be found. Remember, the cheapest truck available is the one that doesn’t have to run!