Understanding the Current Freight Landscape
It’s an understatement to say that the global freight market is navigating unprecedented tariff uncertainty. The changes have been so rapid it’s hard to keep up, let alone adapt. In the past two months alone we’ve seen:
- A 10% global tariff implemented on all imports alongside targeted “reciprocal tariffs” on specific trading partners
- Tariffs on Chinese goods initially jumping to 145% before being reduced to 30% during a 90-day negotiation period ending August 14th
- Threats of tariffs on cellphones and imports from Europe
- A legal ruling that all of these tariffs are in fact unlawful
This uncertainty has created a freight market characterized by demand volatility, pricing fluctuations, and operational challenges. Ocean freight volumes surged as importers rushed to beat tariff deadlines, followed by significant drops when high tariffs were implemented.
In a recent webinar Freightos Head of Research Judah Levine sat down with National Retail Federation Vice President of Supply Chain and Customs Policy Jonathan Gold to discuss tariff changes and the difficulties they’ve caused for importers. Read on for their expert insight – and validation – and even some actionable tips.
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The Difficulty of Adapting Through Rapid Changes
As much as people throw around adaptability and flexibility as key to managing tariffs, the fact is that responding to changes this unpredictable and this rapid-fire is extremely challenging, especially for SMBs. As Jonathan Gold emphasized during the webinar, “The biggest challenge with this round of tariffs is the speed at which they’re taking effect, where you don’t have that buffer time to really make changes within your supply chain.”
Diversification dilemmas
When new China tariffs were introduced during President Trump’s first term, moving some sourcing to other countries was a reasonable step, despite the cost and operational hurdles.
Now the move has all the same difficulties but none of the guarantees.
That’s because by the time a diversification strategy can be implemented, the policy landscape might have completely changed.
The case of Vietnam illustrates this perfectly:
“A lot of folks post-2018 shifted to Vietnam, thinking it would be a safe bet,” Gold explained. “And when you look at the reciprocal tariffs, Vietnam was at the top of the list at 46%. Where are you supposed to go?”
As Levine summarized, the challenge isn’t simply about the current tariffs, but the constant uncertainty about what might come next and where, making any diversification strategy a potential gamble.
Financial constraints in a rapidly changing environment
Adapting to tariff changes when policies shift weekly is also a tough bet financially.
“Smaller retailers…don’t necessarily have the leverage to be able to do some of these things,” Gold pointed out.
And even when companies attempt to respond, the financial investment required creates a bind. As Levine explained, “The cost of sourcing is going to go up regardless of what they do in the short term” – that is, costs will rise whether companies choose to absorb tariff costs directly or take on the expenses of finding, vetting, and establishing relationships with new suppliers.
This is of course even more difficult given that today’s expensive solution might be rendered moot by tomorrow’s policy reversal.
Timing and planning challenges
Tariff uncertainty has made strategic supply chain planning nearly impossible: how can you work on a three-month timeline when you don’t know what will happen next week?
Plus, shifting deadlines creates significant confusion. As Levine pointed out, “There’s some uncertainty as to what a July 9th and an August 14th deadline for these 90-day pauses mean” – whether goods need to be loaded or actually arrive by these deadlines makes an enormous difference in planning.
The tariff environment has created what Gold called “whiplash” for importers, with many forced to make difficult trade-offs between immediate cost management and long-term supply chain resilience.
Strategies for Managing Uncertainty Despite the Challenges
With these massive challenges, what can SMBs do? There are still some steps that can help:
#1: Forge Strategic Partnerships
In times of uncertainty, strategic partnerships with freight forwarders and customs brokers can help.
Your providers stay on top of rapid shifts and can help you explore options such as alternate routing or new product classifications that minimize tariff exposure. Customs brokers can also help streamline compliance processes and minimize costly delays.
It’s also a great time to bolster your relationships with your customers. As Levine pointed out, “This is going to cost somebody something. It’s either going to be the importer through their margin, or it’s going to be the consumer through higher prices.” Building transparent communication channels with customers helps you communicate any price changes in a context of trust.
#2: Utilize Free Trade Zones and Bonded Warehouses
If you’re not already looking into free trade zones (FTZs) and bonded warehouses, talk with your freight forwarder as these can offer some relief from immediate duty payments.
Free Trade Zones (FTZs) are designated areas within the United States that are legally considered outside of U.S. Customs territory. When you bring goods into an FTZ, you don’t pay duties or tariffs until those goods leave the zone and enter the U.S. market. This allows you to store products, process them (such as assembly, manufacturing, repackaging), or even exhibit them without immediately paying duties.
Bonded warehouses are secure facilities approved by U.S. Customs where imported goods can be stored for up to five years without paying duties. You only pay the applicable tariffs when you withdraw the goods for U.S. consumption.
Both options come with requirements and costs. Bonded warehouses require customs bonds, compliance with security standards, and proper record-keeping. FTZs involve application processes, inventory control systems, and oversight. So they’re not for everyone, but they’re worth exploring.
#3: Time Shipments to Your Advantage when Possible
Tariff changes are rapid, but lulls can provide some opportunity to frontload essential inventory, particularly for peak season goods.
However, frontloading comes with important operational considerations. Levine cautions about potential capacity constraints that come with the rush to beat tariff deadlines, which may create its own logistics challenges, including potential rate increases if demand surges.
This could become even more acute as importers try to take advantage of the legal pause.
Work with your providers to weigh immediate tariff savings against potentially higher freight costs and operational disruptions.
#4: Leverage Technology for Decision-Making
Platforms that provide market transparency and market data can make uncertain times a little less jarring by allowing for more flexibility in timing, routing, and budgeting.
The traditional freight booking process – requesting quotes, waiting for responses, manually comparing options – creates blind spots that can be even more challenging during tariff uncertainty. Digital freight marketplaces like Freightos can help by providing instant rate comparisons across multiple forwarders – which means you see how different routing options affect your landed costs.
Market data and freight indexes also provide critical context, which can help distinguish between tariff-related cost increases and seasonal market fluctuations. Freightos Data offers real-time visibility into rate trends, capacity constraints, and market shifts that can help businesses time their shipments strategically.
Tariff uncertainty will likely remain challenging for the foreseeable future, but staying informed and building transparency and smoother processes can help you keep your head above water.
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