The Challenge: Warehousing Solution
At the beginning of 2019, a long-term Exegistics warehousing and transportation management client was facing a dilemma and needed a creative warehousing solution. The company manages a large volume of ocean freight shipments from China, and company leadership was steeling itself for a steep duties increase in the new year.
Under Section 301, the U.S. government had raised tariffs on billions of dollars worth of products entering the country from China – increasing them to 25%, instead of around 3 or 4% in the past. For an ocean container with a commercial value of $100,000, our client would now have to pay $25,000 in tariffs instead of $3,000 or $4,000.
The company wanted to import as much inventory as possible from China before the regulations changed, but it had reached its warehouse capacity. Company leaders asked Exegistics to find a flexible and cost-effective storage solution that could handle the excess inventory on a temporary basis.
Exegistics looked beyond standard warehouse operations and came up with a creative short-term storage solution for our client. We installed four semi-trailers in the company’s parking lot that serve as temporary warehouses. The trailers allowed our client to keep all of their inventory on-site, without negatively affecting their operational flow.
“We have been a trusted partner with this client for several years, and this situation is an example of the confidence they have in our expertise,” says Stephen Olds, CEO. “They want us involved in all of their supply chain, shipping, and warehousing decisions, and they know we will protect their interests.”
Exegistics also helped the company resolve an associated shipping problem. Many other companies were expanding their orders from China in advance of the tariff increase, leading to significant congestion in major West Coast ports. This bottleneck was estimated to result in 20 to 40-day delays for incoming shipments. We anticipated this obstacle and rerouted our client’s shipments through Canada instead, saving the company time and money.