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Channel stuffing on an international scale

By Steve Geary | 11/25/2018 | 9:20 AM

The impacts of U.S. trade tensions with China are starting to show up in the numbers.

According the Census Bureau, an unbiased provider of trade data, in September of 2018 the United States imported over $50 billion in goods from China. Compare that figure to 2017, when it was a little over $45 billion. That $50 billion is an all-time monthly record.

A look at the Census Bureau statistics for manufacturer’s inventories shows where many of those imports are going. Year over year, US manufactures inventories are up 6.7%. 

There will be no debate here on whether or not the tariffs imposed by the Trump administration are a good or bad. What is clear is that because of the tariff situation uncertainty is creeping into the supply chain. Uncertainty makes me nervous.

Anybody who relies on China as a source of supply is looking at the risk profile. Long term, there is a need to realign global supply chains with a more deliberate view toward supply chain risk. Tariff uncertainty is a part of that equation.

We are already seeing the pragmatists react to the uncertainty. They are stuffing their DC’s, as shown in the Census Bureau numbers.  There is no choice but to hedge against supply chain risk by stuffing the pipeline with inbound supplies. 

Build a buffer, stuff the warehouses, and buy a hedge. 

Then say a prayer that the politicians in Washington and Beijing find a way out.

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About Steve Geary

Steve Geary

Steve Geary is an adjunct faculty member at the University of Tennessee's College of Business Administration, and is on the faculty at The Gordon Institute at Tufts University, where he teaches supply chain management. He is the President of the Supply Chain Visions family of companies, and Chief Operating Officer at ROSE Solutions, consultancies that work across the government sector. Steve is a contributing editor at DC Velocity, and editor-at-large for CSCMP's Supply Chain Quarterly. He is listed in Who's Who in America, Who's Who in the World, Who's Who in Science and Engineering, and Who's Who in Executives and Professionals. In November of 2007, Steve was recognized for "Selfless Service to Our Nation and the People of Iraq" by the Deputy Secretary of Defense.



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