Risk Management

While some tailwinds prompting shortages in 2024 may have been resolved, others will carry into 2025 with additional twists.

Supply chain managers may still have to deal with risks ranging from geopolitical and weather-related turmoil to more localized challenges.

Heightened shortage risks come whenever a change impacts a high concentration of goods manufactured or produced in a very limited number of places, said Richie Daigle, supply chain evangelist at Tive, a shipment tracker technology company.

Here’s a look at the goods and topics that could be at the top of mind for procurement officers in 2025.

Geopolitical-driven shortages

As President Donald Trump threatens to levy tariffs on Canada and Mexico, along with additional duties on China-based imports, experts say the moves would have an outsized impact on certain goods.

For example, if there are tariffs on Canadian goods, it could create shortages for energy products, pulp and paper products, and automotive parts, said Matt Lekstutis, director at global procurement and supply chain consultancy Efficio, in an interview with Supply Chain Dive.

“There’s lots of conversations going on around potential tariff actions. Those things could also lead to disruptions in supply chain as companies look to find new sources, look to reroute, to avoid tariff issues, and even the cross border administration that could come into play,” Lekstutis said.

Shippers will need to evaluate suppliers globally as they adjust to any price increases spurred by tariffs, said Spencer Shute, VP at procurement and supply chain consultancy Proxima.

"This process could lead to shortages where cost impacts are prohibitive, creating delays in overall manufacturing. This is a critical topic to watch in 2025,” Shute said.

Automotive parts

Even with Trump solidifying his tariff plans, automotive supply chains have had plenty of other sourcing challenges to navigate over the past year.

Rivian Automotive, for example, lowered its annual production guidance in 2024 by up to 10,000 vehicles due to an ongoing parts shortage, according to an Oct. 4 securities filing.

Another car maker, Porsche, faced aluminum shortages after a flood at a supplier’s facility in July.

“It is to be expected that the resulting delays in the production and delivery of vehicles will not be fully compensated for in the further course of the financial year,” the company.

When Porsche goes through a crisis, it has more than one solution and a host of measures to secure supply, according to a 2023 annual and sustainability report from the automaker.

One strategy the company uses is closely examining every component to determine if a certain amount of inventory makes sense, Barbara Frenkel, a member of the executive board for procurement at Porsche, said in the report.

“Prioritizing certain cars in production is another sensible options for getting through any shortages,” according to the report.

Food

Egg prices and supplies experienced a tough 2024 as bird flu outbreaks persisted. Shortages and elevated prices are expected to continue in 2025.

Egg producer Cal-Maine Foods said it saw demand outpace available supply, according to a Q2 earnings report. As a result, the company has had to buy from outside suppliers and rely more on capacity from recent acquisitions to meet customer needs.

Outbreaks from the bird flu and facility fires in 2024 led to the loss of nearly 40 million commercial table egg layers in 12 states, according to the U.S. Department of Agriculture.

“Ultimately these shortages will lead to delays in food production where eggs are a predominant ingredient. Supply will rebound however costs will remain elevated until supply is recovered,” Shute said in an email.

Another part of the food supply chain, cocoa, is also facing challenges in 2025.

Inclement weather, droughts and labor issues in West Africa have fueled the supply issues for cocoa, according to data from Wells Fargo's Agri-Food Institute.

David Branch, sector manager within the Wells Fargo Agri-Food Institute, noted in a 2024 report that “cocoa is produced predominantly in the hot and humid region of Africa, which produces more than 70% of the world’s supply, followed by Central and South America at 15%, Asia at 13%, and Australia at 2% respectively."

Candy producers like Hershey found themselves increasing their production of sweets that don't contain chocolate due to the higher costs.

Companies making more affordable confections — such as Hershey, Nestlé and Mars — will struggle to keep up with demand without raising prices, Branch told Food Dive.

Semiconductors

Semiconductor shortages have been prevalent since the pandemic, and in 2025, the industry's supply issues are still not fully resolved.

“We’re still seeing shortages with semiconductors with the increase in AI and automation that requires electronic components. Though not as scarce as during the pandemic, there are still delays which are impacting manufacturing of electronics and airliners,” Proxima’s Shute said.

A semiconductor giant also recently referenced the ongoing supply challenges in the industry.

C.C. Wei, CEO at Taiwan Semiconductor Manufacturing Company, said 2024 was a mixed year of recovery for the global semiconductor industry in a Jan. 16 earnings call.

“AI-related demand was strong while our other applications saw only a very mild recovery, as macroeconomic conditions weigh on consumer sentiment and end market demand,” Wei said.

In 2025, TSMC expects its fabless semiconductor inventory to return to healthier levels compared to 2024, the CEO added.

Other companies share TSMC’s optimism, even as supply issues remain, due to the boost in U.S. growth from the CHIPS and Science Act. The bill has led to companies being awarded millions of dollars to add manufacturing capacity in the U.S.

One example is Microchip Technology, which was offered $162 million in CHIPS and Science Act funding in 2024 to increase domestic production of microcontroller units and other related semiconductor products that support the automotive and aerospace industries.

But even with the funding infusion, some challenges remain.

“The actual construction time from the date of breaking ground to the first wafers being manufactured, it kind of nets out to around two years,” John VerWey, an advisor in the Pacific Northwest National Laboratory’s global security, technology and policy group, told Manufacturing Dive in 2024.

“But that does not take into account any of the pre-permitting [or] any of the permitting that happens before you break ground,” VerWey added.

Labor shortages have also created issues in the past. TSMS pushed back the opening dates of two fabs in Arizona in 2023 because of the lack of specialized labor. Chairman Mark Liu said on an earnings call from July 2023 that the company was struggling to find workers with expertise in equipment installation in a semiconductor facility.

Pharmaceuticals and medical supplies

Shortages of certain medical supplies, particularly IV fluid, are expected to continue in 2025.

Hurricane Helene impacted the supply of IV fluids, according to the FDA, with empty IV bags of all sizes currently in shortage, an issue that is estimated to last into March.

Amidst the shortage, some companies like Baxter have been able to increase their allocation of certain IV fluids. In November, Baxter said it expected to restart a second IV fluid production line after Hurricane Helene damaged its plant in western North Carolina.

Baxter notified customers on Jan. 21 that allocations of two of its sodium chloride IV solutions were increased to 100%.

“Please note that there is a typical 1- to 2-week lag time for product to flow through the full distribution network after allocation changes are implemented,” the company told customers.

Vulnerabilities remain elsewhere in the medical supply sector, one government official warned.

Michelle Tarver, the FDA’s’s medical device director, recently warned of the U.S.’s lack of mandatory reporting requirements for potential medical device shortages. The director said the U.S. risks falling behind other countries in its ability to ensure product supply.

Tarver’s warning follows the FDA’s call for new statutory authority on device shortages and for full funding of its supply chain program.

2025 will introduce a bevy of challenges for shippers' logistics strategies.

President-elect Donald Trump's push for higher tariffs, potential labor disruptions and pricing pressures are among the developments supply chain managers will have to navigate in 2025. No transport mode will be spared, with carriers in the ocean, air, rail, truck and parcel delivery spaces all grappling with their share of complexities.

Supply Chain Dive spoke with several experts about 2025’s logistics risks and how shippers can prepare. Here's what we found.

ILA-USMX contract ratification, tariffs cloud ocean shipping

The ratification process for the tentative six-year union contract for East and Gulf Coast port workers will be top of mind for ocean shippers.

The deal, announced Jan. 8 by the International Longshoremen's Association and the United States Maritime Alliance, averts the risk of a potential Jan. 15 port strike. But it still needs to be approved by rank-and-file workers and port employers to take effect, and contract rejections have happened before in the supply chain world.

If a strike threat emerges again, companies can prepare by actively monitoring goods going through affected ports, balancing existing inventory levels and exploring West Coast alternatives, Brian Pacula, supply chain partner at West Monroe, told Supply Chain Dive in an email. Shippers also would also have the option of shifting to air freight if they're willing to swallow the added cost, he added.

Beyond planning contingencies for port disruptions, shippers should consider how Trump's proposed tariffs would impact ocean shipping lanes if they're implemented, according to Pacula. Some companies are frontloading imports and stockpiling inventory ahead of Trump’s return to office to minimize any new tariff impacts to their bottom lines.

"At a minimum, supply chain teams should gather and organize relevant data sets, explore alternative options, and create a shortlist of strategies to assess the impact on costs, lead times and suppliers," Pacula said.

Mexico demand could spur rail hurdles

Labor disputes and tariffs could also influence rail shippers' 2025 strategies. Companies are likely to pull forward some rail volume to reduce their exposure to broader logistics risks, according to Jay Cushing, senior bond analyst at bond research firm Gimme Credit.

"For the railroads, customers, and investors we think intermittent labor disruptions and tariff uncertainties should be viewed as a 'cost' of doing business — less of a non-recurring item," Cushing said.

CPKC is particularly exposed to potential Trump tariffs in North America, as its network connects the U.S., Canada and Mexico, Cushing noted. But CPKC is also poised to benefit from growth in cross-border freight activity between the U.S. and Mexico amid ongoing efforts to nearshore supply chains, he added.

Elevated U.S.-Mexico trade activity has strained available rail capacity and disrupted trade flows at times. The agriculture industry felt the pinch last year as major U.S. railroads paused grain shipments into Mexico. Outbound rail activity has been in a similar boat.

"There has been a significant increase in outbound demand from Mexico over the last 18 months," said Paul Brashier, ITS Logistics' VP of global supply chain. "Capacity has not kept up with the growing demand."

Brashier added that Mexico will need to bolster its infrastructure to meet heightened activity. Rail transportation is a key piece of Mexico's infrastructure improvement plans under President Claudia Sheinbaum, according to ProTrans, a transportation and supply chain management provider.

"Mexico’s infrastructure, while improving, faces many needs and challenges that contribute to current gaps and are driving new requirements for investment," per ProTrans.

De minimis uncertainty looms over air cargo

Regulatory uncertainty around low-cost imports and tariff risks are two potential headwinds in the air cargo space for 2025, according to Madhav Kurup, COO of air freight, sea freight and contract logistics at Hellmann Worldwide Logistics.

The de minimis exemption, which allows companies to avoid duties and taxes on U.S. imports below $800, has encountered increased scrutiny in recent years. U.S. Customs and Border Protection announced a plan to implement strengthened data collection requirements around those imports. The provision has been a key tool in direct-to-consumer supply chains, with e-commerce shipments that leverage de minimis helping to fuel the air cargo industry's resurgence.

"Any changes to this could affect the flow of e-commerce shipments, which would have an impact on the air cargo sector," Kurup said in an email. "While the industry has shown resilience in the face of geopolitical and economic changes, navigating these challenges will require agility and strategic planning."

Meanwhile, new tariffs could cause air cargo demand to climb just before they take effect, Judah Levine, Freightos' head of research, said in a November email. If importers aren’t able to receive all their needed inventory via ocean shipping prior to new tariff implementation, they may briefly ramp up their air cargo usage to secure goods and avoid higher customs costs, he explained.

But overall, shippers have had plenty of notice to push forward inventory before the next Trump administration, providing a short-term boost to ocean activity rather than air cargo, Levine said.

"So with the anticipation that the new Trump administration will implement tariff hikes at some point in 2025, many shippers have already started increasing their ocean volumes, as there will probably be at least several months until any change actually goes into effect," he said.

Trucking rates may be less shipper-friendly

For truckload shippers, 2025 is unlikely to provide the same soft rates as the past two years, according to Chris Caplice, DAT Freight and Analytics' chief scientist.

Since the spring of 2022, average long-haul dry van contract rates have plummeted 23% while spot rates have dropped by 36%, Caplice said in an email. But signals in the latter half of 2024 indicate pricing power might finally swing back in carriers' favor soon.

Due to the potential climb in costs such a swing could create, supply chain professionals need to clearly communicate expectations regarding trucking rates this year to higher-ups, according to Calpice.

"If your C-suite thinks your bid events in 2025 will keep generating year-over-year savings, introduce them to truckload pricing analysis for the decade or so before the pandemic," Caplice said. "Benchmarking rates against the broader market is a much better performance measure than year-over-year comps."

With trucking rates currently low, shippers are trying to secure prices at longer durations than they have historically pursued, said Jeremy Nolt, VP of brokerage at Zipline Logistics.

"Customers are hedging their bets, saying, 'I don't know if it's going to get any better than this, and the rates might not be this low for a while, so let's try to lock in our brokerage partners to rates essentially where they're at now,’" Nolt said in an interview.

Strike risks in parcel delivery operations

Further downstream, several parcel carriers are exposed to potential labor disruptions in 2025.

Teamsters-organized Amazon warehouse workers and contracted delivery drivers went on strike in December during the thick of the peak holiday shipping season. Although the strike is over, a union spokesperson told Supply Chain Dive in December its push to unionize Amazon workers hasn't ended.

Meanwhile, FedEx and its pilots union still haven't reached a new contract agreement since employees rejected a tentative deal in 2023. The union pushed to be released from supervised negotiations in 2024 in a bid to expedite talks, but a federal mediator rejected the request. A release is a necessary step before pilots can strike.

Perhaps the top threat to parcel shipping reliability in 2025, at least in North America, is another Canada Post strike if union contract negotiations sour.

Employees shut down the government-owned carrier for more than a month in 2024, with operations finally restarting on Dec. 17 after the Canada Industrial Relations Board ordered them back to work. The board’s action has given Canada Post time to reach a deal with the Canada Union of Postal Workers before May 22, the revised contract expiration date.

Canada Post customers could be at risk for more delays if an agreement isn’t reached by then, pushing shippers to diversify further with alternative carriers. However, other delivery providers often count on Canada Post to make deliveries to far-flung addresses, Alison Layfield, director of product development at ePost Global, said in an interview during the December strike.

"There's so many remote areas that only Canada Post is going to deliver to," Layfield said. "You have carriers such as UPS and Purolator, they have contracts with Canada Post for those specific areas. And so they don't have anyone else to hand those shipments over to, either.

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The U.S. de minimis exemption will end for products from China and Hong Kong on May 2, with other countries slated to follow, putting many direct-to-consumer supply chains in flux.

The decades-old exemption enables products of less than $800 to enter the U.S. without having to pay duties, helping companies ship parcels cross-border at a low cost. But after mounting scrutiny and subsequent actions from the Trump administration to cut the provision’s scope, experts say importers reliant on de minimis will need to adjust their order fulfillment and shipping processes for a new era.

Here are four key questions for supply chains using the exemption to consider as its future remains in jeopardy.

1. Are de minimis shipments impacted by recent tariff hikes on China?

Imports from China are currently subject to a combined 145% tariff rate after multiple increases, White House Press Secretary Karoline Leavitt said April 11. Without the de minimis exemption, these duties will also apply to sub-$800 products from the country.

However, de minimis-eligible products from China and Hong Kong entering the U.S. via the international postal system will encounter a different approach to duties.

Instead of being charged all applicable fees on May 2, postal imports will face a duty rate of either 120% or $100, with the choice being up to transportation carriers. The $100 fee will increase to $200 on June 1. Both the rate and flat charge were originally lower, but the Trump administration has since raised them amid its tariff escalation with China.

The carve-out for postal shipments comes after the U.S. Postal Service struggled with duty collection for postal volume when the exemption was first nixed for China. Postal systems do not have the same level of shipment information granularity as express air couriers, according to Marianne Rowden, CEO of E-Merchants Trade Council.

"It really was not designed for packages. It was designed for letters,” Rowden said in an interview.

Hong Kong's postal service announced April 16 it is unwilling to collect the tariffs and has suspended the acceptance of shipments traveling by non-air methods to the U.S. immediately. Air-bound postal items destined for the U.S. will stop being accepted April 27.

2. Will de minimis changes spur price increases?

The looming closure of the exemption could spur short-term price volatility for e-commerce goods from China.

Before the exemption ends, de minimis users may roll out aggressive sales to encourage more customer orders, said Aaron Rubin, CEO of warehouse management system provider ShipHero, in an April 3 webinar. This will allow brands to move as much of their de minimis volume from China into the U.S. as possible before tariffs are imposed on such shipments.

But prices may climb once May 2 arrives as e-commerce giants that use the exemption, like Shein and Temu, work to cover the additional costs, experts told Supply Chain Dive. Brands must therefore begin communicating the rationale for expected price hikes to already beleaguered consumers.

"I think consumers, unfortunately, will have to bite the bullet and pay for some of these costs, and ultimately brands need to do a good job of educating consumers of why these costs are in place," said Juan Pellerano-Rendon, chief marketing officer at e-commerce platform Swap, in an interview.

Brands should carefully consider how they will factor new tariffs into consumer prices, be it by showing them as standalone charges at checkout or lumping them into existing product costs, said Agustin Farias, trade and tariff strategy lead at global shipping and compliance company Passport, in an April 3 webinar.

3. How can importers adapt to de minimis changes?

While price hikes are a short-term play, e-commerce retailers could shift more of their order fulfillment operations into the U.S. to limit their long-term exposure to tariffs, experts said.

Many brands currently use facilities in Canada and Mexico to fulfill and ship orders to the U.S., but ongoing scrutiny over the de minimis exemption is leading them to explore domestic options, Flexport CEO Ryan Petersen said in an interview with CNN.

"All of those companies are scrambling as we speak to bring that fulfillment back to the U.S.," Petersen said.

Beyond seeking more U.S.-based fulfillment partners, de minimis-reliant businesses may also import more inventory in bulk or partner with capable customs brokers and lawyers to help limit tariff costs, experts have suggested previously.

Once China and Hong Kong products lose de minimis eligibility, importers may need to find ways to separate those orders from items made in other countries, Farias said. 

A potential strategy could be to group items from China and Hong Kong into a single manifest using traditional entry procedures, he said. While those items will still need to be subject to the tariffs, consolidating them into one entry will allow importers to lower their customs brokerage costs versus filing individual entries.

Shipping goods from Vietnam could also be a good near-term solution for shippers with existing production operations in the country. Exports of Vietnam-based products currently are able to reap "de minimis benefits for as long as those are in effect," according to e-commerce fulfillment provider Portless.

4. Can the de minimis exemption survive?

The U.S. will eliminate the trade tool for countries beyond China once capable duty collections systems are in place, according to an executive order on reciprocal tariffs, but no firm end date has been provided. Although Trump has instituted pauses on de minimis changes in the past, some experts are doubtful that the exemption will be around for much longer, at least in its current state.

ShipHero’s Rubin said while tariff rates may continue to change, the end of the exemption "is a foregone conclusion." He added that he expects it to be fully eliminated by the end of 2025.

However, the White House has left the door open for further modifications to its de minimis ban on China and Hong Kong. The Commerce Secretary will submit a report within 90 days on the impact of the changes "on American industries, consumers, and supply chains and making recommendations for further action as he deems necessary," per an April 2 executive order.

Alison Layfield, director of product development at ePost Global, said she expects the de minimis exemption will be around for the long term in some form, but perhaps at a lower threshold than $800 to limit the amount of imports that can leverage it.

"There's got to be a threshold that would work and would work across the board for all countries," Layfield said in an interview. "I mean, managing it by country right now, I think, is going to be very challenging.”

Fashion supply chains are under incredible duress in 2025 due to a litany of raw material procurement, labor and logistics management challenges.

Participating fashion leaders in the BoF-McKinsey State of Fashion Executive Survey — which polled 345 individuals between August and October 2024 — are pessimistic about the year ahead. According to the survey findings, 39% of fashion executives anticipate industry conditions to get worse, while 41% expect the market to remain the same.

“Consequently, 2025 is likely to be a time of reckoning for many brands,” according to McKinsey's State of Fashion 2025 report. “The upshot is that there is still opportunity to be found for brands that move nimbly and are quick to adapt to upheavals in a chaotic marketplace.”

Here are three trends fashion supply chains will need to navigate this year. 

Navigating potential tariffs

President Donald Trump’s second term presents risks to fashion supply chains, with tariffs a leading concern, said Sheng Lu, a professor and director of graduate studies at the University of Delaware’s department of fashion and apparel studies.

According to Lu, tariffs could raise sourcing costs and prompt inflationary pressure, ultimately impacting consumer purchasing power and the overall U.S. economy.

Lu said that the Consumer Price Index is already high, and continuing to hike tariffs on China-made goods and apparel would only be "adding fuel to the fire."

However, fashion retailers have been preparing for Trump’s tariffs. While discount retailers like TJX believe tariffs will provide opportunities, many other companies have devised plans to mitigate the impact of higher duties.

In November, Steve Madden told analysts it aims to slash its imports from China by up to 45%. Similarly, sporting goods retailer Academy Sports and Outdoors has reduced the percentage of goods it sources from China to best position itself for the next four years. 

Despite diversifying sourcing practices, procurement and production networks are expected to continue leaning on Asia, said Lu. 

Per McKinsey’s outlook, “fashion brands are likely to double down on diversifying their sourcing footprint in Asia and lay the foundations for nearshoring.” Compared to a 2019 baseline, U.S apparel and textile imports from China were down six percentage points in 2023. Meanwhile, in the last five years, the share of investments in nearshoring apparel manufacturing increased 20 percentage points for the U.S.

Pellet grill maker Traeger, for example, said in November it manufactures about 20% of its grills in Vietnam but aims to scale its production capacity in the country.

Stakeholders are interested in expanding sourcing in the U.S. and in the Western Hemisphere, especially with Free Trade Agreement partners, the United States Fashion Industry Association told Supply Chain Dive. However, most brands are going to “wait-and-see” based on the implementation of tariffs. 

De minimis exemption changes

Possible alterations to the de minimis threshold — which is critical to cross-border e-commerce supply chains — will also impact global fashion brands. As of May 2, the U.S. de minimis exemption is no longer applicable to goods from China and Hong Kong.

The threshold enables companies to avoid duties and taxes for imports less than $800. Ultra-fast fashion e-commerce marketplaces like Temu and Shein have benefited from the exemption. 

But with U.S. lawmakers looking to crack down on China-based imports, the recent change (and potential future alterations) to de minimis could send ripple effects down the supply chain, leading to higher prices and longer shipping times.

When removed, the price of some Shein and Temu products could rise by up to 20%, according to McKinsey.

“With Trump’s new tariffs looming, some argue that closing the de minimis ‘loophole’ has become even more urgent, as it creates more financial incentives to use the rule to bypass the tariff increase,” Lu said prior to the executive orders.

Improving labor transparency

Labor woes remain a persistent challenge for fashion supply chains, according to industry leaders.

The prevalence of exploitive labor conditions is one of the most complex and obscure issues plaguing the supply chain. As of 2021, roughly 50 million people are living in modern slavery, according to global data from human rights advocacy group Walk Free. Over 29 million people in Asia and the Pacific region are subject to modern slavery, per Walk Free, accounting for a larger total than all other regions for which the group has data combined. 

In 2024, a Skechers supplier was accused of using forced labor from the Xinjiang Uyghur Autonomous Region and was added to the Department of Homeland Security’s list of companies suspected of modern slavery. Shein, meanwhile, has consistently been scrutinized and probed about the potential use of forced labor in its cotton sourcing practices. 

Forced labor is just one “example in a trend that we expect will continue when it comes to supply chain transparency and a broadening expectation that companies engaging in global trade understand who and what is in their supply chains,” said the Retail Industry Leaders Association in an email.

RILA further noted that the Uyghur Forced Labor Prevention Act, or UFLPA, has continued to urge greater scrutiny and visibility over the use of forced labor in global supply chains. The association stated that it anticipates the “robust enforcement of the UFLPA and US forced labor laws to continue” in 2025.

A tight U.S. labor market also poses risks for fashion supply chains, impacting frontline labor availability in warehouses and distribution centers, RILA added.

Canada's parcel delivery sector is preparing for another potential strike at Canada Post, an event that could increase demand for other carriers and delay shipments across the country.

The government-owned carrier shut down in the thick of peak season in 2024 due to an employees' strike, disrupting the flow of holiday deliveries. The work stoppage lasted just over a month before the Canada Industrial Relations Board stepped in, restarting operations on Dec. 17.

Another disruption could happen soon if the government-owned carrier and the Canadian Union of Postal Workers don't reach a new long-term contract by May.

The current agreements between the two parties are set to expire on May 22. Canada Post earlier in April that a labor disruption is possible on or after that date, adding that it will work closely with customers to prepare them for any potential impacts.

"This is not the message we hoped to be sharing at this time," Canada Post said on April 3. "But we recognize how important it is to give you the information you need to make business decisions."

Here are three pressing questions shippers should consider in planning to mitigate any disruption.

Where do contract negotiations currently stand?

Progress in contract negotiations has appeared to be limited so far this year, with both sides reporting a breakdown in talks in early March. A key sticking point in discussions is how weekend delivery will be handled.

Canada Post said it aims to create a new part-time workforce to make weekend deliveries, along with measures to better match staffing levels with fluctuating volumes. It argues that the changes are needed to help its delivery business fare better against the competition.

The Canadian Union of Postal Workers is against such measures, saying that the carrier should instead use full-time employees to staff its operations wherever possible.

"This managerial flexibility comes entirely at the expense of the worker, who must bear the cost of shifting consumer demand with unstable work hours," the union said in a March analysis on weekend staffing. "Such instability puts workers under strain."

An industrial inquiry commission, established by the government to examine Canada Post issues, will offer a report and recommendations on how to potentially resolve the ongoing contract disputes to Canada's Minister of Labour by May 15. Although that's a week before the strike could occur, experts have expressed doubt that the two sides will secure a deal and avoid a strike prior to the deadline.

"The potential of [a] strike, for which would be the soonest would be May 22, is highly likely," said Alison Layfield, director of product development at ePost Global. "So many of us in the industry are already preparing for this."

How would a strike disrupt deliveries?

Canada Post is usually the top option for direct-to-consumer shippers because of its country-wide coverage and lack of residential surcharges, according to Imtiaz Kermali, VP of sales and marketing at eShipper. The carrier is also a key resource for other delivery providers, with many handing off packages to the carrier for parcels destined for rural addresses.

Without access to those capabilities, various Canada Post shippers scrambled to hand volume to alternative carriers during 2024’s peak season. Carriers imposed a mix of restrictions to help manage the influx of packages entering their networks, from service pauses to pickup and drop-off volume caps.

However, if a late May strike occurs, it would likely be less disruptive than the previous work stoppage, experts said. E-commerce sales and shipping volumes are soft at the moment amid tariff-driven uncertainty, resulting in healthy levels of capacity, according to Maggie Barnett, CEO of LVK Logistics, a fulfillment provider in Canada and the U.S.

"There's still going to be disruptions. But instead of seven- or eight-day delays, we would see three- to four-day delays on some of these items, with potentially longer times for pickups from the fulfillment centers," Barnett said.

Other parcel carriers in Canada told Supply Chain Dive in emailed statements their networks are prepared for any disruptions that could occur due to a strike.

FedEx said it has a plan in place to maintain reliable service for its customers even if demand increases. Purolator, another delivery provider, is incorporating lessons learned from the last Canada Post strike into its contingency plans, saying it will make sure service is strong for existing customers. Neither carrier provided additional details about what their contingency plans entail.

Although FedEx and Purolator said they are prepared, that doesn't mean they will open their doors to every shipper looking for a temporary solution during the strike, according to Kermali. Preparing a network for a volume surge is resource-intensive and can risk disgruntling major customers if service is compromised to make room for more packages, he added.

"Carriers want to avoid that, because then their premium customers that they treat are also affected by a small, quick surge of business that comes in and goes out," eShipper’s Kermali said. "So businesses need to prepare to ensure that they have a network readiness plan."

What should shippers do to prepare?

Shippers need to have alternatives ready if a strike occurs, be it through direct carrier arrangements or third-party services connecting them to other delivery options, experts said.

They should also consider how using other carriers could impact their shipping costs or delivery coverage. Shippers sending items through letter mail or to rural addresses might see especially high price increases during the transition, Barnett said.

Transparent customer communication about potential delivery disruptions — and options for them to avoid delays — is another important facet of contingency planning.

For example, if a company uses Canada Post for standard delivery and private carriers for expedited shipping, it could recommend the expedited option to ensure customers get their orders on time, ePost Global's Layfield said. She added that businesses could ask customers using a PO box to share an alternative address to avoid any strike disruptions.

"There doesn't necessarily have to be an interruption or delay in their package delivery if, say those customers with a PO box can provide a physical street address instead of that PO box," Layfield said.

The United States and China reached an agreement to decrease escalating tariff rates the two countries had placed upon each other in recent months, according to a White House briefing.

As part of the agreement, the U.S. will pause for 90 days the 34% tariff on imports from China that President Donald Trump first announced April 2. The U.S. will also lift additional duties it subsequently levied that raised the combined tariff burden on goods from China to at least 145%.

During the pause, the U.S. will instead charge a 10% tariff on imports from China while maintaining duties it installed prior to April 2, including those enacted under Section 301, Section 232 and the International Emergency Economic Powers Act.

In return, China will also pause a matching 34% tariff on U.S. goods for 90 days in favor of a 10% duty while rescinding all other levies it has enacted on the U.S. since April 2.

Both countries will implement the pause and other agreed-upon actions by May 14.

“I’m happy to report that we made substantial progress between the United States and China in the very important trade talks,” Treasury Secretary Scott Bessent said in a May 11 statement. 

“The move meets the expectation of producers and consumers in both countries, serves the interests of both sides and the common interests of the world,” a spokesperson for the China Ministry of Commerce said in a statement, per a translation by the South China Morning Post.

During the 90-day pause, the two countries will engage in further economic and trade discussions, per the White House. Bessent and U.S. Trade Representative Jamieson Greer, who both met with China officials in Switzerland, will lead the discussions for the United States.

“This was, as the Secretary pointed out, a very constructive two days,” Greer said in a statement May 11. “It’s important to understand how quickly we were able to come to agreement, which reflects that perhaps the differences were not so large as maybe thought.”

“We hope that the US side will build on the meeting, continue to work with China in the same direction, completely rectify its wrong practice of unilateral tariff hikes, keep strengthening mutually beneficial cooperation, maintain the sound, stable and sustainable development of China-US trade and economic relations, and jointly inject more certainty and stability into the world economy,” the spokesperson for the China Ministry of Commerce said, per a translation by the South China Morning Post.

It’s been five years since COVID-19 rattled markets, pressured supply chains and upended manufacturing.

In the early days of the pandemic, production and hours worked plummeted to levels not seen since World War II across manufacturing, with factories shutting down or operating with limited capacity.

As government restrictions loosened, output roared back in the second half of 2020, driven by the motor vehicle sector, according to U.S. labor data. The recovery gained momentum in the following years amid vaccine rollouts and rising economic demand.

While the days of social-distancing and mask mandates are a memory at this point, disruptions from the pandemic have taught manufacturers a variety of lessons about how to stay agile, and spurred operational changes along the way.

Companies have accelerated investments in supply chain resiliency to avoid or mitigate future operational disruptions. There’s been a greater push to implement artificial intelligence and automated tools for greater efficiency and decision-making. Manufacturers are also looking to reconfigure hard-to-fill jobs to make them more appealing to the next generation of workers.

Here’s a look back at how the pandemic changed manufacturing.

Stronger supplier relationships were formed

Supply shocks occurred at different points throughout the pandemic, depending on the manufacturing sector.

Chip McElroy, president and CEO of McElroy Manufacturing, an Oklahoma-based maker of machinery that welds together underground pipes for gas companies and water municipalities, said his business saw an “astronomical” collapse in product orders between mid-March and May of 2020. Meanwhile, ongoing orders with suppliers for raw materials and intermediate goods continued through the year and kept potential issues at bay.

“I really didn’t have any supply disruptions to speak of pretty much for the balance of 2020,” McElroy told Manufacturing Dive. “But [problems] really hit the fan as things started coming back to life and as we needed to reorder.”

Around this time inflation reared its head, surging from 2% to nearly 8% during 2021, and McElroy began seeing extended lead times driven in part by price hikes and delays on needed materials. He also said the company realized just how much it relied on components from factories in other countries, including items like seals, insulation foam and paint.

To mitigate challenges, McElroy said the business made an effort to strengthen its supplier relationships and continues to foster those dynamics.

“We’ve gotten much closer with our supplier partners,” he said. “The more open we have been with our suppliers, the more willing they are to engage us in a way that is probably far greater than what our dollar volume with them would suggest they need to do.”

Manufacturing jobs became more advanced

When the lockdowns took effect, the United States lost about 1.3 million manufacturing jobs as a result of layoffs and business closures, according to the Bureau of Labor Statistics.

While hiring rebounded in the following months, with jobs surpassing pre-pandemic levels at 12.8 million in summer 2022, the sector has recently dealt with labor constraints as companies struggle to recruit and retain workers.

“It’s harder to get folks who want to come in and do these jobs that are required to make manufacturing run,” said Tim Gaus, principal and smart manufacturing business leader at Deloitte, to Manufacturing Dive.

To fill the labor gap, more companies are leveraging automation and robotics, as well as investing in ways to upskill jobs and foster a working environment for the next generation, according to an April 2024 Deloitte report.

Gaus said manufacturing has become less desirable in part because today’s workforce is looking for a different work experience compared to past generations, including hybrid and tech-forward options.

To make the jobs more attractive, Gaus said employers are putting more technology into the hands of shop floor workers to create a more modern experience. According to the World Economic Forum’s 2023 Future of Jobs report, 40% of the current skill requirements in advanced manufacturing will evolve over the next five years, with an increased emphasis on leadership, digital and soft skills.

On the other hand, manufacturers are investing in software-defined manufacturing, such as predictive maintenance and other artificial intelligence tools, to drive the operation in a more agile way, said Kelsey Carvell, a principal in Deloitte’s supply chain and manufacturing operations practice.

“So potentially, you don’t need to work as many hours to get the output,” Carvell told Manufacturing Dive.

As companies conducted mass layoffs through the pandemic, a number of them fought to hold on to their workers. In previous downturns, McElroy said his company would conduct layoffs accordingly, but in 2020, he and other leaders suspected conditions would return quicker than expected and didn’t want to risk losing their employees.

“Because we held on to our people, we were able to respond to the market that came back more quickly and then the additional rehiring we needed to do wasn’t nearly as stressful,” McElroy said.

In total, McElroy laid off about 15 people, he said, which “was a pretty minor blip.” About 480 people work for the company, with the vast majority in North America.

Supply chain management came to the forefront

COVID-19 disruptions forced companies to rethink their supply chain strategies and accelerated adoption of technologies that gave them greater visibility across their networks.

Prior to 2020, Gaus said industrial manufacturers mostly operated with a lean, just-in-time approach, where they kept their inventories as low as possible. Pandemic-induced disruptions highlighted the cracks in that way of doing things.

“We saw a lot of companies shift to rethinking that mindset,” Gaus said, with many weighing whether they should have more redundancy or inventory stockpiles and a slightly different flow to their end-to-end supply chain.

McElroy, for example, made an effort to carry higher levels of inventory post-COVID and nearshore sourcing to limit potential issues.

“I think one of the lessons learned from just-in-time manufacturing is that you can go too far, and when you do and there’s a disruption, then you’re not able to satisfy your customer," he said.

Beyond stockpiling, manufacturers also advanced their supply chain technologies after the height of the pandemic. According to Deloitte’s 2022 manufacturing outlook report, which surveyed hundreds of U.S. executives and senior leaders, 53% of respondents said they expected to enhance data integration for more supply-and-demand visibility and planning.

While digitalization and automation accelerated across manufacturing, Alex Iuorio, SVP of supplier development at AvNet, a distributor of semiconductors and other electronic components, said to Manufacturing Dive that the biggest change he saw was an increased awareness from the public regarding supply chains.

“What laymen understand is impulse buying,” Iuorio said. “I have to stock, you know? I can no longer get what I want instantly, and so those things started to bubble to the forefront. We saw the same condition in our business.”

In addition to electronics distribution, AvNet offers supply chain solutions designed to reduce costs and improve management processes. During the pandemic, Iuorio said customers would come to them asking initially for parts, and the conversation would shift to “Hey, I want to talk about my supply chain solutions so that this never happens to me again.”

Dive Brief:

• Rocky Brands has “ample time” to transition production away from China thanks to its efforts to frontload inventory ahead of tariff hikes from the U.S. in April, COO and CFO Tom Robertson said on an April 29 earnings call.
• The footwear company will use its six-to-seven-month inventory buffer to shift manufacturing to its own facilities in the Dominican Republic and Puerto Rico, as well as to countries like Vietnam, India and Cambodia, Robertson said.
• Robertson said Rocky Brands plans to manufacture less than 20% of its volume in China by the end of the year, per the call. In 2024, about 50% of its footwear was manufactured in China at its own facility in Suzhou, or by third party suppliers, Robertson said in February.

Dive Insight:

Many shippers are looking to diversify their production footprints away from China to mitigate the impact of 145% tariffs on imports from the country.

For instance, drinkware company Yeti plans to shift 80% of its production out of the country by the end of the year. Similarly, toy and game company Hasbro aims to procure less than 40% of its goods from China by 2026.

Rocky Brands, which owns brands like The Original Muck Boot Co. and Georgia Boot, will ramp up production at its facility in the Dominican Republic, where it has been making boots for over 40 years, said Robertson. Despite a 10% tariff on goods from the Dominican Republic, the duty is “nothing” compared to those levied on China, he added.

“We're going to continue to leverage that asset for us this year, as well as our Puerto Rican facility, as it's going to be a much more meaningful asset given the dynamic that's going on in the world right now,” the CFO said.

Like Rocky Brands, many shippers have also been frontloading inventory, a popular tactic to navigate logistics hurdles, as a hedge against rising tariffs.

But in some cases, Rocky Brands has “methodically” paused or slowed certain shipments from China based on consumer and retailer needs, CEO Jason Brooks said on the April earnings call. The footwear company can also move product made in China around its global network, redirecting it away from the U.S. to other countries.

Rocky Brands will also soon implement price increases on several footwear styles as another lever against tariffs, Robertson said. The new prices are set to go into effect in June, regardless of any potential changes made to tariffs on imports from China in the next several weeks.

Despite being in a “very good inventory position” currently, according to Robertson, Rocky Brands is still wary of potential scarcity on U.S. shelves later in 2025 due to abnormal inventory flows, especially ahead of the fall and holiday seasons.

“So, it'll be interesting to see how that plays out,” Robertson said. “I do think that we are in a competitive advantage situation.

Honda Motor Co.’s decision to ramp up electrical vehicle production in the U.S. could influence the automaker’s overall North American production strategy as it seeks ways to avert import tariffs proposed by President-elect Donald Trump.

While executives with the automaker acknowledged Trump’s reelection could curtail U.S. EV tax credits, the company remains committed to retooling its Ohio manufacturing sites for EV production to support U.S. sales.

Shinji Aoyama, Honda EVP and representative executive officer, said during the company’s Q3 earnings call with analysts Nov. 6 that converting its Ohio sites for electrification was a long-term decision made to improve the automaker’s position in the North American EV marketplace.

But Honda also views its U.S. investments as flexible, allowing it to adapt to market conditions, Aoyama said.

“Therefore, the impact on the investment plans, the presidential election will have no impact on us,” he said.

However, Honda, like other automakers, also is pondering what to do about manufacturing operations in Mexico should Trump follow through on imposing a blanket 10% tariff on all products entering the U.S. as he discussed during the campaign.

Aoyama said Honda produces about 200,000 vehicles in Mexico annually, of which about 80% or 160,000 are sold in the U.S.

Vehicles scheduled to be built in Mexico for shipping into the U.S in 2025 would be subject to any new tariffs imposed by the Trump administration, Aoyama said, describing the situation as an area “requiring some actions because we cannot relocate production sites all of a sudden.”

He recognizes Honda and its competitors face a similar problem, but believes implementation of new policies would take time, creating opportunities for negotiations.

“I wouldn’t think that the tariff will be imposed soon,” Aoyama said. Though eventually it could lead to production shifts where manufactured goods were not subject to U.S. tariffs, he added.

For now, Honda, like many manufacturers with operations in Mexico hoping to capitalize on the nearshoring wave, awaits action from the incoming administration.

“We have to see what happens and what we can do,” Aoyama said.

When the COVID-19 pandemic prompted a rise in supply chain challenges in 2020, Hapag-Lloyd decided it needed better insight into its supplier base. At the time, a surge in freight and congestion at ports exposed vulnerabilities, such as a lack of data and information sharing, for the ocean carrier. 

To address the issues, Hapag-Lloyd went looking for a partner to help it leverage big data and artificial intelligence, leading it to deploy supply chain technology company Craft’s platform in 2021 to gain transparency through its supplier intelligence portal.

“It could be that our vessel is punctual, but we cannot rely on our truckers to be on time in a certain country,” Daniel Braune, head of procurement at Hapag-Lloyd, said in a Craft case study report. “The entire supply chain from customer to destination involves a number of different suppliers that all need to function and be extremely transparent. This is where supplier management plays a huge role.”

Gaining visibility through supplier profiles

As an ocean carrier, Hapag-Lloyd categorizes suppliers as other transport companies, whether those that provide in-land transport to ports or from ports to end-users, Ingmar Mester, director of supplier management and sustainability at the company, told Supply Chain Dive in an interview.

Hapag-Lloyd gathers information in three key areas from supplier profiles within Craft’s portal: facts and figures about each company, relevant news alerts and internal corporate collaboration. Craft collects supplier data from industry partners, proprietary machine learning, and a company’s operational data, according to the company's website.

The carrier credits the platform with helping it navigate the impact of last fall’s strike at East and Gulf Coast ports, where it works with several terminals. The three-day strike forced some ports to cease operations, leaving shippers with limited options until the work stoppage ended.

Understanding the dynamics of shipping cargo to the East Coast was important to mitigate the impact of the strike, Mester said. Shipping a container from Europe to New Jersey, for example, could take a week, and if a port was closed at the time the vessel arrived, the carrier would need to act immediately.

Craft’s platform sent alerts and developments about the strike to procurement team members and other departments in Hapag-Lloyd's network. Users can customize such alert settings with specific companies and types of risks, a Craft representative said in an email to Supply Chain Dive.

Using Craft data, Hapag-Lloyd can quickly adapt product schedules to ensure minimal negative impact on customers.

“I need to know if any other ports that are close by are open and can be accessed,” Mester said. “This kind of crisis management is kind of normal for Hapag-Lloyd, but we have a much better transparency now, because as the news come in, as the things develop, as the American media is covering, even announcement of strikes, we are already aware of it, and we can then act.”

Risks that can impact supplier agreements

Craft’s platform also aids Hapag-Lloyd in identifying supplier risks, including whether a supplier is in good financial standing to carry out contracted services, according to Mester.

“The biggest risk that we have is a failure of the supplier, so that the supplier, for whatever reason, cannot provide the service for which we have contracted them, and that a delivery that we have planned for any of our customers cannot be executed,” Mester said.

Geographical and geopolitical risks are also on Hapag-Lloyd’s radar. For example, low water levels in the Panama Canal in 2023 restricted the amount of cargo that could travel through the waterway. In addition, attacks on commercial vessels along the Red Sea have caused shipping lines to pause or remove vessels from transiting the route to the Suez Canal.

“It might not drive the supplier out of business, but it will definitely have serious consequences on our service to our customers, and we cannot control it. We are fully reliant on third parties, and this is what we need to control,” Mester said.

Regulatory risks are also important for Hapag-Lloyd to monitor, especially when suppliers are put on a sanctions list.

With Craft, the carrier can identify partners that could pose a specific type of risk. The company’s platform offers over 500 data points in risk categories such as cybersecurity, finance, geopolitics, and regulation and compliance. Clients can use the portal using a Google-like search function to find supplier profiles, the Craft representative said.

"It's so easy to use, it takes me five minutes to train my colleagues here that are new to the company, and they will find their way around the tool and make good use of it," Mester said.