Some domestic manufacturers that rely on plywood imported from China may soon be hit with additional costs if they fail to alter their raw material procurement processes.
The U.S. Department of Commerce recently announced it would apply no duty charges to Chinese exporters that were investigated and found to maintain business practices free from "dumping" or unfair pricing tactics. The remaining exporters that are not cleared by federal inspectors will see an average duty of 22.14 percent applied to American purchases. This high percentage is usually reserved for companies that are not cooperative with Department of Commerce investigations, according to the American Alliance for Hardwood Plywood.
The high rate could have a significant impact on prices and supply as it takes effect. As such, manufacturers may look to implement new strategies to avoid paying the additional costs associated with the new duty, potentially causing them to seek new domestic suppliers that are able to provide more competitive pricing, which in turn may lead to stronger demand.
In order to meet the increasing orders, domestic plywood producers will need to ensure they are using the most efficient processes possible. Having ineffective production strategies may put them behind in regard to client demands. Distribution channels will be challenged as shipping volumes increase.
Getting domestic plywood to manufacturers and distributors in cost-effective and timely fashion is essential for U.S. producers to benefit from the pricing advantages created by high duties imposed on Chinese plywood sources. Employing route planning software for distribution fleets can help plywood producers control delivery costs while optimizing shipping efficiencies.