Allied Angle: Logistics: The Fiber of the Supply Chain

HAS EXPORTING BECOME TOO RISKY? With tariffs, trade wars, and EU procurement restrictions, the landscape for exporting remains uncertain. As offshoring slows and manufacturing returns domestically, questions about labor and automation loom large.

For Indiana exporters, inland shipping costs present significant challenges compared to competitors closer to ports. Since 2017, companies have seen dramatic reductions in export markets, resulting in a more cautious approach to re-entering global trade.

Logistics is more than moving goods; it’s the backbone of the supply chain, focusing on transportation and inventory management. Critical factors like warehouse capacity, labor availability, fuel costs, driver shortages, port delays, and tariffs can make or break success.

FROM BARCODES TO BIG DATA
Decades ago, order processing was the most time-consuming part of logistics. With the advent of barcodes, real-time inventory tracking, and global logistics platforms, companies like Amazon redefined the industry. Transportation is the costliest part of logistics with significant efficiency potential. Freight alone accounts for two-thirds of logistics costs and plays a critical role in customer service.

DO YOU MEASURE UP?
Measuring logistics performance is essential to establish a baseline for improvement. Clear goals reduce costs and boost customer satisfaction. Key areas for improvement include:

• Increasing average order value.
• Reducing travel times and consolidating shipments.
• Localizing procurement.
• Investing in warehouse and transportation management systems.
• Embracing automation where it makes sense.
• Outsourcing logistical services for efficiency.

THE FURNITURE INDUSTRY PERSPECTIVE
Mike Wagner, President of Jasper Group, has been navigating logistics challenges since 1876. The furniture industry is investing in re-shoring due to logistical uncertainties.

“Commercial and hospitality buyers are opting for more certainty of domestic manufacturing. Some of our hardwood suppliers have become so dependent on large container shipments to their Asian customers that many have diminished capabilities to deliver smaller, more frequent orders.”

Wagner adds, “In the coming years I suspect the automation in furniture manufacturing will sustain domestic production, and lumber supply chains will need to match the automation investments and realign their distribution strategies to serve a more diverse customer base.”

SHIFTING EXPORT TRENDS IN LUMBER
On the lumber side, Mike Powers of Maley and Wertz reports that their export business has declined by 90% compared to a decade ago. “We’ve replaced it with increased sales to domestic distributors and industrial markets,” says Powers. “We’ve always exported only what we’ve produced in excess of our domestic demand,” he said adding that it’s better for market stability anyway.”

Powers reflects on the impact of tariffs during President Trump’s first term: “Overnight it seemed that most exports came to a grinding halt. Then those players that were heavy in exporting had no choice but to dump all their production in the US, crashing domestic markets.”

OPTIMISM AMID CHANGE
Tom Oilar, President of Cole Hardwoods, offers a positive outlook: “Exports are approximately 20% of our volume but we have seen more inquiries from China after the election. We assume it was them trying to get in front of the potential tariff. As of today we are seeing the freight rates to China unchanged over the last couple months. It appears the longshoremen have reached an agreement, which is good news for all.”

Oilar also notes, “Sawmills are reporting more activity from Chinese buyers sourcing logs. AHEC reports that in 2024, log shipments to China surpassed lumber shipments. While tariffs will impact the industry, I don’t expect them to be as severe as in 2018. We remain optimistic as we move into 2025.”

“I really expected our customers to be nervous with Trump talking tariffs, but it has been just the opposite,” said Brett Franklin of Tri-State Timber. “Log volume has been too low to get enough (sawmill) sales, but new customers come in looking for logs. We keep raising our price and they keep buying. The last time Trump was in we lost a lot of export business, but so far we are not slowing down. Clear walnut seems to be hottest and white oak is still strong.”

THE POWER OF GOOD LOGISTICS
Effective logistics leaders connect teams across all levels. They must excel in both data analysis and understanding global trends.

Logistics has a profound impact on profitability. With the right investments in technology, automation, and strategy, logistics is one of the most controllable costs in any business.

THE POWER OF COLLABORATION IN LOGISTICS
Effective logistics isn’t just about internal efficiency—it’s about how industries work together to overcome challenges and drive collective success. Collaboration between manufacturers, exporters, and industry organizations is critical to navigating trade restrictions, optimizing supply chains, and meeting market demands.

By leveraging partnerships, sharing best practices, and investing in forward-thinking strategies like automation and re-shoring, the hardwood industry can create a more resilient and sustainable future. When companies work together to adapt to global trends and logistical hurdles, the entire sector benefits—strengthening market stability and ensuring long-term growth.

By RAY MOISTNER,
Executive Director Indiana Hardwood Lumbermens Association