Distribution services enable consumers to purchase and obtain goods and are the main touchpoints between the public and U.S. supply chains. While retailing, franchising, and international postal services are the traditional face of distribution services, e-commerce and express delivery services have become increasingly important to support increased consumer demand for convenience and speed. Behind the scenes, wholesaling, cold chain, and warehousing services enable the efficient management of inventory in U.S. supply chains, while direct selling and marketing services offer novel ways of distributing and marketing goods and services. Whether operating marketplaces online or in brick-and-mortar storefronts, employing millions of workers or just a few, or extending the reach of U.S. brands across the world or within local neighborhoods, distribution services make the American Dream possible.
U.S. competitiveness in distribution services has long created opportunities for U.S. companies to expand their global reach, with countries around the world seeking to draw U.S. investment in these sectors. At the same time, international trade and investment barriers can make it difficult for U.S. distribution service providers to establish affiliates abroad and provide services around the world. In recent years, and particularly since the Covid-19 pandemic, increased consumer demand and expectations for convenience and on-time delivery has increased the use of e-commerce, leading to shifts in consumption patterns that brick-and-mortar retailers have had to adapt to. This has drastically changed U.S. distribution networks, resulting in greater focus on last mile delivery and on inventory management and data collection. Moving forward, U.S. distribution services continue to evolve to meet the rapidly changing and diverse demands of global consumers to ensure an efficient and resilient supply chain for all.
SCS tracks issues impacting U.S. distribution services in both domestic and international markets. Below are three key issues our team is focused on to ensure that U.S. distribution services are resilient and efficient in a competitive global environment.
Labor Negotiations and Actions
The Covid-19 pandemic put immense strain on distribution services, in terms of additional demand and difficult working conditions. Over the past several years, workers in retail establishments, warehouses, and express delivery services have sought to improve their work conditions through labor actions such as unionization, collective bargaining, and strike actions. Labor actions and lockouts across the supply chain have steep impacts on distribution services. For example, the International Longshoreman’s Association strike in October 2024, which affected six of the top ten maritime ports in the United States, forced distribution services companies to adopt mitigation measures such as shifting imports to the West Coast, frontloading imports, and holding on to logistics assets like refrigerated containers and chassis for longer periods than usual, resulting in higher transportation and logistics costs, which were largely passed to consumers. In collaboration with the Department of Transportation and other interagency partners, SCS conducted outreach to distribution services companies to understand the impacts of these labor actions on their businesses and more broadly on the U.S. economy.
Supply Chain Disruptions
Distribution services are deeply impacted by disruptions in global supply chains, which generate congestion in the flow of goods and drive up logistics costs, which are often passed on to consumers. Since the Covid-19 pandemic, it has become especially important for firms and the U.S. government to proactively analyze risks to global supply chains that affect distribution services. Some recent examples of significant disruptions to U.S. distribution services include Hurricanes Helene and Milton in September and October 2024 and the closure of the Port of Baltimore in March 2024 following the collapse of the Francis Scott Key bridge. In such cases, SCS provides Department and other U.S. Government leadership with commercial insight into the impact of these supply chain disruptions, informed in large part via outreach to industry.
Logistics Infrastructure Planning
Logistics infrastructure, including transportation assets and distribution facilities, can be difficult to plan for given shifts in global trade policy and increased compliance burdens relating to environmental resilience and social impacts. Difficulties in obtaining permits for development can set back logistics infrastructure construction by months, raising costs and creating inefficiencies in domestic and international supply chains. Globally, many countries have rules and regulations barring foreign investment in land and infrastructure, creating barriers to entry for U.S. firms. SCS is working to understand how these domestic and international hurdles in logistics infrastructure development affect the efficiency of global supply chains.
Part 1: CBP Proposes New Rule to Strengthen Enforcement and Limit Duty Exemption for Low-Value Shipments. Customs and Border Protection (CBP) announced a Notice of Proposed Rulemaking aimed at tightening the de minimis duty exemption for certain low-value shipments entering the United States. The proposed changes would increase data collection requirements. The public have until March 17 to submit comments to CBP.
Review the Notice of Proposed Rulemaking for Part 1
Part 2: CBP Proposes New Rule to Strengthen Enforcement and Limit Duty Exemption for Low-Value Shipments. U.S. Customs and Border Protection (CBP) announced another Notice of Proposed Rulemaking aimed at tightening the de minimis duty exemption for certain low-value shipments entering the United States. The proposed changes would exclude goods subject to trade enforcement actions from being eligible. The public have until March 24 to submit comments to CBP.
Review the Notice of Proposed Rulemaking for Part 2
