The tariff wake-up call: Why LSPs should take up orchestration
Connecting planning and execution is the next step for improving customer service and profitability
When tariffs were first announced in January 2025, the logistics industry felt the immediate shock waves. Deliveries stopped abruptly, shipments were hastily rerouted through alternative ports and countries, and entire trade lanes shifted overnight as importers scrambled to avoid the impending duties.
Logistics service providers—from freight forwarders, 3PLs, and 4PLs to warehousing operators and drayage companies—became the first line in the supply chain to absorb financial impact during those chaotic initial weeks. Purchase orders were cancelled, border crossings became increasingly complex with new documentation requirements, and carriers began implementing protective surcharges across their networks.
Since then, few sectors have remained unscathed. But many companies have deployed sophisticated solutions that enable them to plan proactively: creating multiple scenarios, optimizing outcomes across different tariff structures, and protecting their bottom lines through advanced analytics and integrated planning systems.
Now that the initial tariff shocks have subsided, LSPs face a difficult reality: it's time to reshape the ways they work or risk becoming the weakest—and least profitable—link in the supply chain.
Hard truth #1: Time is not in your favor
The velocity of change has been unprecedented. The huge uncertainties unleashed by the current trade war have made business planning almost impossible. Everyone has spent countless hours making manual updates to systems to account for the rapidly evolving tariff landscape. That’s time you can’t get back.
But here's the critical difference between LSPs and the rest of the supply chain: while manufacturers and retailers have invested in AI-driven systems that can automatically identify affected products, calculate new landed costs, and adjust sourcing strategies in real-time, most LSPs are still operating with manual processes. This technology gap means that while your customers are optimizing their supply chains with sophisticated tools, you're stuck playing catch-up with reactive, labor-intensive solutions.
The opportunity lies in orchestration platforms that can unite planning and execution across every leg of the supply chain—suppliers, manufacturers, warehousing, distribution, carriers, LSPs—working in isolation with separate systems, an orchestrated approach synchronizes efforts and insights across the entire operation. AI can help identify tariff implications instantly, automatically apply appropriate rates, and suggest optimal routing alternatives before problems cascade through the network.
“There used to be a maritime code of rule that people lived by that said any changes would took 60 days. That was just so people and companies could have time to make those changes. Today, it's much more volatile. ”
Hard truth #2: The costs of unpredictability are passed along at every stage
Beyond the planned tariff expenses, surprise charges are proliferating throughout the logistics ecosystem as each player builds protection against their own unpredictable costs. Consider the cascading effect: an ocean carrier uncertain about shifting fuel costs and port congestion adds a tariff-adjustment surcharge to each container. The freight forwarder receiving that container must decide whether to absorb the cost or pass it to the shipper. Meanwhile, the trucking company moving the container inland faces its own unpredictable costs from border delays and adds its own protective margin. The warehouse operator dealing with inventory timing disruptions implements storage surcharges. Each player in the chain is independently adding buffer costs to protect their margins.
The complexity multiplies when calculating tariff applications for goods crossing multiple borders. What happens when those components transit through multiple countries as trade negotiations fluctuate as rapidly as they have recently? The tariff calculation becomes a moving target as rates and deadlines shift, with companies planning for one cost on departure only to face different rates mid-route and yet another calculation upon arrival.
These cumulative costs—and the operational burden of tracking and managing them—are eroding margins across the entire multi-party network. According to one survey of logistics industry leaders, nearly 80% of shippers have reported cost increases from tariffs and duties, with almost 70% of shippers now hoping to cut shipping costs through contract renegotiation. LSPs are absorbing a disproportionate share of this impact because they lack the integrated systems to efficiently manage the complexity.
[Read more: Tariffs and the supply chain: Navigating the ripple effects of economic policy]
Hard truth #3: Volume swings have added to long-term uncertainty
The demand patterns following the tariff announcements have created a volatile operating environment that's particularly challenging for LSPs. Purchase order volumes changed dramatically in the months following the initial announcements, creating extreme swings in capacity utilization.
Some sectors experienced sudden demand spikes as businesses rushed to move inventory to non-tariffed locations or stockpile goods before duties took effect. Increased demand and shifting trade routes have notably led to congestion at ports and cross-border points in some countries while leaving others emptier than usual.
The challenge for LSPs is that these volume swings are temporary but unpredictable. Eventually, stockpiles will be depleted, tariff structures will stabilize, and businesses will settle into new operational patterns. But the timeline remains unclear, leaving LSPs in a difficult position. If they adjust their services, staffing levels, or contractual commitments to match current demand, they risk being poorly positioned when volumes normalize. Most are choosing to wait and hope for stability in the near future, but this passive approach means missing opportunities to strengthen their position during the transition.
Companies with sophisticated pricing models and dynamic forecasting capabilities will be better positioned to survive these turbulent times.
[Ready to act? Managing tariffs: Make your moves count]
One simple truth: Orchestration benefits everyone
LSPs today face information and planning gaps that prevent optimal execution. The solution lies in supply chain orchestration—the seamless connectivity between supply chains, LSPs, and multi-party networks that enables continuous optimization, minimizes total costs, and dramatically improves the customer experience. Unlike traditional point-to-point integrations, orchestration creates a unified ecosystem where information flows freely, decisions are made with complete visibility, and every participant benefits from collective intelligence.
“Orchestration brings planning and execution together. I can execute better if I have better plans, but I can have better plans if I have better information, especially when disruptions happen.”
For LSPs, orchestration means:
Real-time visibility and proactive decision-making: Instead of reacting to problems after they occur, orchestrated systems provide predictive insights that enable proactive adjustments. When tariff changes are announced, the system automatically calculates impacts across all active shipments, identifies optimal alternatives, and begins implementing changes before disruptions occur.
Automated compliance and cost optimization: Orchestration platforms can automatically apply the correct tariff rates, ensure proper documentation, and optimize routing decisions based on total landed costs rather than simple transportation expenses. This eliminates the manual work that's currently consuming so much time and resources.
Dynamic capacity and resource allocation: By connecting LSPs with real-time demand signals from across the supply chain, orchestration enables more efficient resource allocation. Instead of managing capacity in isolation, LSPs can dynamically adjust services based on predictive analytics that account for seasonal patterns, tariff impacts, and supply chain disruptions.
Enhanced customer value proposition: With supply chain orchestration, LSPs can offer their customers integrated solutions that extend beyond basic transportation and logistics. They become strategic partners providing supply chain intelligence, risk management, and optimization services that directly impact their customers' bottom lines.
The tariff disruptions of 2025 have created a defining moment for the logistics industry. LSPs that embrace orchestration will emerge stronger, more profitable, and better positioned to serve their customers in an increasingly complex global trade environment. The question isn't whether orchestration will reshape the logistics industry—it's whether your organization will lead the transformation or be left behind by it.
Learn how Kinaxis is helping LSPs tame complexity and deliver on high customer expectations with seamless supply chain orchestration.
