Deconstructing the TPP: One size may not fit all in this trade bloc

Some cause for concern

While most 3PLs note the many potential benefits of the deal, an agreement of this size comes with countless variables that make it difficult to predict the TPP’s overall efficacy. For instance, Li expressed concern that the anticipated growth in traffic “may exceed the development of logistics infrastructure, and this will cause further pressure on the current, tight airfreight export capacity market.”

While he welcomes the opportunities offered by TPP, Dinh of Bee Logistics is also aware of potential risks, such as added global competition, human capital fluctuation, faster cost increases, more investment to ongoing services and higher costs to differentiate one company from another.

It also remains to be seen how TPP will affect foreign trade zone activities in the United States. To some extent, they may be rendered redundant, but they would still find a role as long as components sourced from non-TPP countries enter the assembly process, said Imbriani of Team Worldwide.

In light of growing interest in trade between Asia and Latin America, faster cross-border movement should benefit flows between countries like Japan and Chile. In the absence of direct air freight connections, U.S. airports could see a growing role as conduits for this kind of traffic. Team Worldwide is not making any plans in this direction, though. “It is too early to say how Asia-Latin America will play out with a U.S. transit role,” said Imbriani.

And what might happen if other nations want to join years down the road? An expansion of TPP by certain interested countries – the Philippines, Thailand and Indonesia come to mind – could change the landscape significantly.

For the most part, however, many forwarders and shippers are reluctant to pay much attention to TPP. “None of my clients have made plans or said anything about TPP,” reported Albert Saphir, president of logistics consulting firm ABS Consulting. “I think this is still way too far away.”

Small to mid-size forwarders, so far, have not been vocal on the initiative, either. Most public comments have come from the multinational integrated express carriers and shippers, who have all extolled TPP’s benefits to global trade.

Phau Hui Hoon, assistant vice president, cargo and logistics development division, at Singapore’s Changi Airport Group, expressed similar ambivalence. “We see the TPP as a positive step,” he said. “[But] given that the ratification of the TPP could take some time … it would be premature at this stage to make more specific forecasts.”

A.G.O.’s Goguen said he is not holding his breath on the TPP. “It is a very big undertaking to get all 12 nations to ratify it,” he added. “Especially with the uncertainty in the U.S. election.”

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