Featured Headlines:
CBP Releases UFLPA Operational Guidance
CAFC Clamps Down on 232 Tariff Challenge
Trucking Hodge and Railroad Podge
Milk and Meat Together at Last
Pesty New EPA Form
- Earlier this week, the Environmental Protection Agency (EPA) approved a new Form 3540-1 Notice of Arrival (NOA) for use effective immediately.
- The purpose of the new form is to provide clarification for some of the data elements and further instructions; there are no additional data elements included.
- The old form will expire on June 17, 2022; however, electronic filing of the NOA form remains unaffected.
- Click here to read CSMS #52176791.
CBP Releases UFLPA Operational Guidance
- On June 13th, US Customs and Border Protection (CBP) released guidance to assist the trade community with importing from the Uyghur region of China under the Uyghur Forced Labor Prevention Act (UFLPA); the UFLPA Operational Guidance for Importers applies to goods imported on or after June 21, 2022 (not entered).
- While a Withhold Release Order (WRO) gives importers three months (90 days) to get information to CBP, UFLPA gives only 30 days.
- According to the guidance, if a shipment was previously reviewed and determined to be admissible by CBP, the UFLPA will speed up the release of identical future shipments.
- The biggest takeaway for importers to note is the importance of tracing your supply chain; failure to do so may result in shipment seizure by CBP.
- Want more information? Interested parties should consider attending CBP’s Forced Labor Webinar.
CAFC Clamps Down on 232 Tariff Challenge
- The Court of Appeals for the Federal Circuit (CAFC) has dismissed a challenge to the Section 232 tariffs placed on steel imports by the Trump Administration.
- A three-judge panel reviewed the claim alleging that the Commerce Secretary’s report violated the law by failing to outline any threat to the domestic industry; however, the CAFC ruled that there was no substantial evidence to support the challenge.
- The Court also said that the statute grants the president the discretion to set the nature and duration of the tariffs.
- In its opinion, the CAFC affirmed the CIT’s decision; and additional duties for steel and aluminum as outlined in Section 232 will continue uninterrupted.
Trucking Hodge and Railroad Podge
- Dual-port transactions—which occurs when dray truckers bring in one container and take out another—accounted for just 20% of Los Angeles/Long Beach port moves at the end of 2020. At that time, the port authorities identified dual transactions as the best means for reducing congestion and designed an incentive program for local terminals. This week, the Harbor Trucking Association (HTA) announced that dual transactions had eclipsed 49% of all transactions.
- Just as US importers get relief on port-to-port ocean pricing, the situation at US rail ramps has greatly worsened; congestion in Chicago and Dallas is acute with dwell times up as much as 300%. For this reason, most IPI destinations for international intermodal are not enjoying the rate drops seen on coastal business.
- Overflow yards for loaded and grounded containers are becoming the norm for intermodal rail. Columbus and Toronto have joined the list of ramps being forced to store boxes without appointments off-site.
- Booking lead times for drayage in New York and Houston are below two weeks for the first time in 14 months; however, lead times for Savannah, Charleston, Vancouver, and Toronto have gone beyond two weeks again, unfortunately!
LATAM Program for Food Jam
- The Food and Agriculture Organization of the United Nations (FAO) estimates that global food import costs will increase from $51 billion in 2021 to $1.8 trillion in 2022. This is a stunning expected increase of 360%.
- Today, shipments from Latin America represent over 25% of global agricultural imports; and food products are 75% of the region’s exports by volume.
- On June 14th, Brazil and 15 other Latin American countries announced their intention to advocate for agricultural trade reform at the World Trade Organization (WTO). The push from Latin American countries comes amidst a wave of food scarcity protectionism from India, Malaysia, and Indonesia, among others.
- With agriculture so vitally critical to Latin American economic success, the group of nations is committed to finding solutions to the worldwide food insecurity crisis while also preventing a reversal of decades of food trade liberalization.
- Recent data indicates that US imports from Latin America (all commodities) are up 150% by value since 2020. The increase is partly explained by Trump tariffs on Chinese goods, but much of the growth has been agricultural and organic (pun intended!).
- Mexico made headlines by landing two huge manufacturing deals; John Deere will shift their tractor cab assembly from Iowa to Ramos Arizpe in 2024, and German-giant Siemens announced plans to build a $35 million electrical components factory in Nuevo Leon.
Milk and Meat Together at Last
- US dairy exports by value rose by more than 20% year-over-year in March and April, making them the two highest months on record.
- The total export value of milk and cheese-based products nearly eclipsed $5 billion in the last seven months, 22% higher than in the same period 12 months ago.
- Cheese was the star of the dairy export “team” with consecutive months above 40,000 metric tons for the first time in history.
- New cheddar capacity is supporting the historic growth with exports doubling in 2022; this includes a tangy 300% increase to Japan.
- Not to be outdone, American beef exports topped $1 billion in April, for the third time in 2022.
- An impressive 124,408 metric tons of beef crossed US borders and left US ports in April; this is the fifth highest month in history.
- Exports of lamb were hardly sheepish either. US farmers increased shipments of the other red meat 37% by volume and 90% by value.
Spotting the Spot Market
- No matter which index or pundit you follow, prices on the ocean import spot market from Asia are falling. When you factor in the lack of premium surcharges, average rates are down as much as 40% since March. Let’s look at the major factors likely to affect July-August pricing for ocean freight in the Transpacific:
- ILWU Negotiations with PMA. Since the Ever Given, the global supply chain and ocean carrier profits have been in the mainstream news. At the same time, wages for port workers are somewhat eye-popping for middle-class Americans. Can either side afford to be in the limelight as the “bad guy” in these negotiations? To date, all press releases and announcements have been mild mannered and have sought to reassure shippers and consumers that a deal will be struck. That said, it will certainly not happen before the current contract expires on July 1.
- Shanghai. Many feared that the return of Shanghai’s factories would immediately overwhelm a still fragile international supply chain. To date, production levels have been lower than expected, though it is hard to tell if this is residual labor dislocation or a shortage of new orders. It is likely a combination, but it seems clear that the lack of backlogs at other Chinese ports will allow carriers to absorb any extra Shanghai volumes without causing broad shipping chaos.
- Carrier Supply. Blank sailing levels have remained low in June, with less than 20% of total capacity removed. Though many do not realize this, overall industry capacity is considerably higher than demand (and has been for months). The main cause for persistently high rates is the dislocation of assets and broad supply chain inefficiencies (most obviously embodied by US port congestion).
- Battered Consumers. US consumers are setting all the wrong records with savings rates at a low historic ebb just as credit card debt flows and flows (and flows). American overall debt and credit card debt are at their highest levels in history. With inflation weakening each dollar and the Fed raising interest rates, where is the money for more spending coming from?
- Shipper Demand. Even if consumers are hurting, many shippers are still buying “just in case” merchandise after having been stung by late shipments when they attempted “just in time.” The re-stocking picture in the US has never been so cloudy.
- At the end of the day, we anticipate a further softening of the Asia-US ocean import market. West Coast labor unrest is the largest potential “wrench” in this prediction.
- For shippers locked into long-term high-cost deals, this summer may well be the time to go find some freight bargains (we haven’t said this in three years, y’all!).
