Shap Talk

CBP Encounters Some Bad Juju(bes)

As you may already be aware, President Biden signed the Uyghur Forced Labor Prevention Act (UFLPA) into law on December 23, 2021. UFLPA established a presumption that the importation of goods manufactured in the Xinjiang Uyghur Autonomous Region (XUAR) of the People’s Republic of China were produced with forced labor—which prohibits the goods from entering the US.
Since its enactment, UFLPA has continued to present unique enforcement challenges to US Customs and Border Protection (CBP) personnel due to increasingly complex supply chains.
Recently, CBP encountered an import of jujubes—a small pitted red date—that was being produced in the XUAR, but then shipped from other areas in an attempt to circumvent UFLPA and benefit financially.
While investigating the shipment, it was noted that the packaging contained a logo of the Xinjiang Production and Construction Corps, a paramilitary organization that has been sanctioned by the US and is also on the UFLPA Entity List, as well as other references to the XUAR.
Due to this evidence, the shipment was detained; and led to a domino effect at other ports looking to intercept and examine similar shipments of jujubes.
Enforcing the UFLPA is challenging—but CBP has hope that it will in turn create real change in the working conditions of millions of people throughout the world.
Visit our website to see learn How to Avoid Forced Labor Violations on Your Imports.

RSVP for the FSVP Guidance Update

The US Food and Drug Administration (FDA) recently posted an updated version of their guidance on the Foreign Supplier Verification Program (FSVP)
Click here to view the Guidance for Industry: Foreign Supplier Verification Programs for Importers of Food for Humans and Animals.
If you have any questions about your FDA imports, contact our compliance experts!

Looking for the Holy Rail

“On second thought, let’s not go to Chicago or Kansas City, they are silly places!” Despite markedly declining import volumes and even more dramatically decreasing intermodal rail activity, Chicago and Kansas City remain highly congested, with railroads forced to ground and stack loaded containers, while truckers play a giant game of hide and seek searching for marine chassis. As in Camelot—all those centuries ago—local shippers, debauched by money lust, put more cargo on their plates than their warehouses could hold!
“Your mother was a hamster, and your father smelled of elderberries!” This barb and many other insults have been flying as fast as finger pointing in Kansas City, where average container dwell times have extended beyond two weeks—which is even worse than the average dwell for all of 2022.
“Run away! Run away!!,” say potential intermodal rail investors. Prominent consulting firm, FTR Transportation Intelligence, has forecast a difficult financial year for railroad cargo operations in 2023. Trucker availability and falling fuel prices have made trucking relatively more competitive than rail compared to 2021 and early 2022. Interestingly, the shift to the Gulf and East Coast for international cargo also hurts rail volumes, since those ports typically connect to shorter line-haul routes, which are better served by trucks.
“’Tis but a flesh wound,” the railroads claim. After peaking at 33,360 loads per workday in April 2022, that metric has gradually shrunk each month since. However, when compared to 2019 levels, the rail cargo industry remains at least stable for now.

DOT's Safety Plea

Are we still allowed to use “Russian Dolls” as a metaphor for a riddle wrapped in a mystery inside an enigma? Wait, can we quote Churchill on Russia to describe Russian Dolls?! This opener is a Russian Doll in and of itself, intelligent readers!
In any case, the Bipartisan Infrastructure Law (BIL), which earmarks an additional $108 billion in spending to repair and improve America’s roads, bridges, tunnels, ports, and internet access (!) while creating economic growth, curbing climate crisis, supporting worker equality, and promoting transportation safety for trucks, planes, trains, automobiles, helicopters, boats, electric vehicles, automated vehicles, drones, motorcycles and scooters substantially through powerful investments in current technologies and disruptive future technologies that greatly enhance broader infrastructure designs may well be the largest Russian Doll of all time!
Let’s all pause a moment and celebrate the longest sentence in the history of transportation newsletters, loyal followers! Shapiro’s 83-word sentence is now king!
In its “Research, Development, and Technology Strategic Plan (RD&T),” the US Department of Transportation (DOT) seeks to provide a roadmap (pun intended) for the highly ambitious and complex BIL for 2023-2026, especially as it pertains to technology investments and highway safety.
Alarmingly, 43,000 Americans died on our highways in 2021; while 2022 final data is not yet available, the country was on pace to eclipse 44,000 deaths. 2021’s horrific total was 10.5% higher than 2020.
The DOT’s RD&T calls for powerful analysis of infrastructure designs and current technologies to better understand human factors, vehicle limitations, cybersecurity vulnerabilities and the data-driven systems inside vehicles, all with an eye on greatly improving safety on US roads and highways.
While we promise to never beat our sentence length record (while also apologizing profusely for today’s 83-pointer), we look forward to offering future updates on the DOT’s efforts to support and prioritize the thousands of “dolls’ in the BIL!

When the CHIPS Are Up

The Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (CHIPS) may well be the least elegantly named law to derive a relevant acronym in human history. Dude…even California Highway Patrol (CHiPs) was 427% smoother.
However, with a first wave of investment of $50 billion, the US Department of Commerce (DOC) program is a big bet on America’s future.
Interestingly, the US is already the third largest manufacturer of semi-conductors on the planet, but we consume, consume, and consume the little devils! In a recent study of chip demand, it was estimated that demand is up over 20% since 2019, with supply up about 3%. Since we are great at math, we know this ain’t good.
Essentially, countries like Japan, China, Taiwan, and South Korea—also giants on the manufacturing side—have been consuming their own production, leaving very few for import into the US.
Somewhat quietly, the need for semiconductors was rising even before the gluttonous demand spike during COVID. The advent of 5G, electric vehicles, and more sophisticated medical products all contributed to a “ground swell” of demand in 2019 and before.
Realities during COVID broadened the demand crisis (or is it a supply crisis?… it’s both!). Essentially, chips with older technology, recently launched technology, and cutting-edge technology all flew off the stock shelves at manufacturing facilities in countless industries. At the peak of the crisis, the average inventory for chips in US manufacturing locations was a negative number! Anybody who tried to buy a new car understands this.
As many of you gentle readers know, the semiconductor industry also experienced several “black swan” events during COVID. From factory fires to energy shortages to winter storms to COVID-19 outbreaks and lockdowns…the chip industry couldn’t catch a break! And this does not even calculate the harmful consequences of extraordinary cargo transits during the pandemic (yes, even airfreight).
Though covered less frequently in the press, the manufacturing equipment and tools of the trade associated with chip production also faced all of the same headwinds, and this essentially multiplied the supply chain woes for chip lovers. Salt and vinegar for me!
What we may not readily consider (or want to consider) is what happens to a country’s defense in such a crisis.
The CHIPS Act of 2022 boldly expresses triplet goals: 1) vastly increased protection of national security; 2) big job creation; and 3) broader economic potential for the US overall.
Early forecasts predict the addition of tens of thousands of permanent manufacturing jobs and over 100,000 construction jobs during CHIPS deployment.

Earthbound Misfits Misc Bits

Research of nearly 1,400 global ports by the Environmental Change Institute (ECI) indicates that over 40% are significantly vulnerable to tropical storms, flooding, and other maritime hazards associated with climate change. As one unnamed lower-level official put it, “time to nuke the polar caps on Mars and pack our bags, people!”
Shapiro, by far the most reputable and enlightened GLOBAL CHB/freight forwarder, has discovered that 100% of the world’s ports are more than significantly vulnerable to the politicization of science itself. Folks, that is some true wisdom indeed.
Back here on Earth, the ECI study named Houston, Texas and Shanghai, China as the two global ports facing the largest potential risk when factoring all possible causes. That said, on average, ports in western Europe also rank very high for risk with coastal and fluvial flooding, based on the location of rivers and the lack of flood protection overall.
The median annual risk for global ports? First, noble scholarly readers, this means the 700^th port on the list! $7.5 billion per year is the middle of the pack risk for ports in 2023!
Historically, we look to Asia-Europe business as a bellwether for future US trends, especially for rates and blank sailings. While Covid threw this out of whack, 2023 feels a whole lot more like 2019. During the first seven weeks of this year, the three main carrier alliances have blanked 53 sailings and counting!
Interestingly, the Asia-Europe trade has also witnessed several postponements for contract negotiations. The theory is that the ocean carriers have no incentive to lock in rates at what they pray is the trough. Does this mean US contracts will be signed in June?
Hey, wait! Weren’t all of us North Americans pushed to sign contracts in January 2021 and 2022 when the traditional contract season is in April? We just can’t, for the life of us, figure that one! We’ve contacted MIT for some economics assistance; please stay tuned!
Oh, by the way, “bellwether” originally meant the lead sheep of a flock, the one wearing a bell! As a newsletter that tried to spell it “bell weather,” we are deeply ashamed.
As new ships/capacity come online, the steamship industry is “cascading” (shifting, not washing!) larger vessels to secondary trade routes. This new deployment strategy comes on the heels of relocating larger vessels to the lucrative Atlantic routes.
The result is that smaller, less fuel-efficient vessels will either be put in action as upgrades in Asian feeder markets or will be quietly asked to leave the ocean and retire to the English countryside (or maybe Peru).
During the pandemic surge, charter rates for these smaller ships reached daily hire rates of over $100,000; today’s rate is just $20,000 per diem. If you say it in Latin, friends, it just sounds smarter!
The moral of the story is that the little engine could, but the little vessel might not.