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Flatbed Demand Flatter Than Flat
Apropros the WCO
- Acting U.S. Customs and Border Protection (CBP) Commissioner Troy A. Miller formally announced that Ian Saunders, Deputy Assistant Secretary of the U.S. Department of Commerce, is the official U.S. candidate for the position of Secretary General of the World Customs Organization (WCO).
- Every five years, WCO members elect a Secretary General to lead the organization and provide strategic direction.
- The Secretary General is elected via secret ballot by a majority of the WCO Council—a body comprised of the heads of the 184 customs agencies that are members of the WCO.
- Saunders’ vast career spans 30 years of work on international customs and trade issues. Deputy Assistant Secretary Saunders remarked, “The WCO is important for global trade because it’s the venue where the conversations happen about the guidelines and the rules that allow customs to manage international trade effectively.”
- Click here to learn more about this announcement.
Eager to Enforce Uyghur
- CBP recently posted updated information about the upcoming Uyghur Forced Labor Prevention Act (UFLPA) Region Alert—which is a new ACE enhancement scheduled to go live on March 18, 2023.
- The UFLPA Region Alert will add three new validations to ACE in specific applications, which include the following:
- Postal code will be a required field.
- Users will receive an error message if the postal code provided is not a valid Chinese postal code.
- Users will receive a warning message when a XUAR region postal code is provided.
- The specific applications impacted will be:
- Cargo Release (SE) application—only for the Manufacturer (MF) party and only when the country is reported as The People’s Republic of China (CN) in the SE36 and/or SE56 record.
- Manufacturer Identification Code ($I) application—when creating or updating a Manufacturer Identification Code with a city located in The People’s Republic of China (CN).
- This enhancement will also provide the ability to update an existing MID with a postal code.
- Click here to read the full Trade User Information Notice from CBP, which includes links to helpful resources.
- For more information on the UFLPA, please contact our compliance experts!
Flatbed Demand Flatter Than Flat
- With new home starts down 40% from their peak in 2021 and US manufacturing relatively quiet, DAT Freight and Analytics reports that spot load flatbed postings from shippers are down an impressive (excruciating?) 73% year-over-year (YoY).
- The parents of flatbeds, already contending with other trucks calling them “flatbreads”, have assured the tender flatbeds that they will again be popular when spring thaws broadly increase construction activity.
- Somewhat quietly, the flatbed sector also picked up more than 40% capacity during the pandemic, and this forces us to dust off our much-loathed economics textbooks. Go on, gentle reader, just see if you can find it!
- As you were already guessing, with low demand and high supply, flatbed spot pricing is down more than 20% from 2022’s peak summer levels. Contract rates have also slid nearly 10% during the same period.
- The average national rate per mile for flatbeds sits at about $2.75 per mile with further rate erosion likely in early 2023.
Beyond the Rail
- While we avoided a nationwide rail strike last year, there was and is continued grumbling about days off and quality of life issues. Encouragingly, US railroads are piloting new programs to reduce the number of on-call jobs. Additionally, they are examining pathways to reduce furloughs for front-line workers during economic downturns.
- For example, Union Pacific (UP) is re-working job responsibilities, starting in Kansas, to ensure defined schedules for many workers. For many of us, this sounds absurd, but the great majority of rail positions are on call. This is because of all the babies being born on America’s rails today. No, it isn’t, and that was preposterous!
- For their part, Norfolk Southern (NS) has designed a program to better cross-train workers for different jobs and locations. The aim is two-fold: workers are more valuable, and they are more easily deployed across the network (especially during a downturn).
- NS was also in the news for bragging up a storm, and if you know NS, this is ALL too common! In Austell, GA, just west of Atlanta, NS will be able to double their annual marine container throughput by year end by installing new cranes.
- Austell links the Savannah and Charleston ports to the broader US rail network, and NS expects capacity to eclipse 100,000 containers per year.
- With better use of local real estate, NS also expects to more effectively stack containers as needed with room to hold 2,400 containers at any one time. Shippers were more excited about the cranes, frankly. “Stacking?! We don’t need no stinking stacking?!,” said every single American shipper.
Give Peace a Chance?
- Maybe next year! Worldwide sales of US military weapons by the US government jumped by nearly 50% in 2022 when compared to 2021. Check, please! That bill surmounted $50 billion last year (including tips for the wait staff).
- Not to be outdone, private sector sales to foreign governments hit $153.7 billion, also about 50% higher than 2021.
- Phew, thank goodness there is no tension between the world’s two largest economies, China and the US. We’re glad THAT was all a bunch of hype!
- Prominent markets for US military goods? Indonesia, Taiwan, and broader SE Asia. Maybe China didn’t notice. Maybe?
- Interestingly, Saudi Arabia and the United Arab Emirates have their own table at the military arms restaurant run expertly by the US. Yemen is pissed!
- We don’t pretend to fully understand the State Department’s objectives in the global chess match, so please do not read any of this as criticism, patriotic reader. We just think it is fascinating and worthy of some “gossip”!
- Not included in the sales numbers is US military support for the Ukraine, which has now topped $27 billion, a total sure to rise in 2023.
- One last interesting stat: the US also earmarked $4.8 billion in foreign military financing grants and loans in 2022 to help allies buy more US-made “goodies.” For our part, we have contacted the White House and offered our top-notch export forwarding services!
Carriers Carrying On
- As ocean carriers scramble to pivot after twin market collapses, Asia to North America and Asia to Europe, cross-alliance collaboration is back in style. While this may confuse the heck out of Customs brokers and forwarders, it is mostly positive for shippers looking for reliable services and transits.
- Nearly 600,000 TEUs of capacity was withdrawn from Asia routes last year, let’s call that 10% of total capacity to North America and Europe. That’s a boatload of boats, gang!
- Interestingly, ocean carriers increased supply for India and the Middle East by over 300,000 TEUs with most of that coverage coming from vessels formerly working in Asia.
- The second most likely destination for redeployed vessels was the transatlantic with some 162,300 new slots in action. Many vessels bitterly complained about the bitter cold waters of the Atlantic, but, hey, at least they have jobs, right?
- ONE, the carrier most exposed to transpacific downturns as a percentage of total fleet capacity, has announced even more blank sailings and vessel detours in their efforts to remain profitable.
- ONE pointed to well-stocked inventories in North America and inflation-related consumption decline in Europe as the most powerful headwinds facing the Japanese carrier. Despite the gloom, doom, and grumbling, ONE posted a $2.77 billion profit for Q4 2022 and almost $15 billion for all of 2022.
- The trend line is the cause of ONE’s new nail-biting habit, however. Profits are down over 40% YoY over the last four months. Slip slidin’ away, we’d say.
- Say goodbye to SeaLead (and Sealand for that matter)! SeaLead, one of those pesky smaller carriers that entered the trade during Covid, has suspended its Far East-US West Coast service. Pundits indicate that their East Coast service is also in jeopardy. Smaller carriers with their smaller vessels did quite well when rates were sky high, but their operating costs are simply too high at today’s low rates. Only the carriers with massive vessels have the critical mass to lower per container unit costs.
- Say hello to Oceanus Line, a newborn carrier out of Florida! The proud parents announced that their child would link Florida with Mexico and Colombia out of Port Manatee using relatively small 1,600 TEU vessels.
Elon Maersk?
- Like the ambitious fellow at the helm of Twitter, Maersk is looking to take over the world! Step one is the consolidation of many famous brands. The shipping world will say goodbye to Hamburg Sud, Sealand, and LF Logistics. Thanks for the memories!
- With its many maritime and non-maritime acquisitions, Maersk has clearly been positioning itself aggressively as a one-stop shipping solution or “global integrator.”
- Traction for this profound ambition has been mixed, but it certainly helps explain the split with MSC from the Maersk side of the house.
- As we mentioned last week, MSC is clearly positioning itself to go it alone as a global independent. With 750,000 TEUs of new capacity arriving in the next two years, $9 billion already invested in the secondhand vessel market, and the launch of several standalone services yesterday and today, it is easy to see that MSC sits with four aces and a stack of chips in the carrier casino.
- When we witness Maersk consolidating brands, are we seeing them position themselves as a global independent as well? The Maersk order book today does not suggest that; the commercial posture of Maersk today certainly does. A conundrum, clever readers!
- Interestingly, Maersk was seen dining with CMA CGM quite late at night over a beautiful bottle of French red. Though witnesses are not certain, CMA appeared to be blushing!
- Two European beauties with recent spending sprees on terminals, 3PLs, and air cargo capabilities, check. Two providers that emphasize service above price…check! Two carriers with highly ambitious environmental goals, you guessed it, check!
- Speaking of environmental goals, Maersk also announced an investment in a Berlin-based start-up to mass produce green methanol. While her order book is not massive, Maersk does have 19 methanol-powered vessels on order and will need 6 million tons of green methanol per year to reach her ambitious 2030 fleet emissions target.
- We will watch this drama unfold with bated breath! Here we go again, we initially thought it was “baited breath,” but it turns out that “bated” means restrained.
- In the short and medium term, we expect more services and more capacity as MSC and Maersk prepare for their futures, either as monolithic independents or in new marriages.
