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Canucked Up in British Columbia
You Reap What You POE
- As previously reported, Port of Entry (POE) changes are now allowed for US Food and Drug Administration (FDA) entries via the Cargo Release Update Transaction in the Automated Commercial Environment (ACE).
- The POE can be updated/corrected in ACE for FDA entries by using the Update Action code after the shipment has arrived and the customs entry has been released.
- Once a new submission for a POE change is received via entry, the FDA will send new reason codes to acknowledge the POE change and to confirm that the previous status and or decision messages are still valid.
- At this time, there won’t be changes to the FDA messages sent back after entry transmission.
- Please note that this enhancement is currently only available in the production environment as it continues to undergo FDA testing prior to implementation; however, it is expected to go live in ACE soon. An additional CSMS message will be sent to provide an update on the planned deployment date when it is known.
- Click here to read additional CBP guidance (CSMS # 56873760).
FDA Food Traceability FAQs
- The U.S. Food and Drug Administration (FDA) has posted a new frequently asked questions list about the Food Safety Modernization Act – Food Traceability Rule along with some additional resources for the trade community.
- Food subject to final rule requirements can be found here: FDA Food Traceability List.
- The new fact sheet addresses questions to help importers understand how the rule applies in certain scenarios can be found here: FAQs: FSMA Food Traceability Rule.
- Please note that the Food Traceability Rule is separate from FSVP.
- For additional information, please refer to the FSMA Final Rule on Requirements for Additional Traceability Records for Certain Foods.
- Any questions? Feel free to reach out to our compliance experts!
The High-Flying Five Eyes
- On June 28, 2023, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced that the US—along with Australia, Canada, New Zealand, and the United Kingdom (UK)—have agreed to band together to coordinate on export control enforcement.
- Under this new agreement, the Five Eyes Partners, as they’ve come to call themselves, have vowed to take action to prevent and deter evasion of export controls, including by restricting Russia’s access to technologies that fuel its unlawful invasion of Ukraine.
- Last month, delegates from each of the five countries met in Ottawa, Canada and jointly committed to facilitating the exchange of information related to export control violations, including trends in illicit procurement methods.
- “The United States and our Five Eyes partners stand united in our commitment to vigorous enforcement of the Russia and Belarus export restrictions,” said Matthew S. Axelrod, Assistant Secretary of Commerce for Export Enforcement.
- The initiative aims to strengthen the resilience of global supply chains and prevent unauthorized diversion of controlled items.
- Click here to view the official BIS press release.
Teamsters Repossess UPS?
- Before we offer a quick update on the gloomy negotiations between UPS and the Teamsters, let’s have a look at just how large UPS has become:
- UPS has more than half a million employees.
- UPS moves between 24 and 27 million packages per day.
- Last year, the company made $13.1 billion in revenues over $100 billion.
- 68% of UPS’ workforce belongs to the Teamsters Union.
- More than 60% of UPS’ business comes from domestic US deliveries.
- UPS handles more than twice as many packages a day as FedEx.
- Contract talks between UPS, the largest American transportation company, and the International Brotherhood of Teamsters (Teamsters) broke down early Wednesday morning, raising the likelihood of an August 1 strike.
- Both sides accused the other of walking away from the negotiating table after the Teamsters rejected UPS’s latest offer on wages and benefits.
- Neither UPS nor the Teamsters said what the sticking points were in the latest round of negotiations though at least several non-economic issues have been resolved.
- After the high cotton profits of 2021-2022, transportation providers from steamship lines to trucking firms to integrators like UPS have faced tough negotiations with the labor forces on whose backs all that cotton was harvested! Unfortunately for labor, the “Great Freight Recession” of 2023 has forced ownership to be more conservative on future wage hikes and increased benefits. We’ve seen this story, and globally, over and over again in the past year.
- If you’re looking for hope, the Teamsters working at less-than-truckload (LTL) carrier ABF Freight System approved a new five-year contract on Friday, the first deal with the union to cross the finish line this year.
- The new ABF-Teamsters contract includes a wage increase of $3.50 per hour effective July 1 and a $6.50 hourly raise over the life of the five-year deal. By contrast, the previous ABF contract included only a $2 per hour wage hike.
- If you’re looking to poke your ulcer, Yellow is appealing directly to President Joe Biden to intervene in its conflict with the Teamsters since Yellow needs to restructure to refinance $1.3 billion in long-term debt. Lawyers for Yellow claim the company will run out of cash this July without refinancing.
- The company and the 22,000 Teamsters at Yellow are at an impasse over a proposed restructuring that would blend the networks of regional carriers Holland and New Penn with national carrier YRC Freight, creating “One Yellow.”
China’s Deflation Flirtation
- Just as Americans hear the phrase “inflation fears” twice per minute at home, the world economy now watches China nervously as she inches closer and closer to price deflation.
- We have all heard that consumer deflation is bad, but why is that so? Essentially, as prices for goods and services decrease, companies make less money, cut wages and staffing, and the broader standard of living goes down the drain. Yes, deflation is very naughty indeed.
- After the slowest rate of growth in 30 years due to 2022’s Covid lockdowns, Chinese consumers lack broad economic confidence, and wage growth has been sluggish at best.
- In June, Chinese consumer inflation was exactly 0%. Producer/manufacturing prices? Down a jaw-dropping 5.4%!
- Let’s look at the major economic hurdles China faces today:
- Lethargic consumer spending.
- Decline in exports (down 17% from their peak).
- High local government debt.
- Youth unemployment above 20%.
- Real estate/housing crisis.
- Like many economic maladies, the symptoms of China’s illness intersect. For example, one reason consumers are so conservative is that they believe their houses are worth less today than yesterday. Similarly, local governments raise most of their money through land sales, and those sales have largely evaporated causing cash-strapped cities and provinces to borrow money at unprecedented levels.
- The housing crisis is so dire that the Chinese government has stepped in and extended loan terms for real estate developers by 12 months for certain types of borrowing. This was done primarily to ensure that homes under construction can be completed.
- There are rumors of future measures from the government to stimulate spending broadly and for home sales, in particular.
- The export picture seems to be getting worse by the week. Both the US and Europe have been “de-risking” their supply chains in part due to China’s stance (or lack of stance) on Russia. And, even without Putin pouting, the West views Taiwan and Chinese territorial aggression with moral and financial alarm.
- Just this week, China announced export controls for gallium and germanium, minerals essential in the production of semiconductors and crucial for manufacturing electric vehicles and fiber optic cable. Are earth metals next?
- Regulatory actions and constraints on Western (and Chinese) firms in the tech industry are directly connected to the low rates of employment for 20-something recent graduates in China.
- With so much concern about human rights, Taiwan, Russia, and intellectual property, maybe we should root for China to shrink a bit and face a bigger economic malaise?
- Be careful, cowboys and cowgirls! The International Monetary Fund is “counting on” China to cover 22.6% of global economic growth over the next five years! This is twice the expected value of American GDP growth over the same period.
- Like it or not, as China goes, so goes the global economy as it is structured today!
Canucked Up in British Columbia
- As we enter the 12th day of the ILWU Canada’s port strike, there is at least one labor minister claiming that progress is clear and present with a resolution possible by Friday. And the Canadian Mounties high-five with glee! And the moose all smile, ear-to-ear!
- For those of you scholars out there, moose is the only plural for moose. As much fun as meese or mooses might sound, it is just plain ol’ moose.
- This note of optimism stands in stark contrast to earlier acrimony from both sides. For their part, the elegantly named British Columbia Maritime Employers Association (BCMEA) said, “ILWU Canada is attempting to aggressively expand their scope and redefine regular maintenance work far beyond what is set out in the industry-wide agreement, which has been legally well established for decades. Changing this definition would result in immediate and significant impacts to terminal operations; the ILWU has left no further avenues to reach a deal.”
- I know you’ll be shocked, but the union didn’t much care for that. They replied that they hoped the BCMEA was “not using its vast resources and connections to vilify the union and scare the public with tales of economic disaster.” Hey, these guys may be blue-collar, but they write quite the nifty sentence!
- The 7,500 ILWU Canada workers handle import and export cargo estimated to be worth $377 million a day at the ports of Vancouver and Prince Rupert though the Canadian Chamber of Commerce believes the full economic toll is above $600 million per day.
- Not surprisingly, the ILWU in the US has pledged to unload exactly zero diverted containers from Canada. Diversions directly from Canada would be more obvious than those that occur en route across the Pacific.
- The value of Canadian exports to the US sits at $30-40 billion a month. That must be trillions of jugs of maple syrup! Okay, okay, the trade is dominated by fuel, vehicles, computers, and agricultural products.
- Let’s hope that we fall short of the two-week mark for this strike; after all, it is estimated that it requires four days for each strike day to restore order to rail operations, trucking systems, and shipper supply chains. As of July 13th, we are canucked for 48 days and counting!
Air Cargo’s Share So-So
- Imagine if the only really good news you could share is that you are finally marginally less in decline compared to last year, this June. Those of us few readers who are aging may well be able to relate! And, welcome to the world of air cargo, 2023!
- You guessed it, global air cargo tonnage was only down 4% in June year-over-year (YoY) compared to 6% down in May and 10% down in April. Woot! Get on your hands and knees, patriotic readers, and get some of those reserve fireworks hidden under the guest bed set up in the cul-de-sac. Hey, any form of traction in this air market is positive!
- Based on the ever-expanding capacity picture, average global air rates are down almost 40% YoY. What’s difficult to understand is that YoY comparisons are essentially relative; are you ready to be convinced? Well, good!
- Over the last two weeks, volumes have declined by 3% vs. the two weeks prior, which is also 3% lower than YoY comparisons. With capacity up 1% over the same two weeks, prices must be falling, right? Not so fast, cowboy.
- Not only is the relative condition of the 2023 air market in play, but there are pockets of high growth (and/or great market discipline), regionally, that are propping up the broader rate story. Pass the popcorn!
- The air export market from North America to the Asia Pacific is robust vs. 2022, up more than 10%. Similarly, the broader Central and South America export market is up about 5%. Despite market share volume depression, the Asia Pacific air cargo market has pulled freighters from the capacity picture robustly and adroitly.
- The overall picture for the 2023 international air cargo market is mostly cloudy with a chance of relative gain vs. what was a stalling market by late summer 2022. Capacity is the “speed trap” for accelerated rate growth, but that capacity is at least a great sign for the global economy.
