Featured Headlines:
CBP Isotopic Testing Guidance in Jeopardy!
2025 Air Cargo Captain's Capacity Crunch
BIS Issues a “Don’t Let This Happen to You" List
Asian Coal: The Unofficial 2024 Stocking Stuffer?!
Baltimore Reaches New Heights with Double-Stack Rail Service
An LTL Carrier Consolidation Sensation is Sweeping the Nation
CBP Isotopic Testing Guidance in Jeopardy!
- (In our finest Alex Trebek impersonation): What has always been a critical element of importers’ due diligence efforts? Answer: What is supply chain traceability?
- US Customs and Border Protection’s (CBP) Isotopic Testing Guidance outlines procedures for conducting isotopic analysis on certain goods to aid in the verification of their country of origin.
- Isotopic testing involves analyzing the stable isotopes of elements–such as carbon, nitrogen, or oxygen–to determine the geographical origin of goods. More simply put, it helps prevent trade fraud, including the misrepresentation of the origin of goods to circumvent tariffs or other regulations to ensure products meet US import requirements.
- When can CBP request isotopic testing? Answer: What are cases in which there is suspicion that a good’s particular country of origin has been misrepresented; especially when the origin is not easily verified through conventional methods?
- The results of the isotopic analysis are used to verify the origin of goods. If the isotopic signature matches the declared country of origin, then the goods will proceed through customs clearance. If not, CBP may escalate the investigation or deny entry altogether.
- What hot topic area has CBP especially concerned of late? Answer: What is Uyghur Forced Labor Prevention Act (UFLPA) traceability?
- Friendly reminder: the UFLPA establishes a rebuttable presumption that the importation of any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (XUAR) of the People’s Republic of China, or by entities on the UFLPA Entity List.
- Additional information regarding this announcement can be found on CBP’s Isotopic Testing Guidance webpage.
- We sincerely apologize to any readers disheartened by the fact that we used a Jeopardy ruse to unfairly demonstrate an international trade lesson… We hope you appreciated the connection more than you were disappointed. But hey, that’s showbiz baby!
2025 Air Cargo Captain's Capacity Crunch
- Air cargo capacity is set for tight margins in 2025 as passenger aircraft additions slow, delays in aircraft production persist, and the availability of freighters remains limited.
- With aircraft utilization at a five-year altitude high, there’s little room to squeeze out more capacity from the current fleet.
- Also waiting in the wings is e-commerce demand growth, particularly out of Asia, which is expected to grow by 20%, potentially redirecting capacity from Africa and Latin America.
- With delays to new widebody freighters from Airbus and Boeing, carriers are pushing older aircraft to their sky-high limits. However, with the fleet’s age fleeting by (like ours dear readers) we are on course for service disruption turbulence.
- While regulatory hurdles may slow e-commerce imports into the U.S., growth opportunities lie in underpenetrated markets, such as Southeast Asia and Latin America. For comparison, just a one-kilogram increase per person in e-commerce consumption in Southeast Asia would drive tremendous global growth in airfreight demand.
- For now, we will keep tabs on potential trade tariff shifts that cause a short-term surge in demand followed by a drop-off. However, as seen in previous tariff showdowns, production and exports may shift to other markets, such as Vietnam, which saw a 90% export boost during the 2018-2019 tariff wars.
- (Oh, and there is a teensy weensy ILA port strike a’ comin’… that “turbo props” air cargo demand in a jiffy! Buckle up!)
A Flatlined Freight Market
- This week’s container spot freight rates barely budged, despite carriers’ hopes for mid-November rate hikes. The Drewry World Container Index (WCI) showed a modest 2% increase on the Shanghai-Rotterdam leg to $4,043 per FEU, while Shanghai-Genoa remained steady at $4,400.
- Planned November rate increases fell flat, with Asia-North Europe rates well below the ambitious targets set by MSC ($5,500/40ft) and CMA CGM ($5,700/40ft). But carriers are taking another swing, with new hikes announced for December 1, 2024. MSC is aiming for $6,300 per FEU, while Hapag-Lloyd plans for $6,100 to North Europe and $6,400 for West Mediterranean ports.
- Early negotiations for 2025 contracts have begun, with Hapag-Lloyd reporting higher rates compared to 2024. However, most deals won’t be finalized until early next year. Spot rates remain significantly above this time last year, adding pressure for higher contract rates.
- On the transpacific front, spot rates showed minimal movement. The WCI’s Shanghai-Los Angeles route decreased by 2% week-over-week, settling at $4,700 per FEU, while the Shanghai-New York route remained unchanged at $5,222.
- A notable increase occurred in the intra-Asia trade. Drewry’s recently launched fortnightly intra-Asia spot rate index, encompassing 18 routes, recorded a 45% rise over the past two weeks, averaging $829 per FEU. This surge is attributed to the pre-Christmas cargo rush, tight space availability, the traditional shipping peak season, and blank sailings.
BIS Issues a “Don’t Let This Happen to You" List
- Warning: The following includes information from actual investigations performed by the Bureau of Industry and Security’s (BIS) Office of Export Control and Antiboycott Violations. Viewer discretion is advised; no one wants to see their company name appear in this publication!
- The updated report includes case studies from the following countries and/or areas:
- China
- Russia
- Iran
- Rest of the World
- Antiboycott Violations
- It also includes new enforcement cases involving the first Disruptive Technology Strike Force case to result in a stand-alone administrative penalty.
- Exporters are encouraged to review the publication, which provides useful, albeit colorful scenarios illustrating the exact type of conduct that gets companies, universities and even individuals into trouble.
- Pro tip: We highly recommend reviewing pages 6-26 for some incredibly compelling export compliance information and descriptions of the Office of Export Enforcement Mission and Organization…but we won’t spoil anything for you here!
- If you are interested in reading the entire publication, click here.
- You can also find more information about the other important work that Export Enforcement is doing to keep our country’s most sensitive items out of the world’s most dangerous hands here.
Splitting Checks & Balances
- The good ole folks over at CBP recently issued a reminder for importers that cargo must be declared in the Automated Commercial Environment (ACE) manifest as a split in order to be eligible for split entry processing.
- Let us say it one more time for the people in the back: Cargo moving on the same bill that is NOT DECLARED in ACE as a split is NOT ELIGIBLE for split shipment processing.
- Users can submit a cargo manifest entry release query to determine if a carrier’s bill was split.
- Entries that have non declared split bills of lading from more than one importing conveyance will be rejected beginning December 1, 2024.
- For more details about this upcoming change, please refer to CSMS #63008383.
Asian Coal: The Unofficial 2024 Stocking Stuffer?!
- In October, China discharged 34.25 million tons of steam coal, marking a 15.8% jump from September and a massive 33.5% year-over-year (YoY) increase. According to some reports, this is the highest monthly total since AIS data collection began in 2013.
- Indonesia and the Philippines are lighting up (literally) with coal. Both nations now outpace China and Poland in coal dependency, with the Philippines crowned the most coal-reliant in Southeast Asia as of 2023. Indonesia, meanwhile, continues to soar past benchmarks as coal dominates its energy mix.
- Between April and September, India imported 140.6 million tons of coal—a 7.8% increase over the previous year. With electricity demand surging, coal isn’t going anywhere soon in this region.
- Energy experts have noted that Asian economies like China and India aren’t ready to break up with coal anytime soon. As CTM CEO John Michael Radziwill put it, coal is simply cheaper than gas.
- Advanced economies are saying “no thanks” to coal, with shipments falling 6% YoY. Europe’s pullback is especially striking, and BIMCO predicts coal shipments to developed nations will hit a 15-year low in 2024.
- With Asia’s coal demand on the rise and the West going green, the global coal trade is more polarized than ever. Either way, one thing is clear…there will be plenty of coal to fill all the stockings needed this holiday season!
Baltimore Reaches New Heights with Double-Stack Rail Service
- News out of Baltimore has flip-flopped more than a double stack of pancakes in 2024; but we are happy to report that Baltimore is finally able to have its tall stack and boast about it too after being crowned King (or Queen) of the Federal Hill for shortest rail mileage to Chicago among major East Coast ports.
- CSX Transportation has officially launched its double-stacked intermodal rail service from the Port of Baltimore, marking a significant boost to the port’s efficiency and capacity (and overall morale!).
- The milestone follows the first phase of the $466 million Howard Street Tunnel Project, which includes clearance improvements on 22 rail bridges and tunnels between Baltimore and Philadelphia.
- Once the Howard Street Tunnel Project is fully completed in 2026, the port’s annual container handling capacity is expected to increase by 160,000 containers. This aligns with ongoing densification at Seagirt Marine Terminal, which is scaling up from 800,000 TEUs to 1.2 million TEUs annually.
- Future plans include double-stacking from Baltimore’s proposed Sparrows Point Container Terminal, setting the stage for Baltimore to become a major intermodal gateway for Midwest markets. Cheers to Baltimore, Hon!
An LTL Carrier Consolidation Sensation is Sweeping the Nation
- While the big players like TFI International and Knight-Swift have a close eye on acquisitions, small less-than-truckload (LTL) carriers are reshaping the market through strategic deals. The recent surge in bottom-up consolidation is giving shippers new options in a landscape that has been in flux since Yellow’s collapse in 2023.
- Smaller LTL carriers are climbing the ranks through acquisitions. Terminals, talent, and technology are driving these acquisitions. They are combining resources to compete with larger players venturing into regional markets.
- However, this strategy isn’t necessarily cheaper, as some carriers are targeting customers seeking high-quality service, refusing to operate as “commoditized carriers.” Their strategy is about building density and targeting markets where they can thrive.
- With the top 40 LTL carriers commanding nearly 92% of the market’s $56.6 billion revenue, smaller carriers warn that fewer options could lead to rising costs for shippers. As one put it, “When the big carriers are the last ones standing, you will pay whatever they want.”
