Featured Headlines:
From Deal Picket to Meal Ticket
After Playing Post Office, FedEx is Now Just “The Ex”
You Can't See It…It's Electric…Export Manifest Data!
CBP Issues Guidance on Recent Section 301 Tariff Increases
PGA Tees Off on Harmonized System Update 2420
CBP Maximizes Its De Minimis Shipment Warnings in ACE
Hub and Spoken For
- Before we bore you senseless characterizing the ambitions of the Gemini Cooperation’s hub n’ spoke model for 2025, let’s dust off our yellowed Greek mythology tome and our well-scuffed astronomy textbook. No, really, let’s!
- Twins, mortal Castor (played by Hapag Lloyd) and immortal Pollux (Maersk, duh), joined Jason and the Argonauts (on the vessel Argo) to retake the golden fleece (essentially a blanket that once covered a winged ram) in 1300 BC. Oh, and their Pops was Zeus!
- When Castor died, Pollux begged Pops to make them both immortal by plopping them into the Milky Way as the heads of the Gemini constellation and voila (!)… though the star formation was not recognized until the 2nd century by Ptolemy (who was also a twin!).
- As you may imagine, this rich otherworldly history puts a whale of pressure on Maersk and Hapag. The Gemini constellation, best seen in winter, has been used by generations of seafarers for navigational truth, and the hub-and-spoke debuts this winter with the promise of providing navigational truth/accurate transits 90% of the time!
- In somewhat oversimplified terms, the hub-and-spoke seeks twin goals: better transit performance + greatest port-level efficiencies. In an industry that has endured on-time performance erosion from roughly 80% to well below 50%, the opportunity is tremendous!
- But at what cost? By limiting the number of direct calls per “master” service string, the model essentially works against the diversification of sourcing we have witnessed in earnest since the first wave of Trump tariffs (and what about the second wave?).
- The pair of main competitors, Ocean Alliance and Premier Alliance, are increasing ports of call on master service strings. With weather, labor, geopolitical, and port congestion struggles to the left and the right, Gemini’s competition is banking on more direct services to mitigate overall transit woes.
- Gemini, on the other hand, must lean very heavily on those “spoke” services delivered by feeder networks, utilizing their own owned terminals, and the launch of digital twin technology. Sounds like we made that last part up, right? Also, Maersk and Hapag are fraternal twins at best; this cooperation must be tight, fundamental, and extreme!
- The shipper-side benefits of transit accuracy and improvements are many and powerful. Efficiency gains begin with drayage management, extend to warehouse space and labor planning, and continue to last-mile realities. One can easily argue that shippers’ customer service and performance metrics are very much the stakes of this high-risk high-reward Gemini service design strategy.
- Pollux, known to most of us as Maersk, has been outspoken in “his” criticism of US port productivity, and slow port performance is poison to the hub-spoke hubbub. Will smaller US ports be skipped in Gemini’s master plan to dominate the seas and the heavens?
- And do we shippers really think Gemini will be selling this premium performance service at bargain bin pricing? Well, does Matson do that?!
- So, park yourself under the stars and watch this battle for golden profits (as we shippers get fleeced?!); these twins may be telling another story for the ages!
From Deal Picket to Meal Ticket
- Once they started talking again, the ILA and USMX made quick hay, and we shippers’ finally shout “hooray!”
- Union jobs for every crane, a free and flowing supply chain.
- With expectations so very high, we only pray they rat-i-fy.
- Sixty-two percent ain’t half bad; Dagget is a deal-making lad.
- The best news of all, dear friends? Speculation talks do finally end!!
After Playing Post Office, FedEx is Now Just “The Ex”
- Having been jilted by the USPS after a 20-year air cargo contract, FedEx is licking their wounds and using the shake-up to refocus on “profitable ventures”, cutting 60% of its daytime domestic flying. That doesn’t sound bitter!
- FedEx’s new fleet approach divides operations into three lanes: Purple for premium international parcels, Orange for deferred high-value freight, and White for low-priority shipments hitching rides on commercial flights.
- The global airfreight market is worth $80 billion, and FedEx is ready to grab a bigger share, leveraging digital tools and a dedicated sales team to modernize outdated booking processes.
- Air cargo demand is booming, especially on Asia-to-America routes. FedEx is riding this wave with tighter networks and premium pricing, boosted by e-commerce growth.
- As Amazon markets its cargo space, FedEx is leaning on its advanced logistics and tracking systems to attract freight forwarders looking for reliability and seamless connections. After the big break-up, FedEx also shed a few pounds!
- With a streamlined fleet, international focus, and revamped processes, FedEx is poised to reshape the airfreight landscape—turning challenges into opportunities for growth.
You Can't See It…It's Electric…Export Manifest Data!
- This week, US Customs and Border Protection (CBP) issued a Notice of Proposed Rulemaking (NPRM) requiring export manifest data to be electronically submitted for cargo shipments departing the United States by rail.
- The proposed regulation would create an integrated pre-departure electronic export manifest within the Automated Commercial Environment (ACE), allowing officials to receive the advanced information critical for risk assessment from the source most likely to have the correct information.
- Additionally, it would identify the parties eligible to transmit information and describe the time frames prior to departure of the train as needed.
- Current regulations are insufficient to adequately capture cargo data for rail shipments leaving the United States.
- This rule would enable CBP to address important cargo security concerns, while also providing other valuable and efficient trade benefits.
- For more information, please refer to the Federal Register Notice scheduled to be published on January 13, 2025.
CBP Issues Guidance on Recent Section 301 Tariff Increases
- On December 31, CBP released additional guidance detailing the specific modifications made to existing Section 301 tariffs on certain Chinese products following its extensive four-year review.
- The changes covered in this announcement pertain to the tariff rate increases on five subheadings of the HTSUS related to certain tungsten products, wafers and polysilicon.
- The tariff increase was originally announced in December; however, the changes didn’t go into effect until January 1, 2025.
- To learn more about the changes, please refer to 2024-29462 (89 FR 101682).
PGA Tees Off on Harmonized System Update 2420
- In addition to the changes announced in Harmonized System Update (HSU) 2420, tariff flagging updates will be made to the following Partner Government Agencies (PGAs):
- USDA Animal and Plant Health Inspection Service (APHIS), Lacey Act
- The AL1 flag was removed from approximately 60 HTS codes.
- USDA Agricultural Marketing Service
- The AM7 flag was removed from approximately 15 HTS Codes.
- US Food and Drug Administration (FDA)
- The FD1 flag was added to HTS of 8518.30.2000.
- OTC hearing aids are considered medical devices and are therefore regulated by the FDA. The flag was added to this classification as OTC devices are properly classified in the HTS under heading 8518.
- US Fish and Wildlife Service (FWS)
- The FW3 flag was added to six HTS codes,
- The FW2 flag was added to three HTS codes,
- The FW1 flag was added to six HTS codes.
- The FW3 flag was changed to FW2 on 11 HTS codes; and
- The FW2 was changed to FW1 on one HTS code.
- USDA Animal and Plant Health Inspection Service (APHIS), Lacey Act
- For more details, please review CSMS # 63561519.
CBP Maximizes Its De Minimis Shipment Warnings in ACE
- US Customs and Border Protection (CBP) announced a new enhancement to the Automated Commercial Environment (ACE) that will provide users with an additional warning flag for de minimis shipments that may exceed the $800 per person, per day threshold.
- Importers of de minimis shipments should take the time to fully understand these changes, as it will directly impact the total volume and value of the cargo itself moving forward.
- The second release will be deployed to ACE on January 11, 2025.
- For additional information, please refer to the following links:
No More Shopping at COSCO
- While they aren’t planning invasions of Panama, Greenland, Denmark, and Canada, the US Pentagon is not resting on their laurels, intelligent readers!
- They recently added Cosco Shipping (COSCO) and two Chinese shipbuilders to its naughty list—no coal required—over ties to the PLA. Apparently, even shipping lines can’t steer clear of geopolitics these days.
- While the blacklist imposes no direct penalties, it discourages American firms from engaging with these companies and highlights rising tensions as Washington scrutinizes China’s dominance in the global shipping and shipbuilding industries.
- It is also believed that the US government (including the military) will no longer be permitted to ship cargo with COSCO; it will be interesting to learn if Evergreen and CMA bookings pass muster if they travel on COSCO boats as part of the Ocean Alliance.
- With Covid-19 exposing vulnerabilities in global supply chains, maritime transport and shipbuilding are increasingly viewed as critical arenas of geopolitical competition.
- China builds 359 container ships for every 1 built in the US. No wonder Washington’s nervous—our shipyards are starting to look like museum exhibits instead of production hubs.
- COSCO’s been here before, sanctioned in 2019 for hauling Iranian oil. Looks like they can’t catch a break—or maybe they just really love being on the blacklist.
- As China dominates 60% of the global shipbuilding order book, the US sees its maritime industry’s decline as a strategic vulnerability.
Dray in the Fray!
- Let’s start with a history primer. Why do we call port and rail trucking “drayage”? Because draft horses once pulled side-less carts called drays to move cargo short distances! Well, of course! Also “dragan” in Old English means to haul or transport… or draft as in draft horses, and “dragen” in Dutch means to carry.
- Hey, it makes about as much sense as the term “steamship line”!
- So, what’s happening in this somewhat obscure mode of trucking named in such an antique fashion? We thought you’d never ask!
- The segment continues to be dominated by owner-operators who pull about 80% of the country’s intermodal boxes. Interestingly, estimates indicate that over 1/3 of dray operators are 1st or 2nd generation immigrants to the US.
- Smaller hungry companies (or individuals) thrive because local hauls and unique terminal-level operations procedures require maximum flexibility and tailored services.
- Frankly speaking, dray truckers are a unique breed; they are willing to work irregular hours under constant pressure with highly variable congestion realities that create highly variable pay (and fuel costs) week to week. You BETTER be hungry and niche-minded!
- While it may lower investment barriers to entry, draymen are also HIGHLY dependent on carrier and shipper owned equipment and chassis (which are increasingly placed in disparate locations in and around port and rail centers).
- Guess what? Driver shortages are a clear and present danger and will be for as long as drayage is such a difficult game to play!
- Guess what what? As regulatory and environmental hurdles increase, the cost of entry in the drayage segment increases. When we look to the Socialist Republic of California, for example, new green initiatives are pushing out older trucks and the draymen and draywomen behind the wheel. No, we are not against environmentalism, touchy reader!
- As e-commerce matures to allow ocean supply chains, as globalization grows (fingers crossed), and as the American consumer continues to resemble The Little Engine that Could, demand for drayage should remain strong and grow steadily… especially after there is “peace in the valley” with the ILA and USMX (toes crossed).
- Speaking of the strike: draymen get ZERO pay during a strike; they are hampered greatly by port congestion (limits those turns!), and these noble truckers only benefit from anything that improves port productivity (even that naughty word, “automation”). It isn’t the largest surprise of 2025 that port workers and dray providers rarely hug with tears in their eyes!
