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• On January 5^th, the Animal and Plant Health Inspection Service (APHIS) released a frequently asked question (FAQ) webpage to help importers navigate the Lacey Act Phase VII Implementation schedule.
• Phase VII will require Lacey Act Declarations for all Harmonized Tariff Schedule (HTS) codes that are not 100% composite materials—such as paperboard, paper, medium and high-density fiberboard (MDF and HDF).
• Officials are still determining the complete list of materials and products that will be affected by Phase VII; however, APHIS is expected to release this list sometime in 2023.
• The declarations will be required for the affected HTS codes six months after the final list is published in the Federal Register.
• Click here to see a list of current products that require a Lacey Act Declaration.
• For more information on the Lacey Act and/or APHIS, please contact our compliance experts!

• For those of you enjoying this week’s issue over your morning cup of coffee—or afternoon tea for our readers across the pond—you may want to take an extra sip before reading some of the not-so-inflating updates for 2023 civil monetary penalties (CMPs).
• The US Department of Commerce issued the Civil Monetary Penalty Adjustments for Inflation—which includes, but is not limited to, the following increases effective January 15, 2023:
  • The International Emergency Economic Powers Act (IEEPA) maximum increases from $330,947 to $356,579.
  • The Export Controls Act maximum increases from $328,121 to $353,534.
  • The maximum per violation increases from $15,256 to $16,438.
• If this has piqued your interest at all, then you might want to check out some of the other CMP adjustments announced for this year:
  • Click here to view the adjustments from the Office of Foreign Assets Control (OFAC), effective January 13, 2023.
  • Click here to view the adjustments from the US Department of State, effective January 11, 2023.

• After this prestigious newsletter called Kansas City and Chicago rail ramps “silly places” in our last issue, the two vital inland hubs have suffered a new calamity. Yes, that’s right, a bridge is out in New Mexico for the Union Pacific (UP), and all domestic and international traffic has halted to/from three rail hubs in Southern California to/from Kansas City and Chicago.
• When asked to comment, the Chicago ramp somewhat defensively said, “Rome wasn’t built in a day.” Bizarrely, the KC ramp said, “when in Rome, do as the Romans do” which doesn’t even make sense, frankly! Seems KC has their hearts and minds on those Chiefs!
• Before the bridge failure, the UP had already announced that on-time performance for intermodal trains in Q4 of 2022 was down to 73% after achieving 78% during Q4 2021 and 83% during Q4 2020. There is a train trend to mend, friends!
• While it is not part of the Bipartisan Infrastructure Law (BIL), a bipartisan bill that would provide temporary tax incentives for new truck drivers and expand access to truck parking and rest facilities was introduced in the US House of Representatives on Tuesday.
  • The Safer Highways and Increased Performance for Interstate Trucking (SHIP IT) bill is the second SHIP IT bill on Capitol Hill in two years and is part of the Ocean Shipping Reform Act of 2022 (OSRA22).
  • There will be a quiz later to confirm that our readers know which legislation is doing what and when and whether it overlaps with the BIL!
• The broad US economic outlook is improving as inflation slowly drops, but trucking companies and others involved in moving freight have a tough road ahead of them (pun certainly intended) in the first half of 2023. Freight volumes are beginning to face difficult year-over-year (YoY) comparisons—with the Cass Freight Shipments Index dropping 3.9% YoY in December; this follows a 0.4% decline in November.
• In keeping with our proverbial theme above, we want to remind shippers and carriers alike that “a journey of a thousand miles begins with a single step” and “necessity is the mother of invention.” We have seen the US trucking industry buckle down turning hard times, re-invent themselves, and prosper in even the toughest of circumstances!

• Imagine you are a truck driver worried about consumer demand, inflation, and the financial health of your employer. (Yes, it is okay if you also imagine yourself in a smokin’ hot tractor with radical decals and that cool ball cap upon your head!) Anyway, you might just look-up the biggest rainmakers in the business as you, dear trucker, consider your future.
• The top 10 companies by domestic revenue for 2022 in the US reveal the true dominance of e-commerce and the courier giants. Viewers, please be warned, the following data is not for children or the faint-of-heart:

• Well, this certainly helps us understand why UPS is in the top 35 companies in the Fortune 500, is actively traded on the Dow Jones Industrial, and forks over countless dollars on those darling brown outfits and frequent fashion updates!
• Scholarly readers, UPS’s gross income is 16% higher than the combined incomes of the next NINE domestic firms combined! Really?! Thank goodness they are better at courier business than any other transportation segment by 844% and counting, phew!
• Less-Than-Trailer Load (LTL) has long been admired as the domestic mode with the best returns. When looking at our Top 10 above, it is the “tale of two cities.” Old Dominion leads the Top 10 with a 19.7% income return for every dollar of revenue; Yellow, on the hand, had the least promising rate of return at 2%.
• Similarly, in the Full Trailer Load (FTL) segment, Knight-Swift put up over 16% returns, while XPO struggled to eclipse 2%. YOU, valiant reader, decide where to invest your hard-won dollars!
• At the end of the day, UPS and Fedex brought in 311% of the gross revenue hauled in (pun intended) by the remaining 8 firms in the Top 10 combined!
• Okay, hockey fans, here is your moment: Professional players score one point for each goal and each assist during a season. Wayne Gretzky won the annual points title by 70 points or more six times in his career when the largest margin of victory by any other player in human history was 31 (and was achieved exactly once). UPS is owned by Wayne Gretzky is what we’re saying, okay?? We mean this metaphorically, but still!

• Let’s start with a Shapiro tightrope walk along the woke path of possible cancellation! Please note a famously “incorrect” joke about dear old Europe:

In heaven: the mechanics are German, the chefs are French,
the police are British, the lovers are Italian,
and everything is organized by the Swiss.

In hell: the mechanics are French, the police are German,
the chefs are British, the lovers are Swiss,
and everything is organized by the Italians.

• Ahhh, nothing quite like stereotypes to tickle the ribs and upset the customers! Also, please keep in mind that 20 countries spend and collect euros, while 27 total nations are part of today’s European Union (EU). The silly joke above touches five countries only—and the British and Swiss aren’t even in the EU!
• So, how is the powerful EU doing to start 2023? Look no further than S+P Global’s purchasing managers index (PMI), which captures the confidence levels of private sector executives in the manufacturing and services sectors. A score above 50 indicates potential economic expansion, and a score below 50 forecasts contraction.
• Surprisingly, the most recent PMI for the EU not only rose for the third consecutive month, but it eclipsed 50 (though just barely). At 50.2, the composite PMI, combining results from services business leaders with insights from manufacturing brainiacs, could well signify a gentler landing from what can only be called 2022-2023’s silent recession.
• Bloomberg economists point to an easing of supply chain dysfunctions, slowing inflation, and a warmer-than-usual winter’s reduction on fuel dependency as the primary drivers of EU economic optimism. Many of those same economists also said many things that nobody on Earth can understand, not even their brilliant colleagues, but we digress!
• Unfortunately, the EU’s two largest economies, Germany and France, reported scores beneath 50, but the positive trend line overall matches the rest of the EU. Interestingly, it was French manufacturing and the German services sector that boosted their scores this January. Hmmmm, French “mechanics” and German “chefs” perhaps?!
• Unfortunately for the United Kingdom (UK), their PMI remains well below 50 at 47.8, and Bloomberg expects five straight quarters of contraction—a slide that began in Q3 2022.
• Not at all surprisingly, the Swiss PMI is well over 54! When asked for a quote, the Swiss said, “we have work to do and lots of things to organize, please leave us alone.”
• PMI scores for the US are expected in about two weeks; early predictions from the impossible-to-comprehend economist-speak call for a score beneath 50 and for Punxsutawney Phil, that famous groundhog, to see his shadow!

• In a joint press statement, Maersk and Mediterranean Shipping Company (MSC), the world’s two largest steamship lines, have confirmed widespread rumors, announcing they have mutually agreed to terminate the 2M alliance—one of the three major global groupings on the main east-west trades.
• While the move will not be official until January 2025, insiders expect the launch of independent standalone services in 2023 and into 2024. Insiders also claim that Maersk snores, and this is what ultimately led to the divorce. Friends of Maersk claim that MSC “has a lot of nerve” since MSC is notorious for backseat driving and re-telling stories.
• The early dominant speculation is that MSC will remain independent in the future since its aggressive vessel acquisition strategy puts over 5 million TEUs in their scope. Maersk, on the other hand, may well look to form a new alliance, though how that shakes out is anybody’s guess at this point.
• If you get a chance, give relatively tiny Zim Lines a call. Divorces like this are hard on the kids, gentle readers. All kidding aside, Zim will look to avoid being the last carrier standing when the music stops. Interesting times for the Israeli carrier, certainly.
• For the US market, we expect MSC to expand its already impressive footprint in niche markets like Baltimore, Houston, Boston, and South Florida.
• If global market share is the name of the game again, shippers could be sitting pretty on transpacific rates for a couple of years since the ocean carriers are sitting pretty on enormous “war chests” (above $300B) from the pandemic surge. An independent MSC could spell trouble for carrier pricing discipline in the short term.
• Industry pundits believe that both MSC and Maersk must be extremely aggressive during this spring’s contract season as they look to build commercial strength before the dissolution of the 2M. MSC will likely load both barrels and powerfully pursue BCO and NVO contracts. Maersk, which calls NVOs an “inconvenient truth”, will be out to gather more BCO business than their soon-to-be-former spouse. Let the battle begin!

• The return of passenger pot bellies frees up airplane belly space—and this is hard for the air cargo business to stomach. YoY global capacity is up 8% as our appetite for air travel steadily climbs to yesterday’s altitudes.
• When combined with a 20% decline in YoY chargeable weight, global airfreight rates have nose-dived by 25% compared to very early 2022.
• The news wasn’t all bad for airfreight; the first two weeks of 2023 witnessed an 18% increase in air cargo volumes when compared to the last two weeks of 2022.