Featured Headlines:
Open Your EARs and Listen Here!
Government Fusion Over Entry Refusal
Do Your Duty for the Trade Community
Tractor-Trailer Trucker Succor
Open Your EARs and Listen Here!
- As part of its ongoing efforts to protect US national security and foreign policy interests, on October 7th, the Department of Commerce’s Bureau of Industry and Security (BIS) announced a series of targeted updates to its export controls to restrict the People’s Republic of China’s (PRC’s) ability to both purchase and produce advanced computing and semiconductor manufacturing items.
- The rule: (1) imposes restrictive export controls on certain advanced computing semiconductor chips, transactions for supercomputer end-uses, and transactions involving certain entities on the Entity List; and (2) imposes new controls on certain semiconductor manufacturing items and on transactions for certain integrated circuit (IC) end uses.
- Updates to the Export Administration Regulations (EAR) include, but are not limited to the following:
- Adds certain advanced and high-performance computing chips and computer commodities that contain such chips to the Commerce Control List (CCL);
- Adds new license requirements for items destined for a supercomputer or semiconductor development or production end use in the PRC;
- Expands the scope of EAR over certain foreign-produced advanced computing items and foreign produced items for supercomputer end uses;
- Expands the scope of foreign-produced items subject to license requirements to twenty-eight existing entities on the Entity List that are located in the PRC;
- Adds certain semiconductor manufacturing equipment and related items to the CCL;
- Restricts the ability of US persons to support the development, or production, of ICs at certain PRC-located semiconductor fabrication “facilities” without a license;
- Adds new license requirements to export items to develop or produce semiconductor manufacturing equipment and related items; and more!
- Click here to read the BIS press release, which includes the full list of EAR updates.
- Click here to view the official Federal Register Notice.
Government Fusion Over Entry Refusal
- On October 1st, US Customs and Border Protection (CBP) and the Food and Drug Administration (FDA) rolled out a streamlined approach for notifying both the importer and broker of refused entries to help maintain a clear and open line of communication between the agencies.
- Here’s how it works:
- Once an entry is refused, the FDA will issue a Notice of Refusal.
- This will trigger CBP to issue and send Form 4647—Demand for Redelivery—to importers via the new Automated Commercial Environment (ACE) forms. If the importer doesn’t have an ACE account, a copy will be mailed.
- FDA officials will also receive a copy of CF 4647 via email.
- Additionally, the customs broker will also receive a copy of CF4647 via email or via the ACE portal (if designated by the importer).
- For more information about this process, click here.
Do Your Duty for the Trade Community
- Earlier this week, the USTR announced in the Federal Register that they are seeking comments from the trade community regarding the overall utility and efficacy of Section 301 tariffs.
- Specifically, USTR officials are looking for information regarding the following:
- The effectiveness of the actions in eliminating the unreasonable and discriminatory actions, policies, and practices of the Government of China;
- The effectiveness of the actions in counteracting the Government of China’s actions policies, and practices;
- Alternative actions or modifications to existing actions to more effectively address these issues posed by the Government of China;
- Whether the actions resulted in higher additional duties on inputs used for additional manufacturing in the US rather than on downstream products or finished goods incorporating those inputs; and more!
- Comments can be submitted beginning November 15, 2022 until January 17, 2023 via the USTR Comment Portal.
- Click here to view the official Federal Register Notice.
- If you have any questions related to Section 301 tariffs, please contact [email protected].
Tractor-Trailer Trucker Succor
- After an impressive run of adding 78,000 jobs in five months, US for-hire trucking employment fell by 21,200 jobs in September.
- The US Bureau of Labor Statistics (BLS) estimates that between 1.6 – 2.1 million Americans make a living driving tractor-trailers. The occupation is expected to grow by 90,000 jobs—or 4%—over the next decade. Interestingly, it is also estimated that 101.3% of current truck drivers despise owners of Mini Coopers, VW Beetles, and anything by Fiat who follow too closely.
- The average wage for tractor-trailer drivers is $48,310—which is 11% lower than the average US wage. As you might expect, associations representing truckers and the truckers themselves are super-psyched about the 11% gap. (Maybe this is why so many of them express themselves with one particular finger raised in “salute” on our interstate highways?!)
- Today, only 9.5% of our essential trucking pros are female, though many insiders expect that number to rise considerably by 2031. Despite their small numbers, a recent study did reveal that female truckers are 179% tougher than white collar males (including this writer, dear readers!).
FTL’s Spotty Spots
- September typically marks the beginning of a solid season for FTL trucking— but FTL spot rates told a different story in 2022, as they declined for the first time in the month since 2019.
- The nationwide average truckload rate per mile landed at $2.86, a 3% slide from August and a 17% drop from September 2021. Not surprisingly, volume data for moves from major US ports indicated the most marked decline for these routes.
- Also not surprisingly, every single American with a driver’s license believes that data on a cooling trucking market is fake news based on the incredible number of trucks clogging our roads on the way to the grocery, to football practice, or, in the case of freight forwarders, to the caviar and champagne shops.
- So far, October data indicate that truckload spot rates may rebound nicely. The nationwide average climbed two cents in the first five days—and heavy volume lanes like Los Angeles to Chicago are up as much as 11 cents a mile this month already!
- It is always interesting (and a bit confounding) to watch the contract FTL market and its effects on spots as well. As shippers look to lock-in contracts at today’s lower rates, they are concentrating contract moves on their high-volume lanes, while using spot for their lower volume lanes. While this makes a tonnage of sense (get it…?), it makes our jobs as procrastinating prognosticators quite difficult… poor us, gang!
Poland Gets the Last Laugh
- Since all writers and editors of this famous newsletter are 100% Polish, we are allowed to tell a Polish joke…or two (it is regulation 111c of the politically correct manual for reference).
- After enduring jokes like, “why does the new Polish navy have glass-bottomed boats?” for decades, Poland is taking advantage of new trade routes created by the war in Ukraine and the chronic congestion plaguing the Netherlands and Germany to position herself as a major player in global trade. (Oh, by the way, the answer is “to see the old Polish navy.” Baaaaa dum dum!)
- In the next three years, Gdansk will increase total capacity by 50%. The port will receive $840 million to build a third terminal while upgrading two existing terminals. Once the projects are completed, Gdansk will be a Top 10 European port.
- Not only is Gdansk the only deep-water port on the Baltic Sea that can receive today’s giant vessels, but it is also a major regional rail gateway. Poland shares a 332-mile border with the Ukraine, and improved Polish shipping infrastructure will benefit Ukraine’s export capabilities and will benefit the many nations addicted to Ukraine’s yummy agricultural goods and less yummy fertilizers.
- Though controversial with environmentalists (and almost certainly with Putin), Gdansk is also working on a canal that will allow ships to utilize the Polish port without touching Russian waters.
- Though they’ve all heard the one about a Polish firing squad standing in a circle, Polish officials are impressively taking steady aim at the future economic realities in their region.
Global Food Mood
- The drought double whammy in the US Midwest is wreaking economic havoc for farmers and agricultural exporters. If you can keep your crops from withering, you’re then faced with dwindling water levels on the Mississippi and the Ohio among other essential river arteries. As you might guess, slower transits also increase the chance of spoilage… so, we should really call this a triple tragedy at this point.
- Well, at least we have a stable and effective rail system, right? Uhh, wrong! More than 50% of the 12,000-member strong Brotherhood of Maintenance of Way Employees Division (BMWED) voted against the recently proposed contract extension. This is not only bad news for all American shippers, but the person who named this union could not be located for a good throttling! After barge services, rail transport is the most essential mode of transport for agricultural exports.
- At the end of the day, American wheat exports are expected to be the smallest in 50 years! Good heavens, 50 years ago people were obsessed with pet rocks, disco, and roller skates while saying, “Hey Mikey! He likes it!” thanks to Life cereal.
- When evaluating processed food production, especially in Europe, will there be enough gas and oil to power food factories at even somewhat reasonable rate levels? The short answer is “no.” Expanding on these inflationary fears, poorer nations are struggling greatly to simply feed their populations.
- Unfortunately, as nations increasingly worry about the stability and cost of their food imports, they choose to restrict their food exports. This creates a huge strain on nations that do not produce enough food to feed their populations and/or nations enduring unprecedented droughts.
Transpacific Specifics
- Do you want to know what really upsets American shippers? Do you…?! Every Tom, Dick, and Harriot industry insider has indicated that steamship lines are still “comfortably profitable” after rates to the USWC have fallen 75% YTD and 50% YTD to the USEC! Provided their vessels are loaded above 80% capacity (approximately), there will be no alms for the carriers. Really?! Any chance we could each get $1B back for shipping costs the last two-plus years?! Well?!
- Though the China National Day break played a part, ocean carriers have blanked or cancelled 40% of total Transpacific eastbound capacity this October. Holy smokes! As they watch rates tumble, several carriers have indicated that they will blank 120% of capacity as necessary…nobody has yet had the courage to indicate that this is categorically and physically impossible!
- That said, vessel load factors sit around 85% to the USWC and a notch below 90% for the USEC. Should these load factors dip further, it is very likely that the carriers will enact additional service suspensions and “winter deployment programs.” Fewer services lead to longer realized transit times—but will any of us notice after the horrific average transits, including berth waiting times, over the last 27 months or so…?
- While Savannah and Houston may be asked to stand in the corner wearing a special hat, broader congestion metrics on both sides of the Pacific are improving significantly—and quickly. This has all eyes on American rail workers; we all need that deal to happen, folks! And yes, there is growing paranoia that the ILWU negotiations are now stalled.
- Seattle and Charleston have joined the “clean plate club,” as these gateway ports currently have zero vessels at anchor. After the nationwide mess this spring, this is impressive!
- Every major US port has fewer vessels at anchor or adrift than two weeks ago. Similarly, berthing delays at Ningbo and Shanghai are down at least 50% in the last month.
- We expect rates to the USWC to crack through the $2000 per 40’ line and to sit at about $1750 by November 1st. Peeking over the Rockies and Appalachians to the USEC, we’ll see rates break through $6000 per 40’, arriving at $5500 or so by November 1st. As happy as we all may be to save some dough, the pace of decline is certainly slowing at this point.
- Some India cargo goes over the Pacific, so sue us for putting India info here! In September, average rates finally slipped below YTD 2021 levels. By month’s end, the average ocean rate was 3.5% lower than September 2021. (There was much rejoicing.)
- The longer view on India is that rates will slowly decline, unlike greater Asia’s recent free-fall, and (shockingly) the carriers are evaluating new blanks for the Indian Sub-Continent.
