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Shap Talk

Featured Headlines:

New Year, New AD/CVD Messages!

Fresh Changes Coming to the National Organic Program

USTR Makes Tariff-ying End of Year Announcement

Trucking Hodge Podge

The Great Destocking

Red Sea Rate Spree

Gulf Coast Im-PORT-ance

The United States is CHIP-ping In

New Year, New AD/CVD Messages!

  • Effective January 16, 2024, U.S. Customs and Border Protection (CBP) will nationally implement cargo messages to communicate with filers of entry summaries that are potentially non-compliant with antidumping and countervailing duties (AD/CVD).
  • Specifically, CBP officials will address AD/CVD entry summaries that appear to have omitted companion AD or CVD case numbers and/or applied incorrect company-specific 10-digit AD/CVD case numbers.
  • These cargo messages do not require the filers to take action and are informational only. However, when corrective action is taken by the filer to address the potentially noncompliant AD/CVD issue while the entry is still in trade control, this may reduce the need for further action by CBP for the identified issue.
  • To read the full announcement—which includes examples of the cargo messages— please refer to CSMS # 58721104.
  • Interested in learning more about AD/CVD? Visit our Regulatory Compliance Hot News page for the latest and greatest updates.

Fresh Changes Coming to the National Organic Program

  • Did you know that the U.S. Department of Agriculture (USDA) will begin requiring certain data elements for importers of certified organic products starting March 19, 2024?!
  • Feeling unprepared for the change? Don’t fret! The USDA has provided additional resources on its National Organic Program webpage to assist importers in understanding what information will be required and how to become certified.
  • Feel like your food stuffs aren’t up to snuff? Contact our Compliance Experts with any of your burning questions!

USTR Makes Tariff-ying End of Year Announcement

  • On December 26, 2023, the Office of the U.S. Trade Representative (USTR) announced that they are extending certain Section 301 exclusions—originally scheduled to expire on December 31, 2023—until May 31, 2024.
  • For additional details, please refer to the official Federal Register Notice (2023–28770).

Trucking Hodge Podge

  • It’s not much of a trade secret that the U.S. trucking industry has faced challenges of late, with a notable loss of trucking jobs in the early months of last year—an issue exacerbated by a slow hiring trend. In total, approximately 21,700 motor carrier operating authorities were removed in 2023, indicating a 5.9% reduction in active authorities.
  • Despite expectations of a larger exodus of carriers, the industry’s transition has been slower than predicted. This year’s hiring performance was notably weak—similar to gains reported in 2014, 2016, and 2018; and the shutdown of less-than-truckload (LTL) carrier Yellow in August also impacted trucking employment.
  • While trucking employment was down 1.5% year-over-year (YoY) in November, it still managed to remain higher than any other November prior to 2022. Plus, the industry is starting 2024 with a surplus of employees compared to 2021.
  • Bankrupt trucking company Yellow is selling off assets, with several terminals finalized for sale. As of the writing of this well-read newsletter, Yellow still has 118 leased properties and 46 company-owned facilities available for auction.
  • It’s safe to say that the sale of Yellow’s remaining terminals will reshape the US LTL map for shippers in 2024, with some major breakbulk hubs among the properties still in flux. Estes Express Lines, XPO, Saia Motor Freight, and other providers have already acquired terminals in this process.
  • California regulators have delayed the enforcement of the Advanced Clean Fleets (ACF) rule, which mandates new drayage trucks to be zero-emission vehicles after January 1, 2024. This delay is pending a preemptive waiver from the Clean Air Act by the US Environmental Protection Agency (EPA).
  • The EPA’s ruling on the waiver may take up to nine months to a year, but non-compliant trucks won’t be allowed to operate at California ports or rail yards once enforcement begins.

The Great Destocking

  • Only now that Santa and his elves have wiped store shelves clean, and the naughty list has been released, can we point out the notable “Great Destocking” of 2023—an event that saw a significant reduction of almost 20% in inflation-adjusted US inventories.
  • As a result, warehouse capacity has increased by 30%. Despite this growth, vacancy rates remain below pre-pandemic levels, putting continued pressure on rental costs and lease agreements.
  • According to JLL data, the warehousing vacancy rate reached 4.9% in the third quarter of last year, reflecting the gradual release of space, but still sat below pre-pandemic averages. This could be due to shippers being cautious about expansion decisions in 2024, anticipating slower US economic growth.
  • Development activities continue in key regions—such as the US Southeast, mid-Atlantic port areas, and the US-Mexico border—fueled by shifting global trade patterns and Mexican manufacturing growth.
  • Despite the mixed trends for US warehousing, investors are bullish on the sector especially when viewed in contrast to vacancy rates for office buildings. Gee, those Wall Street guys sure state the obvious sometimes!

Red Sea Rate Spree

  • Please allow me to introduce myself, I’m a trade of wealth and haste. I’ve been around for a long, long years…stole a million shippers’ soul and faith!
  • Look, we can attempt sympathy for the carrier devils, but our efforts won’t last this time.
  • Yes, ocean carriers face increased costs for insurance for bunker usage and for the dislocation of assets. Yes, all of this was outside their control and can be placed at the feet of the Houthi rebels. Also, this is VERY SERIOUS for Europe trade, of course.
  • However, in 30 days, rates from Asia to the US have DOUBLED… 200% “sympathy” for the devils? Really?!   And, for once, global rates have increased at the same pace as rates to the US. Studious readers have almost certainly noticed that American shippers almost always face higher general rate increases (GRIs) and surcharges, no matter the supply and demand truths.
  • Our assessment of the ocean rate explosion is that 30% connects to the robust (and expected) demand growth prior to Chinese New Year (CNY). That leaves 70% connected to a form of hype and the increased cost of doing business to/from Europe (not USA!).
  • Looking at the US East Coast (USEC) and Gulf, 24% of that volume passed through the Suez in Q3 2023—but, after the dramatic restrictions and worries in Panama, that number skyrocketed to … well… it exploded to… well… it conflagrated to 31% by January 2024!
  • Yes, readers a mere 7% increase in dependency on the Suez. …Shrug.
  • Okay, well at least vessels are piling up and having to anchor on both sides of the Panama Canal, right?! Well, they must be, isn’t that so?   Uh, no.   While we are seeing a seven-day delay in Panama roundtrip transits, that could be mitigated by “sailing and steaming” a bit faster!
  • Folks, the most substantial byproduct of a tiny uptick in planned Suez usage to the US is a shorter window to load cargo at origin. Today, you must pull your equipment within seven days of sailing rather than ten!   Oh, the hardship… oh, the terrible strain on planning!!
  • Yes, we expect empties to be scarce for a few weeks. Yes, we expect feeder connections supported by boats headed to Europe to become less dependable.   Yes, we even worry about future Panama restrictions, but 200% is simply too much “sympathy.”
  • Anyway, at the end of the day, worldwide ocean pricing is not based on supply and demand alone, unless we include the supply and demand of hype!

Gulf Coast Im-PORT-ance

  • US Gulf Coast container gateways anticipate solid growth this year. The rebound in exports and the steady flow of imports in 2023 contributed to this optimism, also bolstered by increased manufacturing activity and population growth.
  • Exports surged by 11.4%, offsetting a 7.7% decline in imports—which resulted in steady containerized volumes. Remember that 2022 was a steroid year, and import levels bested pre-pandemic volumes.
  • Port Houston saw a 15.1% increase in outbound volumes, largely thanks to a 34% rise in petrochemical shipments. Houston port officials have forecasted modest container unit growth of 1% in 2024, with a 3.2% increase in exports offsetting a 2.6% decline in imports.
  • The busy Texan hub is also planning to develop two new container yards at Bayport and allocated $160 million for the reconstruction of two container yards at Barbours Cut. These developments align with the ongoing dredging and widening of the Houston Ship Channel, expected to be completed in Q1 2025.
  • The Port of Mobile is expanding its container handling capacity with projects like additional ship-to-shore cranes, an expanded container storage yard, and a flyover bridge for quicker access. It’s also seeking to increase its intermodal reach into the Midwest.
  • The Port of New Orleans has plans to enhance its capacity with a new wharf at its Napoleon Avenue Container Terminal.
  • New Orleans is also focused on developing the Louisiana International Terminal (LIT), a major project with substantial funding that will significantly boost overall container handling capacity.
  • Read something super im-PORT-ant to your supply chain? Reach out to [email protected] to get the conversation started!

The United States is CHIP-ping In

  • Have you heard about Nvidia’s upcoming launch of a China-focused AI chip in Q2 2024 aimed at capitalizing on China’s booming artificial intelligence (AI) market?!
  • This strategic move aligns with the broader context of global semiconductor developments and is driven by the growing demand in China—particularly in industries such as autonomous vehicles and data centers.
  • Concurrently, the Biden-Harris administration has unveiled preliminary terms for the Microchip Act, a significant initiative to bolster domestic semiconductor manufacturing and reduce reliance on foreign chip production.
  • According to the U.S. Department of Commerce (DOC), the Microchip Act outlines plans to allocate federal funds to support semiconductor research and manufacturing, with a primary focus on enhancing national security and broader economic resilience.
  • Both Nvidia’s venture into the Chinese AI chip market and the DOC’s initiatives reflect the evolving landscape of the semiconductor industry. These developments underscore the importance of domestic chip manufacturing and supply chain resilience in a global context.
  • It’s clear that the semiconductor sector is at the forefront of technological advancements and economic strategies, with implications that extend beyond national borders. Maybe we will all have a few more chips on our shoulders in 2024…just maybe.