Featured Headlines:
CBMA Importer Claims System Now Available from TTB
CBP Delays Section 232 Game Play
How to Comply with the Fully Implemented UFI
Fuhgeddaboudit…Port of New York is #1!
CBMA Importer Claims System Now Available from TTB
- Importers seeking refunds based on Craft Beverage Modernization Act (CBMA) tax benefits assigned to them by foreign producers may now access the myTTB CBMA Importer Claims System to file claims for refunds based on entries made during the first calendar quarter of 2023.
- The Alcohol and Tobacco Tax and Trade Bureau (TTB) has published a helpful guide on its CBMA Imports page to provide users with step-by-step instructions for the regular claims submission process; click here to access it.
- Remember, Shapiro can also make these quarterly filings on your behalf! Reach out to [email protected] for pricing and additional information.
- To learn more about the recent changes to CBMA tax benefits, check out our ShapFlash.
CBP Delays Section 232 Game Play
- If you subscribe to our ShapFlash alerts, then you already know that US Customs and Border Protection (CBP) announced that the new requirements for reporting the countries of smelt and cast for imports of aluminum and aluminum derivative products have been delayed by 30 days.
- The requirements were originally scheduled to go into effect on April 10, 2023, but will instead go into effect on May 10, 2023, to “allow additional time for the trade to update their software programming and systems to comply with these new reporting requirements.”
- Effective April 10, 2023, there is also a 200% duty on imports of aluminum and derivative aluminum articles that are products of Russia, or where any amount of primary aluminum used in the manufacturer of such aluminum articles is smelted in Russia or where such aluminum articles are cast in Russia.
- Never miss an important update like this again—visit our Subscription Center today to sign-up for our complimentary ShapFlash news alerts!
- Any questions? Feel free to reach out to our compliance experts!
How to Comply with the Fully Implemented UFI
- The US Food and Drug Administration (FDA) is now actively enforcing its requirements for domestic and foreign food facilities to provide a valid Unique Facility Identifier (UFI)—also known as a DUNS number—when registering for the first-time and/or renewing a registration.
- Although enforcement of these requirements officially commenced on January 1, 2023, the FDA initially provided a 60-day grace period for facilities to comply.
- Now that the grace period is over, the FDA has begun removing facilities with invalid registrations from its databases, and products shipped to the US without a valid registration will be detained at the port of entry.
- As a result, it’s crucial for importers to ensure that their registration has been renewed as soon as possible to avoid costly detentions and/or delays.
- Click here to read the full update (CSMS #55593773).
Frostick to the Point
- If you have attended Shapiro Crab Feast Seminars and/or company webinars in the past, then you have likely met our frequent flyer of a guest, Jim Frostick, VP of Sales and Marketing for IMS Transport—a highly reputable high-tech truck broker. Jim combines sizzling passion for the business with a pragmatic streak and ironic sense of humor. Please note what Jim sees for the near future of the drayage business:
- The little guys are likely to fall fast. Not only has the cost of doing business gone up considerably, but volumes and margins are down. This is a deadly combination for the thousands of one and two-truck operations.
- The cost of a semi ranges from $100,000 and $200,000 today, and insurance rates are only going up. Ouch and ouch.
- While a dray provider typically avoids the cost of a trailer, there is more pressure than ever to own a chassis. The price? Boom, another 10 grand.
- Jim estimates that costs per mile are up about 40%, while margins are down almost 60% since the peak.
- Some of the bigger dray operations are paying drivers for idle time just to maintain power for the expected return of BCO volumes. This is a dangerous waiting game, but it does provide a hopeful view of the future.
- Many more shippers than pre-Covid are outsourcing the management and oversight of drayage. After two years of demurrage and per diem bills from a horror film, this makes a lot of sense. Jim thinks every shipper in America should come to Shapiro for this service. Thanks, Jim!
- While OSRA22 is a godsend for shippers, 3PLs, and dray carriers, most shippers still expect dray providers to pay demurrage or per diem up front, wait 30 days or more for payment, and potentially face a dispute on responsibilities. While Jim was candid about absorbing fees that his company creates (“one container out of 100,000, ha ha”), the cash outlay requirement is more and more burdensome in a hungry market. “Something has to give.”
- It will shock no one to hear that IMS is in favor of merchant haulage moves allowing shippers, forwarders, 3PLs, and dray carriers to choose their own chassis sources. As we all know, the two parties that benefit the most, chassis lease companies and steamship lines, are fighting for continuing and absolute control of chassis usage and pools. Please call the FMC, activist readers!
- While Jim did not and would not say this, it does sound like we shippers and forwarders need to be careful not to ask for the world from our dray networks without understanding the underlying realities. If we ask them to make $20 a box for the pleasure of outlaying our fees for 45 days while enduring a risk of per diem refusals or split return denials, we may see them walk away from our business… or perhaps RUN away from it!
Teamsters Not Yellow
- Oh goodie, more labor tensions in yet another mode of transportation!
- After crossing our fingers and praying to our higher powers over rail worker strife—and while still squeezing our lucky rabbit feet over the ILWU (…and any brotherly empathy from the ILU…)—we now must frantically search for four-leaf clovers to ward away a Teamsters action.
- Yellow, the largest of the large LTL providers, wants to reduce its eastern terminal count, while also consolidating the operations of Yellow-owned New Penn and Holland. On the face of it, Yellow should be able to eliminate redundancies in their system to promote efficiencies and drive profitability. At the end of the day, Yellow believes that some 290 eastern terminals will survive.
- The Teamsters say, “not so fast, bucko!” Though their contract with Yellow does not expire until 2024, they have rejected the planned re-structuring.
- Last year, Yellow re-designed and consolidated their western operations, YRC Freight and Reddaway. One imagines that the Teamsters noted the loss of union jobs during Yellow’s western revamp.
- At the same time, the Teamsters are negotiating deals with ABF Freight and TForce Freight, with contracts expiring this summer for both companies.
- These negotiations are quite compelling because the motor carriers are worried about future demand but have yet to feel the deep drop felt by ocean carriers, for example. The theory is that with warehouses full to the rafters, shippers still have a lot of domestic cargo to move.
- From the Teamsters side, while short-term demand is relatively stable, it is increasingly difficult to hire and retain truckers. Who really has the leverage in these battles?
Scarlet Ammonia Fuels Debate
- Okay, ammonia is almost certainly not red, but we could not resist combining a reference to the best Grateful Dead song and chemistry! Intrepid reader, prepare to remember why you hated chemistry as we discuss greener maritime fuels…here goes!
- The International Code of the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk (IGC) of the International Maritime Organization (IMO) is not only the largest mouthful in an industry of acronyms, but it has also outlawed the use of ammonia as a fuel source on the high seas. So, why are we even talking about ammonia?!
- The reason is the other poster children for a greener fuel future are batteries, hydrogen, and methane. Based on today’s technology, we can quickly kick batteries and hydrogen to the curb. (Kick hydrogen lightly please lest it blow your foot to Mars…)
- Batteries are simply too heavy for long-range maritime propulsion, though they do work well for cute and dainty ferries and are used for those already.
- Hydrogen is a superstar for energy density by weight and is abundant on our planet (thank you H2O!); however, hydrogen is a very poor choice for energy density by volume. One imagines a giant vessel with giant balloons overhead…it just takes too much space to use hydrogen for long distances. Like batteries, hydrogen will work for shorter-range needs.
- After reading that Maersk has invested in 8 x 16,000 TEU methane powered vessels, why not simply turn to methane for a greener future? Well, thanks for asking!
- While methane itself is carbon-neutral, it is currently manufactured from fossil fuels. It also creates formaldehyde as a byproduct, is extremely flammable, and (like hydrogen) it essentially leaks through metals (like engines, for example). The “leaking” leads to low efficiency of fuel burning.
- Well, what about green methane, produced from biomass or pulled from the air since green methane requires hydrogen (easy to find) and carbon dioxide (harder to find)?
- Despite the fact that we each add 2.5-4.5 pounds of carbon dioxide per day, depending on our couch potato vs. triathlete breathing trends, our atmosphere is only .5% carbon d!
- The more likely source for carbon d is biomass—which essentially involves rotting wood and plants or getting far too involved with animal dookey and tooting. Let us all pause to commemorate our first use of “dookey and tooting” in this prestigious newsletter!
- So, we know that ammonia is used in household cleaners, fertilizers, manufacturing, water purification, refrigeration, and most of us were scolded by the folks about NEVER mixing the stinky stuff with bleach! But, it also has high potential as a fuel.
- The beauty of ammonia is that it’s composed of nitrogen and hydrogen. Nitrogen is 78% of our atmosphere, and good ol’ hydrogen is all over the planet (though not much in the air). There is also an energy savings connected to its storage, but that is some deep chemistry, gang!
- The current drawbacks for ammonia: the stuff is toxic, burning it emits nitrogen oxides and nitrous oxide (yes, laughing gas), and the fuel form is not liquid; this last aspect makes it hard to build variable multi-fuel engines during a ramp up period for ammonia use.
- Please read the next article for more fun with chemistry starring our new hero, ammonia!
Amogy Has No Apologies
- After borrowing from the Grateful Dead above, why not slip in a Papa Roach song reference for this encore? Well, Shapiro has No Apologies either!
- US sustainable energy start-up, Amogy, has announced their goal of producing an ammonia-powered tugboat by the end of 2023. Following their successful production of an ammonia-powered drone, tractor, and semi-truck, we don’t recommend betting against these pocket-protector-protected nerds!
- We have all read that the ocean shipping industry currently contributes 3% of all greenhouse gas emissions per year, and we have an ambitious goal of carbon neutrality by 2050. Amogy sees this as a giant opportunity—and they are betting on ammonia.
- As we mentioned, methane production is currently far too dependent on fossil fuels, but ammonia can be produced and delivered from “well to wake” much more easily. This refers to the manufacturing front end, “well to tank,” and the delivery/usage backend, “tank to wake.”
- Now, what can be done about all that nitrogen oxide and laughing gas? Hey, we wouldn’t mind a little laughing gas in the air, but it is a greenhouse gas…. Boo!
- Essentially, selective catalytic reduction (SCR) technologies should be able to be applied to ammonia systems to neutralize dangerous emissions. We suspect this is analogous to your car’s catalytic converter.
- The bigger hurdle—other than the teensy little fact that it’s illegal to use the stuff today—is that ammonia burns so slowly that it currently travels through an engine as part of the total emissions. As you might guess, ammonia itself ain’t so good for the fishies!
- Imagining that the emissions problem is solvable, experts have eyed the 200+ gas tankers that carry ammonia on the seven seas today as a great first test. Not only do those ships already carry ammonia, but the crews are also experienced in handling our toxic goddess.
- We should all watch Amogy’s 2023 test with bated breath while holding our noses!
Port Report
- Those folks at Alphaliner sure are smart! We mean it, and this time they have directed their keen gaze at the trend lines of the 30 busiest global ports.
- Overall, these robust and vigorous 30 moved a record 454 million TEUs (twenty-foot equivalent units) last year. While impressive, this was less than 1% more than 2021.
- When we think about the deep slide in Q4 of 2022, this makes a lot of sense. When we think about the deep slide of Q4 and into 2023, we also weep and gnash our teeth a lot.
- Shockingly (not!), China’s top 10 ports led the way with 222 million TEU moves—which was a nifty increase of 4.1% year-over-year (YoY). However, as a trend line, the 6.2% growth in 2021 was considerably more impressive.
- Another impressive grower was Tanger Med, Morocco, which benefits greatly from Med-based transshipment business. While handling just 3.5% of the volume enjoyed by China’s mighty 10, the port grew almost 6% last year.
- Looking closer to home, New York and Savannah each grew about 5%, and we’ll have more to say about New York port in the next article. (Exciting, huh?)
- Volume declines featured many ports in Europe. The largest of the Old World’s ports— Rotterdam, Antwerp, and Hamburg—each lost more than 5% of cargo action.
- Joining the EU giants on the “slip slide and away by more than 5%” list were Los Angeles and Long Beach (LA/LB) in the US and the massive Colombo in Sri Lanka.
Fuhgeddaboudit…Port of New York is #1!
- Based on 2023 year-to-date (YTD) data…New York (NY) has once again been dubbed the busiest port in the US! It will be interesting to see if The Big Apple can keep her cargo shine, growth juiciness, and prideful tartness for all of the year. After all, LA/Long Beach is more negatively affected by Chinese New Year (CNY).
- An even deeper dive into the numbers—as we portended in the Port Report article above—shows that last year, New York grew 5%, while those California rivals lost 5% of volume. So, the broader playing field has been flattened considerably.
- Much has been made of shippers diverting cargo to the US East Coast (USEC), and this is another fundamental shift to consider. Also, with Trump tariffs still in place—but sans the consumer mania maddening the US public—importers must look for new sourcing options, especially for lower-value products. This boosts the use of NY, which is far less dependent on cargo from Asia.
- Interestingly, New York has now outperformed Los Angeles and Long Beach in five of the last eight months—thus extending the trend line beyond early 2023.
- Before we print shirts and run around high-fiving random strangers throughout the five boroughs, we note that New York was “only” down 20% in January-February, while the SoCal twins were down an agonizing 30%. So, New York is just “less bad off.” Yay…
- Impressively, and in a sign of better times to come, New York ports have shipped out 390,000 TEUs of empty containers YTD. Fuhgeddaboud port congestion when the cargo starts pouring in and out of The City that Never Sleeps, yet again.
All Over the Scrap Map
- All of us like to sound smart at dinner parties and neighborhood picnics. (Please stop denying it… yes, that means you!)
- Among our theories about mothballing vessels, the death of the ship charter business, and new alliance formations, most of us foresaw a profound uptick in ship scrapping activity. After all, with the surge, huge returns could be generated no matter the size, age, and fuel efficiency of even the rustiest old buckets.
- Alphaliner indicated roughly ZERO scrapping activity in 2022; any math wizards out there might have figured out that this ties the all-time low at least!
- Adding to our certainty about rising scrapping levels is the intense level of new building activity and deliveries. Hey, most pundits think the steamship business is oversupplied by more than 30%, why not get rid of inefficient environmentally questionable boats?
- Intelligent supply chain geeks like us were not alone! Hapag proclaimed to all her neighbors that 900,000 TEUs would head to the trash heap; Drewry mentioned 600,000 at a family holiday dinner; and even more conservative Alphaliner guessed at 350,000 while chatting with the kids’ baseball coach.
- Drum roll please…! YTD scrapping activity has reached a whopping…a colossal…a gargantuan… 19,800 TEUs. How can this be? Why would this be?
- Well, the vessel charter business is steadily improving after a sharp drop. These fat cats simply lack the incentive to scrap what they can “rent” to eager ocean carriers.
- Smaller players—typically engaged in feeder activities— can again afford to buy a vessel or two since second-hand prices have returned to Earth.
- And, what about the big boys themselves? What about the steamship lines? It seems that they are still building new boats, buying old boats, and positioning themselves for the market share war of all market share wars.
- Just a few short weeks ago, MSC bought the Evergreen twins, Ever Liberty and Ever Uniform—despite the fact that they just celebrated their 24th birthdays. In human years, these little darlings are 216 years-old, gang!
