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Provocative Revocation of ADD/CVD Orders
A Flower Power Import Tower
- According to U.S. Customs and Border Protection (CBP) officials, for the third year in a row, imports of cut flowers for Valentine’s Day surpassed well over 1 billion stems in 2023.
- Although it’s not against the law to import flowers into the US, there are certain restrictions in place by CBP to protect domestic agriculture from pests and diseases carried by flowers and/or plant-related materials exported from foreign countries.
- CBP agriculture specialists work behind the scenes diligently to inspect floral shipments from 58 countries to ensure they don’t contain harmful diseases and/or crop-damaging pests.
- Last year, more than 700 million flowers were imported from Colombia into the US, with most arriving via Miami International Airport (MIA).
- Click here to watch a video demonstration of a cut flower inspection by CBP!
Provocative Revocation of ADD/CVD Orders
- The U.S. Department of Commerce (DOC) recently announced the revocation of 2 separate antidumping/countervailing duty (ADD/CVD) orders.
- First, the ADD order of polyethylene terephthalate (PET) sheet from Oman is revoked effective on or after March 30, 2020.
- The order was revoked due to no interested parties commenting on the preliminary results of the changed circumstances review (CCR). As a result of the order, Commerce is also rescinding the 2020-2021 and 2021-2022 administrative reviews.
- Click here to review the scope and the reasons for the revocation provided in the Federal Register.
- Second, the ADD/CVD order for high pressure cylinders from China is revoked effective on or after December 5, 2022.
- The order was revoked due to no interested domestic parties responding to the sunset review.
- Click here to review the scope and the reasons for the revocation provided in the Federal Register.
FTL Left a Wee Frail
- Yes, intelligent readers, that didn’t quite rhyme, but frail is the FTL sector, nonetheless. DAT tells us that the truckload demand to truck capacity ratio is down about 13% since December and down an alarming 68% year-over-year (YoY). As you mathematically and economically-minded logisticians must have predicted, FTL rates are down well over 20% in 12 months.
- Like so much analysis today, the FTL story is as much about the prosperity of 2022 as the austerity of early 2023. However, FTL’s future tale is particularly vulnerable for one main reason…Well, ask us, quiet readers!
- According to the Federal Motor Carrier Safety Administration (FMSCA), the government agency most responsible for deforestation due to its absurdly long name doubling the length of its regulations, there are 504,000 registered FTL carriers. This is a staggering number and is very close to the number of people who live in Wyoming…(seriously)!
- Because we are clearly obsessed with this, we also note that 504,000 is larger than the population of 60 separate countries worldwide!!
- A closer look reveals that 329,000 of these carriers have one employee; and over 65% of the industry is one tough daughter or son-of-a-gun and his or her tractor and maybe a bed in the back! By the way, these folks prefer to call themselves, “one-truck fleets.” Never forget that nugget of knowledge, polite readers.
- Remember that trucking firms of all sizes and modes struggled to find parts and to replace older equipment when the many supply chain disruptions during the pandemic slowed manufacturing, shipping, and the joy in our hearts. It stands to reason that the cost of new equipment and repairs may well be hitting many of those 329,000 brave souls at just the wrong time.
- The statistics are not yet dramatic, but we (and the JOC) have witnessed a gentle decline in truck capacity beginning in Q4 2022, though it is down only 2% from the summer of 2022’s peak. A more leading indicator from the FMCSA shows that revocations of authority exceeded grants of new operating authority by December; this is the first time we’ve seen that since the market jitters of early 2020.
- For at least 12 months now, the big boys in the FTL business have been forecasting the demise of the one-truck fleets and other smaller enterprises. They have argued that this exodus will lead to a better balancing between supply and demand and will nudge rates back up above $3 a mile versus today’s somewhat meager $2.75 or so.
- Time will tell if the early economic malaise of 2023 will hurt the smaller outfits in FTL. To invert a famous quote from David and Goliath, “one-truck fleets are not what we think they are. The same qualities that appear to give them weakness are often the sources of great strength.” Hang in there, little guys!
Show and LTL
- LTL carriers of all sizes have reported softer demand for months, with many publicly owned carriers reporting drops in shipment count as well as tonnage.
- High inventory levels, contraction in manufacturing output, and reduced consumer spending all play a part in the freight shortfall—and LTL is coming off a period of extremely high demand.
- According to SJ Consulting Group, the total US LTL market expanded 16% in 2022, with total industry revenue rising to $58.8 billion. Hey, this is less than 20% of what the steamship business made in 2022, but nice try!
- The 25 largest LTL carriers had $53.9 billion in combined revenue, compared with $46.3 billion in 2021. The 92% market-share of the Goliaths in the business makes sense since critical mass is the name of the game in LTL.
- Carriers have weathered years of double-digit annual insurance premium increases and hope to see slight relief in 2023, but insurance providers continue to face inflation, economic pressures and larger verdicts in both average loss and so-called “nuclear” verdicts. Looks like we need to stuff the courts with transportation geeks like us, y’all!
- Even within a difficult insurance market, fleets have options to control costs, and carriers are turning to technology, including cameras, telemetry and artificial intelligence, to help mitigate risk and reduce premiums. They have also requested that truckers stop eating all that fancy sushi so easily found just off highway exits in the vast American hinterland!
New Port, Old Sport!
- Well, old sport, just as The Great Gatsby told the story of new money versus old, Bloomberg reports that Scale AI is placing a $2 million bet that that their data configuration-based artificial intelligence (AI) solutions can show the world the future of efficient port operations in stark contrast to today’s frequently inefficient models.
- As we all at least hope, most port operations are so busy and bustling that a pause for research and development is all but impossible. Scale AI has searched the world over for the best place to launch their “Smart Port Lab,” and it looks like they think they have found true love. Thank you, Buck Owens, for the awkward use of your song lyrics (PFFT!)
- Having purchased two Panamax-capable $11 million ship-to-shore cranes in 2009, Ponce Puerto Rico has since been pummeled by Mother Nature three times. Most significantly Hurricane Maria put the port down for the count in 2017, and Ponce has not been operational for container business since.
- Being a very lucky port, Ponce’s efforts to re-build have since been stymied by earthquakes in 2020, and Hurricane Fiona last year. Local fortune-tellers have already gone on record that Ponce will be visited by frogs, livestock pestilence, hail and locusts in the coming years. Phew, at least they will escape six of the Plagues of Egypt!
- Editor’s note: the people of Puerto Rico have certainly suffered from Maria, Fiona, and earthquakes. In total, some 3,000 people died, and housing repairs and food shortages have caused acute suffering. Our point is simply that Ponce is perfect for AI experiments.
- Scale AI, a California-based company with a valuation over $7 billion, plans to test and develop autonomous inspection, hardware autonomy, digital surveillance, and digital receipt (container tracking) systems at Ponce among other initiatives. And, as all men love to hear, they will be using drones as part of their testing and future applications. Neat!
- Scale AI, never shy to boast and brag, has indicated that it hopes to export their superior AI port solutions to the world from Ponce, Puerto Rico in the future.
- An unnamed consultant in the US maritime business mentioned that the International Longshoremen’s Association (ILA) and the International Longshore and Warehouse Union (ILWU) and their 100,000 members combined will likely “thoughtfully” mention the other 6 Plagues of Egypt should Scale AI make great progress quickly. For those of you who know your religious history, the other six Plagues of Egypt are the really scary ones!
The Airline Decline
- As we untwine, the airline cargo pipeline with passengers not on the sideline, we wish for even a straight line to find some sunshine and avoid fears of the breadline.
- Year-to-date (YTD) air cargo stats are far from promising compared to early 2022. Global chargeable weight may be down over 20%, but at least Asia Pacific, normally a bright spot market (pun intended) is…uhm, well…down over 30%! Ouch, gentle readers.
- Well, okay the US air export market usually picks up the slack, right? Wrong. US export tonnage is down 24% so far in 2023. As you might guess, the problems for the air cargo industry only deepen when we look at the supply side…
- Capacity—primarily in the form of passenger belly space—is up 11% year-over-year (YoY); and that, combined with the 20% plus decrease in chargeable weight, has eroded global rate levels by about 25%. It has been a long, long time since the average kilo of air cargo cost less than $3 to ship, but we are knocking on that dubious door!
Almighty MSC
- As this noble, award-winning newsletter predicted, MSC is off to the races in their quest for independence (and unqualified world domination)! Apparently, the story starts in India… at least for MSC.
- After watching a swell in Indian exports to the US—a route expected to prosper as Section 301 tariffs persist from China—MSC has expanded its Sentosa service loops by directly connecting Nhava Sheva and Mundra to Long Beach and Oakland, America’s largest and tenth largest ports, respectively.
- Having greatly expanded its collection of smaller vessels in the secondhand market (where you buy giant vessels at flea markets), MSC is also evaluating its deep and wide range of feeder connections and replacing third-party commercial operators with MSC vessels where practical.
- An interesting example of the feeder expansion strategy: by March, MSC will launch a weekly feeder connecting Dublin, Cork, Le Havre, and Antwerp.
- While it is only a rumor at this point, several Venetian businesspeople see the relaunch of MSC’s Dragon service, linking China to the Med (including FOUR Italian ports) as the first step in MSC’s drive to take over the gondola business in Venice. Frankly, to us at least, we think this may be more about fine Italian wine than good business sensibility!
- For our nerdier readers, there are typically 400 gondolas in action in Venice, and they cost about 40,000 euros each; MSC could take over the business in 11 minutes!
- When you add the current global capacity and the magnitude of new building orderbooks, MSC will emerge as 144.4% larger than Maersk and will eclipse the operating capacity of Hapag Lloyd, Evergreen, and ONE combined…Yowza!
