Featured Headlines:
CBP Branches Out on Trade Remedy
USITC Singles Out Freight Rail Couplers
Inflation Worriers, Make Your Voice Heard!
China’s Trade Surplus a Broken Record
Strikes a Discord for Global Supply Chains
Steamship Profits Eclipse Total German GDP
CBP Branches Out on Trade Remedy
- US Customs and Border Protection established the Trade Remedy Branch to coordinate the agency’s implementation, enforcement, and communication efforts related to their trade remedy programs. Now, staying informed has never been easier!
- CBP created a website to help provide additional guidance to assist the trade community; it includes, but is not limited to, resources and links supporting:
- Section 201, 232 and 301 Tariffs
- Antidumping and Countervailing Duties (ADD/CVD)
- Automated Commercial Environment (ACE)
- Interested in learning more? Click here to take a peek for yourself!
USITC Singles Out Freight Rail Couplers
- The United States International Trade Commission (USITC) has determined that the US industry is not being materially injured or threatened by imports of freight rail coupler systems and components from China. As a result, Commerce will not be issuing antidumping or countervailing duty (ADD/CVD) orders for these products from China.
- The trade attorneys for the Respondents successfully argued on behalf of their clients to allow them to continue to participate in the US market without additional duties.
- The Commission will soon publish a public report containing additional information and details regarding the case; it is expected to be available on the USITC website by July 21, 2022.
Inflation Worriers, Make Your Voice Heard!
- As you may already be aware, the USITC has launched a factfinding investigation related to the economic impact of Section 232 and 301 tariffs on US industries; click here for more background information.
- As part of its investigation, officials originally scheduled a hearing for Wednesday, July 20, 2022, at 9:30 am; however, this hearing has been extended to 3 days due to the high interest in the trade community and the high volume of hearing witnesses. It is now scheduled to take place between July 20-22.
- Click here to virtually attend next week’s hearings.
The Domestic Deadly Medley
- Even as we watch the broader economy puckering up, we see supply chains “truckering up.” US for-hire trucking ton-miles increased another 1.5% in May and are up an impressive 5% in 2022.
- May’s trucking activity was also 1.6% higher than May 2018, which was previously the highest May on record before 2022. Interestingly, pre-pandemic 2018 was the strongest ton-miles year in US trucking history.
- Not surprisingly, American trucking added 20,600 jobs in June after hiring 25,800 bright-eyed and bushy-tailed rookies in May; these hiring rates are double last year’s levels for the same months.
- The Association of American Railroads (AAR) has announced that intermodal train speeds are down 2.6% this year and have reached a record low average of 24.4 miles per hour (mph). Train bunching and ramp congestion are seen as the primary choke points in 2022. One anonymous rail commentator was heard muttering, “well at least we are faster than an elephant.” Unfortunately, this simply is not true since many of us (and ALL our dear readers) know that elephants can reach 25 mph…!
- Intermodal rail volumes are down for all US railroads, except Kansas City Southern, which is essentially flat.
- The railroads, already smarting from all the teasing they get from ports and steamship lines, are blaming you, our dear, virtuous shippers. They point to idling containers and chassis at shippers’ facilities as the main root cause of ramp congestion and inefficiencies.
- And…guess who else agrees? The ever-cheerful chassis providers, TRAC and DCLI, have complained that shippers have not only been sitting on chassis twice as long since pre-pandemic levels, but many importers simply leave their containers at the port or rail. Additionally, an unauthorized commentator mentioned that “shippers should really floss more often.” Sounds like the gloves are off!
- BNSF Railway, Norfolk Southern Railway, and Union Pacific Railroad have all acknowledged they don’t have enough engineers, crane operators, hostler drivers, and other train crew in some cities to handle even reduced volumes; railroads also acknowledge more lift equipment is necessary in certain terminals. Fortunately, the railroads are indicating rather high levels of flossing among their office employees. Small victories, folks; and perhaps a “plaque” may be in order…
China’s Trade Surplus a Broken Record
- After Covid restrictions were lifted—notably in the Shanghai region—June exports from China increased at the highest pace in 2022. Cargo flows for Chinese goods increased almost 18% year-over-year. Many pundits point to lessening port congestion and overall supply chain velocity as key factors as well; this despite the fact that nobody likes anybody who says: “supply chain velocity” (ever).
- Interestingly, as Chinese imports have dropped, establishing a three-year low in June, major gateway ports there have been able to process exports more effectively.
- China broke its own record (this is definitely a broken record of two kinds), and almost hit a $100 billion trade surplus with the rest of the world.
- May exports, up nearly 17% over May 2021, totaled over $330 billion. Computers, steel, automobile parts, and dental floss (duh!) led the list of standout commodities.
- The US, always the hungriest nation, gobbled up over 17% of those record-breaking Chinese exports. Yum!
- Nearly every fancy schmancy news agency, including AP, Bloomberg, and The Economist, has forecast diminishing growth in Chinese exports for the rest of the year. With inflation headwinds, a marginal return to services/experiences over commodities, and somewhat shocking reports on consumer debt, most pundits expect a low-growth 2022 overall for China.
- And, just to make President Biden (who clearly flosses three or four times day) lose that brilliant smile, Chinese imports from Russia are up 56%, as China takes advantage of price reductions on fuel as the EU and US attempt to isolate Russia economically.
Strikes a Discord for Global Supply Chains
- German dockworkers will begin a 48-hour strike from Thursday through Saturday to protest current wage levels. This will be the third and longest such action in the increasingly bitter negotiations; over 12,000 stevedores are set to participate in Germany’s longest dock strike in more than 40 years.
- In southern India, a four-day strike by truckers has disrupted cargo flows, as truckers and the owners of container trailers protested over haulage rates being too low to cover the increasing cost of fuel. The major gateway port of Chennai was the mostly profoundly affected. Fortunately, despite a demand of 80% increases, local truckers accepted a 25% increase for imports and 10% for exports. That said, it is expected to take a week to establish smooth-flowing container operations in Chennai and smaller neighboring ports.
- After 12 people died and hundreds of others were injured after a chlorine leak led to a deadly explosion, dock workers in Aqaba, Jordan have accused the port authority of gross negligence and walked off the job. The union has indicated that ownership has met some demands, but they expect more progress before returning to work at the port.
- In Southern California, shippers, already tense over ILWU talks, are preparing for protests and work stoppages by owner-operator dray truckers after California’s AB5 law went into effect. The law forces all truckers to become employee drivers rather than independent contractors; this means that very small firms and individuals must apply for licenses and file incorporation documents immediately. Owner operators in Oakland are expected to stage a similar action starting Monday.
TransPac Unpack
- Since February, FCL spot rates from Asia to the USA (both coasts) are down a bit more than 11%. A 40’ container spot rate from Shanghai to Los Angeles may well drop below $7000 in the next weeks, while we could see $9500 to New York. If this occurs, these will mark the lowest rate levels in 12 months.
- With steamship lines feeling the pressure from beneficial cargo owners (BCOs) as spot rates dip below many contracts, we cynics in the crowd expect more blank sailings. Woot, woot! If rates are dropping, cut the supply!! Guess what? We cynics are right (as usual); blank sailings for early July will near 20% for the US and over 25% for the US West Coast. Let us all hope that the carriers do not cut supply too much lest we relive the space shortage horrors of the fall of 2022.
- July’s blank slots total over 200,000 TEUs of space, y’all.
- Yet, ocean carriers can justify supply adjustments when we look at US port congestion. As we all high five and uncork the champagne at the news that LA/LGB is down to 24 lonely vessels waiting in the harbor, New York and Savannah are now up to 67 frustrated vessels waiting to berth. In fact, 6 out of the 8 largest US ports are trending higher for vessels at drift or anchor…one step forward, two steps back.
- Additionally, container dwell times on port, especially in beautiful Southern Cal, are trending the wrong way, and fast! The number of containers dwelling longer than 9 days in LA is up 20% in just two weeks. Port authorities and steamship lines are pointing to the ever-unpopular railroads as the root cause of container congestion; they also said that railroads have acne, floss infrequently, and don’t do their homework on time.
- Lest we put out a collection plate for the poor steamship lines struggling with weakening demand, their vessels are averaging 92% utilization for the West Coast and a lofty 99% for the US East Coast. Not shabby at all.
- Condescending math lesson: let’s all remember that all the lovely numbers we evaluate for a living will now be compared to the largest surge market of a generation in 2021. The “you-know-what” really hit the “you-know-where” starting around July 2021. Thus, we are comparing volumes, demand lines, container rates, extended transits, the kit, and the kaboodle to last year’s tsunami.
Steamship Profits Eclipse Total German GDP
- Yeah, that’s not true, but aren’t you sick of reading about carrier profits? What is no joke is the commercially discriminatory treatment the carriers are giving shipments of dental floss. This vital rolled commodity keeps getting rolled at global ports!
