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Shap Talk

Featured Headlines:

A Commercial Breakdown Sponsored By APHIS

Cotton Import Fees Caught in Limbo

Section 232 Exclusions Steel the Spotlight

Hold the FAQ-ing Phone on 97H Shipments

ACE is the Place With the Helpful Tools—Shapiro is the Place with the Tips & Tricks!

West Coast Wait Time Woes

Final Destination Flat Beds

Arid Air Rates

I’ll Have CHIPS with That!

China Not Invited to the CHIPS Party

Supply Rain Reactions

TransPac Rate Slack

A Commercial Breakdown Sponsored By APHIS

  • We interrupt your regularly scheduled ShapTalk programming to alert you that the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (USDA-APHIS) is seeking comments on a proposed rule that would increase its Agricultural Quarantine and Inspection (AQI) program user fees.
  • Jointly administered by U.S. Customs and Border Protection (CBP) and APHIS, the AQI program assures that cargo and passenger baggage entering the United States is inspected for plants, pests, and potential sources of animal disease.
  • The commercial fees for the AQI program were last updated in 2015. However, they no longer generate enough revenue to cover the costs of AQI services, according to APHIS.
  • The below chart depicts the current commercial fees as they stand today (08/31/23), as well as the incremental fee increases through October 1, 2027.
Vessel
(per vessel arrival)
Truck
(per truck arrival)
Railroad
(per rail car arrival)
Aircraft
(per aircraft arrival)
Treatments (per hour)
Current $825 $7.29 $2.00 $225.00 $237.00
Jan. 1, 2024 $3,219.29 $11.40 $5.81 $228.41 $232.97
Oct. 1, 2024 $3,302.23 $12.40 $6.51 $309.00 $253.19
Oct. 1, 2025 $3,386.23 $13.45 $7.23 $330.07 $273.90
Oct. 1, 2026 $3,471.18 $14.50 $7.97 $351.64 $295.12
Oct. 1, 2027 $3,557.18 $15.55 $8.72 $373.68 $316.83

Cotton Import Fees Caught in Limbo

  • Speaking of impending fee increases…did you hear that the USDA’s Agricultural Marketing Service (AMS) issued a direct final rule earlier this month to increase the fee paid by importers of cotton and cotton-containing products under the Cotton Research and Promotion Order?
  • Effective October 16, 2023, the fees will increase from $0.013215 to $0.0146941 (per kg).
  • According to the announcement, the adjustments—which range from increases of 11.2% to 18.7% respectively—reflect a rise in the weighted average price of upland cotton received by domestic farmers in 2022.
  • Officials cautioned that they would withdraw the proposed increases should they receive significant adverse reactions from the public by September 14, 2023.
  • Click here to read the official Federal Register Notice, which includes more details on the comment process.

Section 232 Exclusions Steel the Spotlight

  • On Monday, the U.S. Bureau of Industry and Security (BIS) published a proposed rule that revises aspects of the Section 232 exclusion process from the duties and quantitative limitations on imports of aluminum and steel.
  • The new rule proposes additional improvements that are intended to create a more transparent, fair, and efficient exclusions process. These include four primary changes:
    1. Proposes to change the criteria generally used for determining General Approved Exclusions (GAEs) by focusing on the substance of objections submitted rather than whether any objection has been submitted to foster a more efficient process.
    2. Introduces a General Denied Exclusions (GDE) process to limit further exclusions on products consistently found to be manufactured in the U.S. Like GAEs, these would be identified on the volume and substance of objections submitted to such products in the 232 exclusions process.
    3. Modifies the existing certification language and introduces new certification requirements for exclusion requests. This would include changes to the Exclusion Request Form to allow requestors to demonstrate that they made reasonable efforts to source their product from the U.S. or from countries in which the U.S. has determined to be a suitable alternative to address its national security concerns. Such countries currently include Argentina, Australia, Brazil, Canada, the European Union, Japan, Mexico, South Korea, and the United Kingdom.
    4. Proposes similar certification language on the objection form to ensure that objectors supply comparable quality and quantity steel or aluminum and make it “immediately available” to requestors per the standards described in the previous Section 232 IFRs.
  • Importers, let your voice be heard! If you have an interest in this matter, we encourage you to submit a comment to the BIS through the Federal eRulemaking website no later than October 12, 2023.
  • For more info, please refer to the Federal Register Notice published on August 28, 2023.

Hold the FAQ-ing Phone on 97H Shipments

  • On August 23rd, CBP officials released a set of frequently asked questions (FAQs) related to the 97H Shipment on Hold response messages provided within the Automated Export System (AES).
  • The FAQs were posted to help answer a smorgasbord of questions regularly fielded from the trade community, including handling shipments that have already been exported, updating the Electronic Export Information (EEI) while the shipment is on hold, making the shipment available to CBP when needed, and more!
  • For additional guidance from CBP, please refer to CSMS #57430632.
  • Any additional questions not covered in the FAQs may be emailed to [email protected].

ACE is the Place With the Helpful Tools—Shapiro is the Place with the Tips & Tricks!

  • After all the years, phases, breaks, fixes (and more breaks!) it is understandable you may have a bit “ACE Phase Fatigue.”  You may even struggle to believe that ACE can make your life easier. (It’s TRUE!)
  • We are excited about the latest enhancements to the Automated Commercial Environment (ACE)—especially for you, importers! We want to share what we learned with you.
  • Shapiro will be offering a webinar that focuses on reports and functionality—tools that can provide you with greater visibility and control of your transactions.
  • We will also share some tips and tricks we have learned along the way. If you are a fan of working smarter, not harder, you don’t want to miss this!
  • The details of our webinar are coming soon.  Keep your sleepy eyes peeled!
  • Any questions? Feel free to reach out to our compliance experts!

West Coast Wait Time Woes

  • Dray folk have resorted to laying on the horn to air their latest and greatest round of complaints with the Ports of Los Angeles and Long Beach (LA/LGB)—which includes claims that they’ve had trouble securing appointment slots for container moves recently.
  • However, in their best matador impression, the Harbor Trucking Association (HTA) has effectively waved a muleta of metrics back at the truckers by declaring that overall dwell times are still within expectations. The truckers just say, “That’s a bunch of bull!”
  • It’s up in the air whether the bull or the matador will win this “corrida de toros” …but spectators are surely in for a show!
  • Alan McCorkle, CEO of Yusen Terminals, has stated that business is brisk during the day shift (8 AM to 5 PM) and peters off heavily at night, adding that the truckers are really saying “the slots weren’t available when they wanted them.”
  • Despite his comments, McCorkle’s Yusen has launched a 60-day pilot project with the HTA to reduce the average trucker time on the port from two hours to 90 minutes.
  • Pick-up and delivery appointments represent more barbs in the back (banderillas) in Southern California— they’re getting canceled! And just to be clear, we’re not talking about what happened to Will Smith when he was canceled after the Academy Awards, but rather what Yusen has seen with appointment cancellations.
  • Currently, truckers book two or three appointments for the same slot and only use one booking appointment, which causes the other slots to be wasted.
  • The HTA and Yusen have not yet detailed how they plan to combat this, so stay tuned for the next edition…assuming we don’t get canceled for that Will Smith joke!

Final Destination Flat Beds

  • Have you ever found yourself driving behind a flatbed truck on the interstate, barreling along with a full load of giant wooden logs, and seen your life flash before your eyes?! If so, then boy, do we have an article for you!
  • But before we ease your anxiety on the log front, we’re going to stoke it just a tad more by sharing a statement from the CVSA (Commercial Vehicle Safety Alliance). Apparently, the secret to keeping cargo secure is to use more than the minimum number of tie-downs prescribed by the regulations.
  • There you have it folks, the secret to preventing wooden logs from flying off the back of a giant truck toward our precious corpora (yes, that is the plural of “corpus”!) is to just throw some more straps over everything.
  • On a more serious note, in May, the CVSA conducted its annual 72-hour hour International Road Check and discovered that 12.4% of all stops resulted in a “securement out-of-service” violation.
  • Remember dear readers, this was AFTER they specifically announced that cargo “securement” was going to receive extra attention in advance of the event.
  • So, the next time you’re stuck behind that flatbed full of logs, you have nothing to worry about…87.6% of the time anyway!

Arid Air Rates

  • This one will be short and dry…air rates are still dropping. (Hey, we warned you!)
  • Chargeable rates are still down week after week, hitting a global average of $2.29 on August 14th, correlating with a drop in global tonnages of 5% for the month of August.
  • Worldwide average rates are 36% below their levels this time last year, but they are still 34% above pre-Covid levels (2019).

I’ll Have CHIPS with That!

  • The U.S. Department of Commerce (DOC) is throwing a celebration for the one-year mark of the CHIPS Act, a $50 billion game-changing initiative aiming to fortify domestic semiconductor production.
  • The CHIPS Act is all about bolstering the nation’s semiconductor supply chain, reducing vulnerabilities, and ensuring a steady flow of these vital components for industries like technology and defense.
  • After signing the act into law, the sector saw private companies making robust investments as they clamor to work together with the government to restore our nation’s secure access to raw materials and advanced fabrication technologies. Total investment to date is estimated to be over $230 billion. No chip on their shoulder there!

China Not Invited to the CHIPS Party

  • On August 28th, U.S. Commerce Secretary Gina Raimondo met with Chinese officials to discuss export controls, specifically around U.S. processor chips and technology.
  • The Chinese government is perhaps a little jealous of the party being thrown on the other side of the Pacific for CHIPS.
  • Rumors stirred earlier in the year that U.S. officials were seeking new export restrictions on artificial intelligence-related processors to stop China from obtaining technology with potential military uses.
  • One of the world leaders in artificial intelligence, American firm Nvidia, took the opposite stance and recently warned the U.S. that further curbing exports would eventually end chipmakers’ abilities to compete in China.
  • It seems that Nvidia’s stock rallying 220% this year, after nearing $30 billion in revenue last year wasn’t enough profit potential for their board!
  • A wise commercial once told us, “You aren’t you when you’re hungry.” China may want to ditch their chip cravings and try a Snickers because this situation could chip away at all our sanities for quite a while.

Supply Rain Reactions

  • Well, loyal reader, it has finally come to this:  Shapiro is shamelessly plugging the return of our world-famous Supply Chain Reactions in an article about Panama!  What’s next?  Pirate-themed videos making fun of large bureaucratic forwarders?!
  • While the rain in Spain falls mostly on the plain, the carriers’ rain story for Panama has a fatal flaw (hey, “fatal flaw” rhymes with “Panama”!).  The fatal flaw is that it is full of b-o-l-o-g-n-a (say it like the Italian city, please)!
  • Over the last 14 days, Panama has enjoyed seven inches of rain in the Canal Zone.  This is 10% of the typical annual total rainfall for the region!
  • Even an amateur meander to your handy calendar also shows that rain is expected every single day in September and the first week of October.
  • While we came three credits short of our degree in meteorology, it certainly looks like the worst of the drought in Panama is at a refreshingly damp close.
  • If we imagine that Gatun Lake, the huge reservoir that feeds the locks of the Panama Canal, is playing hide and seek with rainwater, container ships are still being given priority for Canal transits over other vessel categories.
  • Are we talking about Panama with our ocean carriers for a legitimate reason or are we just talking about the weather? Shippers of concrete, bricks, slate, barbells, or black holes might just think that carriers are manipulating the market to keep vessels loaded light, fluffy, and puffy with profit!
  • While this is hard to imagine, massive black holes are billions of times heavier than that giant ball of fire and glory in the sky, our sun.

TransPac Rate Slack

  • Was that a peak-season or a freak-treason? Rates are up as much as 40% since June, while August witnessed broad rate stability. But what will we see to end Q3?
  • With approximately 2M new TEUs coming online, vessel load factors settling in around 90-92% on average, and blank sailing rates leveling off at around 12% of total capacity, it seems obvious that rates will not be climbing. But will they fall?
  • Yes.
  • Now, THAT was a Pulitzer-worthy bullet, scholarly shippers!  And, we are sticking with it!
  • Having become conditioned to very long transits last year and to what amounted to fortnightly sailings during 2023’s blank sailing frenzy this spring, shippers bought holiday merchandise early this year.
  • If you don’t believe us, put on pants (your legs go in them), carefully exit your dwelling, look both ways, and go visit a couple of your fave retailers!
  • The steady reduction in GRI levels this summer, followed by the carriers’ inability to hold those GRIs for longer than a week or two, spells demand trouble for the steamship lines.
  • Having recently invested in a crystal ball, we gaze into its foggy depths and see spot rate reductions of 7-10% for both coasts by the end of Q3 (October 1st).
  • And on certain service loops, already underfunded with cargo, we expect bargain-hunting shippers and forwarders to proudly brag about savings of as much as 20%.