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Terrific News About Section 232 Tariffs
Include Your Comment on Section 232 Exclusions
Trucking Hodge and Railroad Podge
Beamer is the Creamer of the Export Crop
Terrific News About Section 232 Tariffs
- The US Trade Representative (USTR) announced a deal to partially rollback Section 232 tariffs on steel imported from Japan beginning April 1, 2022.
- The US will replace the existing 25% tariff on Japan’s steel products, which originally went into effect during the Trump Administration, with a tariff rate quota system (TRQ); any Section 232 steel products from Japan that are within-quota will enter the US duty-free, while all imports in excess of the quota allocation will remain subject to a 25% tariff.
- Derivative products made of steel will not be subject to Section 232 duties; this category includes certain nails, tacks (other than thumb tacks), drawing pins, corrugated nails, staples (other than those of heading 8305) and similar articles, bumper stampings and body stampings.
- It is important to note that the agreement does not make any changes to Section 232 tariffs applicable to Japanese aluminum products.
- Click here to view the official US announcement, which includes a full list of affected products.
Include Your Comment on Section 232 Exclusions
- The Bureau of Industry and Security (BIS) is seeking public comments regarding the Section 232 exclusion process on additional duties on steel and aluminum products; the deadline for filing comments is March 28, 2022.
- The BIS is interested in the public’s opinion on the responsiveness of the Section 232 exclusions process to market demand, as well as some of the more specific aspects of the process, such as— potential changes to the associated forms and required information; the request, objection, rebuttal, and surrebuttal process; the standards of review; General Approved Exclusions; and the overall transparency of the process.
- Comments can be submitted via the Federal eRulemaking Portal; the docket number is BIS-2021-0042.
- Click here to view the Federal Register notice.
Trucking Hodge and Railroad Podge
- Cass Information Systems calculates that average Full Trailer Load (FTL) rates overall were 7% higher YoY in January, while FTL Spot Rates were up a full 25%.
- Citing a reduction in intermodal container moves, all four major US railroads reported volume declines YoY for January 2021. Norfolk Southern and BNSF estimated volume diminishment of 10% while CSX reported a 6% volume drop; however, Union Pacific announced a very modest downtick of 1%.
- In related news, every single importer and exporter in the Midwest went on a hunger strike when they heard why the railroad volumes are down. Intermodal moves?! Seriously?!
- Drayage booking lead times remain at 10+ days for the following major US freight hubs: Los Angeles/Long Beach (LA/LB), New York, Norfolk, Miami, Seattle, Houston, New Orleans, and Kansas City.
Block... That... Trade!
- After two weeks of protests disrupted millions of dollars of US-Canada trade, the Ambassador Bridge has re-opened to cross-border traffic. Shortly thereafter, the crossing at Alberta also opened for normal trucking transportation flows.
- Union rules in Canada, the US, and Mexico have a defined process that allows traveling freight to change hands without workers leaving their home country; thus, rail workers are only subjected to one set of rules—vaccination or otherwise. As a result, many shippers switched to rail transport where possible during the crisis.
- With cross-border trucking costs skyrocketing, rail services could well expect higher demand in coming months.
Beamer is the Creamer of the Export Crop
- For the eighth year in a row, BMW topped the list of US car exporters by value in 2021; last year, the manufacturer shipped 257,876 vehicles – worth $10.1 billion.
- BMW’s plant in Spartanburg, South Carolina shipped X-model cars to approximately 120 countries—with an impressive 24.1% imported by China.
Highway Robbery à la Mode
- The US Labor Department announced that the costs of transportation and warehousing climbed another 1.4% in January from December—which wouldn’t be such terrible news if the index hadn’t already risen 16% in 2021!
- A closer look reveals an 18.3% increase in trucking, as well as a crushing 29% rise in ocean shipping— marking all-time-records for both in one year.
- Not to be out-done, rail and airfreight prices increased at their highest rates (pun intended) in more than a decade.
East Coast Seaport Report
- Charleston: A nearly 20% increase in imports YoY in January has created a backlog of loaded containers, with 30 vessels also at anchor in the harbor. The port has leased a barge to move long-dwelling containers and is prioritizing vessels with more exports than imports.
- New York: The port processed just shy of 9 million containers in 2021 – shattering their previous record volume by 18% – after experiencing “5 years of growth in 22 months.” With the percentage of cargo going into demurrage steadily on the rise, and with terminals at 100% capacity, NY must develop immediate plans for expansion. After some struggles with Omicron, the port is back down to 6 vessels at anchor.
- Norfolk: After being forced to close for almost 100 hours in January due to inclement weather, the port of Norfolk is facing tremendous land-side congestion. The port opened their NIT facility to help alleviate some strain on the main facilities at the port. It also announced that the US Army Corps of Engineers contributed nearly $70 million to deepen and widen the channel and harbor in Norfolk. Upon completion, two 20,000 TEU vessels will be able to transit the channel at the same time, and Norfolk will become the deepest seaport on the East Coast at 55 feet.
Empties Full of Pull
- After the Suez and Covid disruptions led to unprecedented asset dislocation and port congestion in 2021, the number of global shipping containers was considered a limiting factor for global trade, which pushed industry observers to closely watch new container manufacturing stats.
- In 2021, a record 7.2 million TEUs of new containers were manufactured; the price per unit reached nearly $4,000 – another high.
- New container production fell 14% between Q3 and Q4 2021, and the price per unit has also fallen 13% YTD; both indicators suggest that the peak market may be over, with many analysts pegging October 2021 as the true peak.
- What we can say for certain is that the global supply of shipping containers is no longer a limiting factor for overall global trade; over time, ocean carriers expect that diminishing port congestion plus the injection of so many new containers will greatly improve on-time performance and equipment availability worldwide.
