Featured Headlines:
FTC Battered by False “Made In USA” Claims
Norfolk Southern Unveils Rail Bale
FTC Battered by False “Made In USA” Claims
- Recently, a case was settled against Lithionics Battery and its founder, Steven Tartaglia, after the company had falsely labeled its battery products as “Made in USA.”
- For background, “Made in USA” labeling only applies to products where the final assembly or processing occurs in the US or virtually all of its components are made and sourced in America.
- In total, $105,319.56 in civil penalties were issued. According to the US Assistant Attorney General, Brian Boynton, the Federal Trade Commission (FTC) is “committed to protecting consumers from the deceptive practices of companies who hope to gain an unfair advantage through dishonesty.”
CBP Issues Guidance on UFLPA
- The Uyghur Labor Prevention Act (UFLPA) establishes a rebuttable presumption that the importation of any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (XUAR) of the People’s Republic of China, or produced by certain entities, is prohibited by Section 307 of the Tariff Act of 1930 and that such goods, wares, articles, and merchandise are not entitled to entry to the United States.
- Effective June 21, 2022, the US will ban all goods from any country that may have raw materials, components or subcomponents made, or some type of processing done in the XUAR.
- Importers should ensure their supply chains do not include any goods from this region and should maintain convincing evidence that the goods were not produced using forced labor. Learn how to avoid forced labor violations.
- US Customs and Border Protection (CBP) will host webinars on this topic on June 1st, 7th, and 16th. Click here to register.
Norfolk Southern Unveils Rail Bale
- Beginning June 27, Norfolk Southern (NS) will eliminate or reduce service for 120 international intermodal lanes in the US.
- NS plans to discontinue ocean container services from Elizabeth, Louisville, Detroit, Columbus, Cincinnati, Cleveland, and Atlanta to Long Beach/LA, Oakland, Portland, and Seattle.
- The news comes as yet another blow to US exporters, and it will be interesting to see what the Federal Maritime Commission (FMC) and government regulators have to say about the moves.
- The omission of these lanes will also negatively affect domestic repositioning programs. In this context, repositioning refers to domestic cargo laden in ocean containers, which is then off-loaded on the West Coast while the empties return to the lucrative Asia market.
- In total, 57 lanes to Long Beach/LA will be removed, 24 to Tacoma/Seattle, and 12 to Portland. Also, 10 services via the US East Coast or Canada are scheduled for elimination.
Domestic Pit Stop Back Drop
- California will disallow all drayage tractors manufactured between 2007 and 2009 by the end of 2022 as part of the “Clean Feet” environmental policies. The state had already banned tractors older than 2007. While calculations are complex, the ban is estimated to reduce port trucking capacity by as much as 27%.
- Interestingly, while spot full-trailer-load (FTL) pricing has fallen nearly 20%, long-haul FTL and less-than-trailer-load (LTL) pricing continues to rise this spring.
- US Bureau of Labor Statistic (BLS) data indicates a steady rise in long-haul FTL overall (this data includes contract and spot purchases) during early 2022 with rates up 7% since February. BLS analysis indicates a more than 14% jump in LTL pricing over the same period.
- 37.5% of the country’s largest 24 freight gateways are reporting improved overall trucking capacity. Of particular interest, the NY/NJ and California markets are among the most improved.
- When looking at those same 24 busy ports and rail ramps, not a single location has experienced an improvement in chassis availability. Fortunately, only four gateways are in crisis mode, but guess what? Those extra truckers in NY/NJ and California face the worst chassis fluidity nationwide. One step forward, and two steps back.
- Cargo volume moving by North American intermodal rail fell over 10% in April 2022 vs. 2021. With staffing problems, congestion woes, and chronic equipment shortages, shippers are moving away from the rail just as trucking fuel surcharges make rail attractive on cost.
- It is estimated that diesel costs account for over 30% of total trucking rates today. With increases of $0.20 per gallon this week and $0.51 in the last month, total trucking costs for shippers are expected to rise even if base rates lower or remain stable.
Global Food for Thought 2
- Despite harsh words from European leaders and the United Nations (UN) about using food as political leverage, Russia agreed to free Ukrainian ports only if the West removes sanctions on Russia. The US rejected that condition.
- With great urgency, European Union (EU) nations and the Ukraine are devising truck and rail options to move grain and fertilizer from the Ukraine.
- The UN further warned that a continued blockade of Ukraine’s Black Sea ports could create the right conditions for a global food crisis and mass migrations.
- In response to current and expected shortages, global food protectionism has grown. India, which has already blocked wheat exports, has placed limits on sugar exports as the world holds its breath at the prospect of rice restrictions from India. A rice restriction could well have ruinous consequences for global food security.
- In SE Asia, export bans from palm oil to chickens reflect large food security fears.
- Egypt is the world’s largest importer of wheat, and many experts fear the worst for the country’s children and poorer populations.
- Fearing less access to US and Ukrainian corn, China has begun to purchase large quantities from Brazil.
Global Shipping Grab Bag
- Thanks to a local shortage, jet fuel from New York is still selling for more than $6 a gallon, after recently establishing a new record around $7.50. While also elevated, jet fuel in the US Gulf and in Europe is selling for approximately $4 a gallon. New York inventories sit at diminished levels not seen since 1990.
- Shanghai continues to aim for June 1 to more broadly re-open with the hope of ramping up local factory production quickly. In some hopeful news, local officials recently re-opened a portion of the world’s longest subway system in Shanghai.
- Recent air export data from Shanghai indicate significant upticks for Tesla, Dell, and HP—a positive sign that local production is at least warming up again.
- In less positive news, Beijing continues to tighten restrictions while local infection rates rise persistently.
MSC's S&P Spree
- Very quietly in August 2020, Mediterranean Shipping Co (MSC) began a sale and purchase (S&P) strategy to increase global capacity rapidly. As we all read, MSC became the world’s largest carrier, surpassing Maersk, at the end of 2021.
- This week, MSC will acquire its 200th used vessel in the last 22 months. This is believed to be the largest S&P “binge” in the history of maritime shipping; the acquisitions have more than doubled MSC’s total fleet size since August 2020.
- According to Sea-Intelligence, in addition to the secondhand purchase spree, MSC has a new order book totaling over 1.7 million TEUs. In fact, MSC’s new building orders alone would equal the capacity of Hapag Lloyd, the world’s 5th largest carrier.
- When you combine the existing fleet with the new vessel orders, MSC will have access to 5.7 million TEUs of ocean capacity. For context, the 2M alliance had the same capacity when it debuted in 2016.
- Don’t be surprised to read about MSC’s purchasing frenzy in businesses beyond ocean liner services. In recent months, MSC has garnered press attention for forwarding purchases in Africa, a bid to control IMA (formerly Alitalia) with Lufthansa, and the purchase of a famous ferry service in Italy.
US Chemical Exports in Hazard
- In 2021, US chemical exports decreased for the first time in four years.
- After falling 8.4%, American chemical manufacturers got less than 2 million TEUs to foreign markets for the first time since 2018.
- Total export growth for US chemicals totaled 26.9% from 2017 to 2020.
- The main culprits for the decline? Covid shutdowns in Malaysia and China, two large export markets, and shortages of rail cars that have caused manufacturers to slow overall material production.
- The decline would have been much worse, but Brazil increased imports 16.1% while Belgium upped consumption by 11.6%.
- 2022 lead times for leased railcars, normally four months, are averaging just about 12 months for US chemicals shippers. Not a good start!
