Featured Headlines:
US Reincludes Certain 301 Exclusions
CIT Tells USTR to "Suit Yourself" in Section 301 Lawsuit
US Export Liquor Gets a Kicker
Shanghai Puts Bull’s Eye on COVID
US Reincludes Certain 301 Exclusions
- The US Trade Representative (USTR) has determined to reinstate 352 of 549 previous Section 301 exclusions.
- Full tariff exclusions will be included, as well as product specific exclusions.
- The exclusions will apply retroactively to October 12, 2021 and will extend through December 31, 2022.
- Click here to view the official Federal Register notice, which includes the full list of excluded products.
CIT Tells USTR to "Suit Yourself" in Section 301 Lawsuit
- Last week, the Court of International Trade (CIT) released a ruling indicating that the USTR had the authority to impose the List 3 and 4A Section 301 tariffs covering over $200 billion in Chinese goods.
- The decision was not in favor of the plaintiffs—a group comprised of over 3600 separate lawsuits. However, CIT also ruled that the USTR failed to adequately respond to comments submitted in advance of the Section 301 tariffs and sent the matter back to the agency.
- The CIT panel of judges ruled that the List 3 and 4A tariffs can remain in place while the USTR reconsiders its actions related to the aforementioned comments.
- The USTR will have until June 30 to respond to the court’s remand.
UK and US Steel the Stage
- The US announced it will replace the existing 25 percent tariff on the UK’s steel products under Section 232 with a tariff-rate quota (TRQ) effective June 1, 2022; the tariff drop will allow “historically-based sustainable volumes” to enter the US.
- According to the deal, Chinese-owned steel companies in the UK must also undergo a financial audit to check any influence from the Chinese government.
- Click here to view the details included in the Commerce Department’s announcement.
- Click here to view the joint statements from the US and UK.
Searching for the Holy Rail!
- Average rail container dwell times in Long Beach/LA have increased to 5.2 days after getting as low as 3.5 days in January.
- Long Beach Container Terminal (LBCT), for example, had 8,000 rail containers on terminal last week; at peak efficiency, the terminal holds between 1,000 and 1,500 containers.
- The Burlington Northern Santa Fe (BNSF) Railroad announced reduced rail car availability in key areas of its network.
- The Union Pacific (UP) Railroad has reported improved cargo fluidity in Chicago, which has been a persistent and chronic problem for UP. The railroad did also announce that intermodal rail traffic from the West Coast is steadily increasing in April.
- Interior Point Intermodal (IPI) bookings nationwide are increasing rapidly after the Lunar New Year lull, and railroads are not taking railcars out of storage quickly enough to meet fresh demand. Rail ramps in the interior US are rapidly becoming congested again.
Domestic Pit Stop Back Drop
- The Federal Motor Carrier Safety Administration (FMCSA) is slotted to receive $873.6 million in federal money to boost funding for safety operations, programs, and grants. The FMCSA requires operators to maintain high safety standards, and it wields the power to remove high-risk carriers, service providers, vehicles, and drivers from operation.
- XPO has sold its port drayage and domestic intermodal businesses to STG Logistics. As part of the $710 million deal, STG will receive 2,200 trucks, 5,200 chassis, and 11,000 containers.
- Among the busiest 40 seaports and rail ramps in the US, 35% are now operating normally for drayage coverage and ease of booking. Unfortunately, 40% still require 4-7 days lead time for bookings, and 25% still require 8+ days’ notice for drayage space. As hard as it may be to believe, these stats are greatly improved over the last 120 days!
US Export Liquor Gets a Kicker
- US distillers are toasting the end of high European Union (EU) tariffs on their precious products. To retaliate against Trump-era tariffs on steel and aluminum, the EU and UK imposed a 25% tariff on US whiskey and spirits in 2018.
- Kentucky bourbon exports to the EU, for example, were almost immediately cut in half, leaving about 11 million barrels of their famous hooch to sit and age. Thus, some American consumers may be slightly grumpy at the good news for exports!
- Kentucky bourbon accounts for 95% of the global trade in that liquor and is the source of $9 billion in economic output per year.
- Distillers and farmers alike applauded the Biden Administration and singled out the US Department of Agriculture for relentlessly highlighting the negative impacts of retaliatory tariffs on valued-added US agriculture exports.
- The EU and UK tariffs officially end on June 1.
The Global Shipping Grab Bag
- Sao Paulo’s Guarulhos International Airport (GRU) is facing major congestion after a surge in air exports has completely filled its airline warehouses. Trucks are waiting as long as 24 hours to deliver cargo as airlines struggle to make room for new arrivals.
- As the US launched sweeping export controls for Russia, Belarus, and Russian-friendly provinces of Ukraine, many insiders feared major tensions with China and Asia. The US Commerce Department recently praised multinational companies doing business in Russia, including Chinese firms. A Department spokesperson said, “The restrictions have been in place for roughly a month, and we certainly haven’t seen any indication that there’s non-compliance in fact we’ve seen the reverse.”
- YTD global air volumes are now 10% higher in 2021 than pre-pandemic 2019. Given the lack of passenger belly space, this is a truly remarkable position for the air cargo industry.
- Despite crippling border bottlenecks currently, Hong Kong International Airport— already the world’s largest air cargo hub—is marching ahead with construction of a third runway. The airport already handles 5 million tons of air cargo per year on 80,000 cargo flights. The new runway will almost double total potential air cargo capacity in Hong Kong; completion is expected by year’s end.
Shanghai Puts Bull’s Eye on COVID
- After announcing a 9-day phased process to test all 25 million residents of Shanghai, Chinese government officials have chosen to lock down the entire city for re-testing. The new mass testing and lockdown period was described as “indefinite.”
- Air operations at Shanghai’s massive Pudong Airport are all but impossible; truckers from neighboring areas face quarantines, and transportation workers are forced to sleep where they work if they want to work at all.
- At the nearby Shanghai seaport, the largest on Earth, Four Kites estimates that the average weekly container through-put is down more than 33% since March 12, though the port remains officially open. Again, the main problem is trucking, and the many delays associated with testing and quarantines.
- During the first lock-down, Shanghai cargo was diverted to nearby ports, especially Ningbo. However, as conditions worsen in Shanghai, most other ports are reluctant to allow truckers from Shanghai to deliver or pick-up.
- Nearly all Shanghai cargo consolidation occurs in Pudong warehouses, and the great majority of these facilities are now closed entirely.
This Flippin Ocean Shippin
- Despite the efforts of five tugboats, the 12,000 TEU Ever Forward failed to move forward again this week in the Chesapeake Bay. Three weeks and counting!
- 2021 witnessed the entry of five new ocean carriers into the Transpacific trade. Coupled with new buildings, this increased operating capacity by some 25% in 2021.
- “Potential” Transpacific capacity already exceeds demand; this highlights the extreme downstream allocation and cost impacts of congestion and operational blank sailings.
- It is estimated that 3.4 million new TEU of capacity will come online in 2022 and 2023.
- Maersk reported full-year 2021 earnings of $24 billion; similarly, CMA CGM announced a 2021 net profit of $17.9 billion. This means that these ocean carriers made more money than the total annual GDP of 91 countries on Earth!
