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An Interesting and Customary Quarterly Reporterly
CBMA is Switchin’ Jurisdictions in 2023
838 Reasons to Suspect Forced Labor
Get Yourself Get Yourself Connected
An Interesting and Customary Quarterly Reporterly
- The Internal Revenue Service (IRS) recently announced that it will be increasing the rates used to calculate interest on overdue accounts and refunds on US Customs duties in Q4 of 2022.
- Please note the following adjustments effective October 1, 2022:
- The quarterly interest rates will be 5% for corporations and 6% for non-corporations for overpayments; and
- The interest rate for underpayments will be 6% for both corporations and non-corporations.
- The interest rate is based on the Federal short-term rate and determined on a quarterly basis.
- Click here to view the official Federal Register Notice.
CBMA is Switchin’ Jurisdictions in 2023
- Craft Beverage Modernization Act (CBMA) refund claims will move from U.S. Customs and Border Protection’s (CBP) jurisdiction to the Alcohol and Tobacco Tax and Trade Bureau’s (TTB) jurisdiction beginning January 1, 2023.
- As a result, importers will no longer file CBMA at the time of entry and will move to a TTB refund program instead.
- At that time, TTB will deploy “myTTB”—an online filing system—to handle all CBMA refund claims. Foreign producers must register with TTB and receive a TTB registration number; and foreign producers and importers will submit required data via the online system.
- Importers should note that all required documents will still need to be maintained and submitted to TTB upon request.
- Click here for more details on the upcoming CBMA changes.
838 Reasons to Suspect Forced Labor
- U.S. Customs and Border Protection (CBP) officials reportedly flagged 838 entries—valued at over $266 million—for suspected use of forced labor in August.
- CBP’s report did not specify the proportions of those goods that were held from the Uyghur region in China vs. withhold release orders (WROs) from other countries.
- Want to learn more about the risks associated with Forced Labor products? Check out our helpful guide on How to Avoid Forced Labor Violations on Your Imports!
US Trucking’s Crystal Ball
- Even as we all talk endlessly about inflation and the definition of recession, US manufacturing has been quietly increasing—though slowly. Manufacturing output was up for July by 0.6% vs. June and up another 0.1% in August. When comparing 2022 to 2021, production is up over 3%. As you might imagine, this is a key leading indicator for US trucking, and industrial demand and an overall increase in consumer sales has supported strong trucking results year-to-date (YTD).
- To broaden our view, we note that US retail rebounded nicely in August, with solid growth in home furnishings, clothing, sporting goods, musical instruments, and bookstore sales. When isolating recreational goods overall, the segment grew more than 10%. Again, when evaluating the future health of US trucking, retail is an essential factor.
- The last leading edge to take a gander at is e-commerce. In August, year-over-year (YoY) e-comm sales were up over 12%. While we may see a UPS truck in the driveway, we must remember that e-commerce drives broader trucking demand—pun intended— throughout the supply chain.
Tale of Two Shippies
- The Union Pacific Railroad (UP) pushed rates DOWN for its domestic intermodal offerings out of Southern California by 10-15% for 18 lucky outbound lanes served from SoCal.
- Eyeing the bigger picture, UP is attempting to narrow the gap between spot rail service costs and traditional trucking. They also seem to have forgotten the huge wage increases they promised their workers…but we must presume they know math well.
- CSX Transportation (CSX) and Norfolk Southern Railway (NS)—also reasonably adept with calculators—have addressed trucking rate reductions by providing credits to top customers and by lowering their spot intermodal rates over the last six weeks.
- $12 billion-a-year JB Hunt Transportation Services (JBH), the nation’s fourth largest trucker if you count UPS and FedEx (and second if you don’t), has chosen to delay peak season surcharges for moves originating in California. In the last two years, peak season increases were as high as $5000 a trailer (at the peak of the peak).
- Since JBH has a toe in FTL, LTL, drayage, and domestic rail, their commercial position on peak is a powerful message for the broader market. Essentially, JBH does not consider demand strong enough to support the increases, and they are not enduring increased costs for empty repositions, equipment control, and drayage. Oh…and one imagines that JBH would certainly be seeing the domestic rail rate decreases discussed above.
Get Yourself Get Yourself Connected
- (I ain’t gonna go blind!) Chicago’s O’Hare (ORD) is the globe’s most connected airport, and we don’t mean it “that way,” despite Capone’s local legacy. While O’Hare is not considered the busiest airport (typically measured by passenger flows), the greatest number of connecting flights relay through Chicago’s famous airport—serving 66 countries with nearly 1 million flights a year when adding domestic and international. This is O’Hare’s first #1 connection ranking since 2016. The airport is named after Butch O’Hare, who single-handedly shot down 5 Japanese planes attacking the aircraft carrier, Lexington.
- When looking beyond the US (and why should we EVER do that?!), Mexico City’s Juarez International (MEX) boasts the greatest number of destinations served. The world’s fourth largest city—with over 20 million souls—was founded over 700 years ago, and it claims to have immigrants from the greatest number of countries of any world city.
- Looking over the Atlantic, London’s Heathrow (LHR) maintains its position as the European airport providing the greatest number of relay options for passengers and cargo. Unlike O’Hare, Heathrow was named after … wait for it… a “heath” and a “row.” Yes, London’s mammoth air hub is named after uncultivated land typically dominated by heather, gorse, and coarse grasses.
- Why stop discussing air connections now? If you are looking for the fastest-growing airport for connecting flights, then look no further than Tokyo’s Haneda Airport (HND)! With big brother Narita, Haneda serves as the world’s largest city and provides access to over 100 cities and nearly 30 countries. The airport was ranked #22 for destination breadth before the pandemic, but it now sits at an impressive #14.
- Last one, we swear! Indira Gandhi International (DEL) provides access to the greatest number of destinations among all airports in the Asia Pacific region.
Odds, Ends, and Trends
- After expressing something like “Elon, Amazon, and Facebook can accumulate more wealth than King Midas, why can’t we?”, MSC announced the 2023 launch of MSC Air Cargo. The new world champion ocean carrier will lease four 777-200F jets from Atlas Air to start, and they have hired Jannie Davel, a Delta Cargo and DHL veteran, to run the show. MSC has yet to comment on the possibility of jets and cargo stopping at several feeder airports before final deliveries…!
- Earlier this year, CMA CGM launched an air service with Air France-KLM and partnered with Air Belgium. The famous French carrier has since greatly de-emphasized air cargo services after a poor financial start for that program.
- Speaking of the famous French, CMA CGM has ordered seven biogas-powered ships for placement in their French West Indies trade lane focused heavily on Guadeloupe and Martinique. The ships will hold between 7000 and 8000 TEUs and represent a substantial upgrade in capacity. The news is positive for local economies since port terminals will require upgrades by 2024 to accommodate the larger boats. Unfortunately, the news is quite awful for local food scraps and agricultural waste, most of which were hoping to become slowly decomposing compost rather than being burned alive in an engine. Oh well!
- In a further sign of market cooling, container volumes at China’s eight largest ports have declined over 12% YoY in the first three weeks of September. While we must remember that 2021’s surge became more of a tsunami by September, the decline comes just as Chinese factories are back in full swing after lockdowns.
- While Inter-Asia rates are softening, they are relatively stronger than Asia-US long-haul rates. Last week for example, USEC import rates dropped another 10% as the Inter-Asia indices dropped an average of 2.5%. This is significant because the “up-start snot-nosed little pipsqueak brat” non-alliance carriers are up to 14% market share for Asia-US. If the opportunity cost for long haul increases, will they be lured back to Inter-Asia
