Featured Headlines:
ACE Chatbot Reporting for Duty!
New Petitions Start ADD-ing Up
A Section 301 Update For Issue 300
Welcome to the China Trade Parade
ACE Chatbot Reporting for Duty!
- If you use the Automated Commercial Environment (ACE), then you will want to keep reading, because we have some news for you!
- U.S. Customs and Border Protection (CBP) recently launched a new automated tool on its ACE homepage—dubbed the “Ask ACE Chatbot”—to provide users with additional assistance, resources, and support 24 hours a day, 7 days a week.
- CBP officials have asked users to complete a satisfaction survey after testing the new chatbot to evaluate the overall efficacy of the tool.
- Click here to see the new ACE Chatbot for yourself!
New Petitions Start ADD-ing Up
- The US Department of Commerce and the International Trade Commission (ITC) have filed two new petitions to determine whether there is a reasonable indication that a US industry is materially injured or threatened with material injury by reason of the imports of brass rod and non-refillable steel cylinders from the below countries.
- An antidumping and countervailing (ADD/CVD) investigation has been scheduled for Brass Road from Brazil, India, Israel, Mexico, South Africa, and South Korea.
- The preliminary determination is expected by June 12, 2023.
- Click here for more details.
- An ADD/CVD investigation has been scheduled for Non-Refillable Steel Cylinders from India.
- The preliminary determination is expected by June 9, 2023.
- Click here for more details.
- An additional petition has been filed to determine whether boltless steel shelving units prepackaged for sale from India, Malaysia, Taiwan, Thailand and Vietnam also injure or threaten US industries in a like manner.
- An ADD/CVD investigation has been scheduled for Boltless Steel Shelving Units Prepackaged for Sale from India, Malaysia, Taiwan, Thailand, and Vietnam.
- The preliminary determination is expected by June 9, 2023.
- Click here for more details.
- Any questions? Feel free to reach out to our compliance experts!
- An ADD/CVD investigation has been scheduled for Boltless Steel Shelving Units Prepackaged for Sale from India, Malaysia, Taiwan, Thailand, and Vietnam.
- An antidumping and countervailing (ADD/CVD) investigation has been scheduled for Brass Road from Brazil, India, Israel, Mexico, South Africa, and South Korea.
A Section 301 Update For Issue 300
- On Friday, the office of the US Trade Representative (USTR) extended 77 of the 81 existing exclusions for COVID-related medical products subject to Section 301 tariffs, originally scheduled to expire on May 15, 2023, through September 30, 2023.
- All 81 exclusions will be temporarily extended until May 31st to allow for a transitionary period for importers.
- Click here to read the full notice in the Federal Register.
Truck Hiring Inspiring
- With the drayage, courier, and warehouse sectors all losing jobs, it was particularly positive to hear from the Bureau of Labor Statistics (BLS) that for-hire trucking firms added over 12,000 jobs in April and 14,000 since March 1st. Hey, BLS, thanks for reaching out!
- This reflects seasonal shifts connected to travel, agriculture, and construction, as well as surprisingly hopeful US manufacturing levels. As of January, the US GDP from manufacturing was well over $2 trillion, or about 12% of the overall economy—24% if you include direct and indirect purchases and sales (including raw materials). Hey, not too shabby, provided we forget that it was 50% in the 1970s, counting direct and indirect!
- With high-tech production ramping up in the US and the seasonal summer uptick, full trailer load (FTL) and less-than-trailer load (LTL) carriers are preparing for action. And, manufacturers often need more dedicated designs, a higher margin product for truckers.
- Interestingly, spot rates continue to drop, but shippers have been patient with contract rates as they look to ensure a foundation of reliability and consistency. Those pesky shippers—still gnashing their teeth over the pandemic—do appear to be looking for shorter contracts to best control current trucking volatility while taking in savings where possible.
- Including housing, construction, and industrial inputs with manufactured goods, a full 60% of the US trucking volumes come from “industrial goods.” That is a big slice of the pie…and there is reason for cautious optimism.
- A quick review of Q1 year-over-year (YoY) volume demand by region tells us why any US hiring gains in trucking represent good news:
- US Trend: Down 6.1%
- Southeast: Down 16.1%
- West: Down 14.1%
- Northeast: Down 9.1%
- Midwest: Relatively Flat
- Southwest: UP 14%
- Taking the early lead for “Trucking Region of the Year,” the Southwest was the only region where volumes and spending both increased. With 5-7% increases at border crossings, the region is benefitting from robust trade with Mexico.
- Oddly, in the Southeast and the Northeast, spending levels went up while volumes were significantly down. Hmmmm!
- They say nobody wants to slip and slide through ice and slush in a Northern winter, so that explains a rate hike. And, in the South…? March Madness plus The Masters plus lots of “Gone Fishin’” signs during a beautiful Spring? Shrug…We’re stumped!
- The West is battling twin troubles, with a nearly 30% reduction in imports and about a 20% contraction in new housing starts. Tough times for truckers out West!
New Yawk Dray Tawk
- Feel the spray from Newark Bay, “are there dray loads? Not today!”
- We used to pay to play with a 14-day notice to sway the dray, and they still said “nay!” But, a 27% volume diminishment from January 1st to today did slay that dray bray.
- Rates today convey doomsday as they stray to halfway through last year’s price array.
- By this May, some 44% more drivers have entered the fray, though only 42% have stayed to play with less cargo to weigh.
- While 30,000 drivers—some from Norway, some with hair of gray, but all eager to hit that roadway—are registered, many must stay away and pray. Some even stray to Uber or rely on sick pay.
- Per mile rates betray the market astray, dray must stay higher than a flatbed of hay, or a truckload of clay. Even on a perfect day, a dray is a flay with port turns like a ballet.
- All we can say to attempt to allay is that our hearts will not stray or go away from the hard-working drivers from NY and N Jay!
Welcome to the China Trade Parade
- The vast majority of the world’s wisest and most erudite economists have been saying, “yeah, well, at least there’s China,” when asked if a global recession is already taking root. It will be a nail-biter for the winner of the Nobel Prize in Economics this December 10th!
- The theory is that the world can count on China’s raw materials import appetite to fuel her export manufacturing juggernaut, and this will provide the world with a hedge against America’s slumping demand and Europe’s overall stagnation. Let’s look at April figures to test the theory, scholarly readers…
- China’s imports were down almost 8% year-over-year (YoY), fueled by decreases in crude oil (get it?) and less than medal-winning performances in iron ore and copper imports (get it, get it?). Japan and South Korea—who count on exports to China—have chosen not to invite China to their annual May picnic, though China does still spend $200B a month on imports overall.
- While an 8% slide is disappointing, a very clever person with very thick glasses and a groovy pocket protector pointed out that prices for many of China’s key imports were down in April, and this obscures the demand picture a bit.
- The deeper problem is that infrastructure and property investment is in decline in China, and these sectors are vital for healthy import growth, by volume and by value.
- On the export side, the statistics look great at first. At about $300B for April, China’s exports were up over 8% YoY, and there was much rejoicing… until, that clever pocket-protected hero mentioned that April 2022’s exports were abnormally low due to massive Covid lockdowns in central China, especially Shanghai. Rats.
- Hey, not all the export news was mixed! At least exports to Russia are thriving! This is what every Western nation was hoping to hear!
- Exports from China to Russia neared $10B for April, and this established a new monthly record. For perspective, during the pandemic Chinese exports to Russia averaged below $5B a month. Thanks for helping with Ukraine, China! Love ya!!
- From a regional trading partner perspective, trade with Southeast Asia grew over 5%, trade with Europe declined 3.5%, and trade with the US slid an impressive 11.2%.
- While China may be dominating global trade news, at least the US has won 400 Nobel Prizes in history compared to China’s eight. Na, na, na… that means US “trade” in Nobels is 98% higher than China’s!
Bed Wrath and Beyond
- Sometimes, when you have nothing else to lose, you speak your truth!
- Bed, Bath, and Beyond (BBBY) has filed Federal Maritime Commission (FMC) claims of $31.7 million from COSCO’s OOCL and nearly $8 million from Yang Ming.
- After closely reviewing contract performance from 2021 to early 2023, BBBY highlighted both extreme shortfalls in allocation and failure to honor PSS/GRI commitments.
- Given that every single BCO not named Wal-Mart (and probably Wal-Mart as well) can claim the same poor treatment during Covid, most of us have our bulging eyes glued to the FMC cases and potential precedents.
- Early comments from Yang Ming have emphasized contract language that allows a shipper to decrease annual MQC should the carrier fail to provide space. Without siding openly with BBBY, one wonders why a contract was needed if MQC is not actually guaranteed—but our newsletter writers, admittedly, did not go to law school!
- BBBY has indicated that their stores were 35% out-of-stock by December 2022, even as the company invested tens of millions more in ocean shipping and disrupted supply chain logistics.
- The result was a 50% reduction in holiday sales last year, the final nail in the BBBY coffin.
5G Airport Rules Foggy
- Next time you are arriving on a morning flight in the fog or an evening flight in a thunderstorm, try not to remember that aircraft radio altimeters (RADALTs) operate on the C-band radio spectrum. Who cares, Shapiro?
- Well, careless reader, 5G cell operations also operate on C-band. None of us will be too pleased when pilots, flying in the dark, have interference on their instruments!
- In January 2022, major American telecommunications companies began launching 5G networks powerful enough to disrupt avionic transmissions, and disaster was avoided only when Verizon and AT&T agreed to “power down” their 5G networks near airports.
- No wonder cell reception sucks when we try to display our boarding pass, while holding scalding hot coffee, with 74 grumpy passengers standing behind us!
- Fortunately, the International Air Transport Association (IATA) announced that the five largest US telecommunications companies have agreed to extend their voluntary power mitigation measures at 188 US airports until January 2028.
- Unfortunately, the underlying safety, regulatory, manufacturing, and economic problems surrounding C-band are no clearer than yesterday.
- Essentially, the Federal Aviation Administration (FAA) imposed a RADALT retrofit standard by July 2023, and many airlines have already spent millions to upgrade their systems. With the push to 2028, will those upgrades even be valid?
- Airline executives are fuming mad—especially with Covid so close in their rear-view mirrors—that the airlines are being asked to foot the retrofit bill alone. Oh, the joy!
Trans-Pacific Specifics
- In the wacky world of post-pandemic shipping, have ocean carriers finally found the nirvana of equilibrium?! When we look at March and April of 2023 together, YoY supply was suspended by 27% through blank sailings, while US import demand slipped 27%. Ommmmm city at hot house yoga!
- Before we all lock in our freight budgets through April 2024, let’s take a deep breath and talk about the bigger picture. First, available capacity has fallen each month in 2023; the chart looks like a downward staircase (after two years of a rising staircase). So, today’s equilibrium is very much about the April 15th GRI and justifying it.
- As unpopular as this may be, it is hard to blame the ocean carriers for not wanting to offer contracts below cost; but, make no bones about it, the April GRI was not a market-based shift, it was a means to provoke BCOs to sign deals.
- Look at the fate of that GRI through your Sherlock Holmes magnifying glass. After letting blank sailing rates drop beneath 20% of capacity, the ocean carriers have had to “give back” about 30% of the April 15th GRI in the first three weeks since implementation. Youch! That is some fast rate erosion, bargain shopping shippers!
- With the future structure of alliances in question, wave to the 2M poster child, it certainly looks like ocean carriers have their eyes set on market share just as much as market equilibrium. This is a classic problem in the industry, and it is certainly complicated by new vessels coming online (and, as we watch ocean carriers still gobbling up vessels on the second-hand market… why??!!).
- Before we overreact to the 27% demand slide YoY, March-April’s US import demand was nearly 10% higher than 2019 “comps.” This is a current sign of life at minimum or evidence of a fundamental, broad-based increase in the import market… or both.
- So, as we view the current decline in blank sailings, do we imagine that ocean carriers are bullish on demand and are scaling capacity to meet this demand? Or, do we imagine sharks in a shark tank biting each other (and anything else in the tank)?
- “Hey, Shapiro! Enough with the Socratic method, and what does that have to do with nirvana?” Okay, okay, cranky readers… we’ll put our money where our mouth is!
- We see rates sliding in May by about $100/container to the West Coast and at least $200 to the East Coast. However, we will not be AT ALL surprised to see a rate re-set back to April 15th levels on June 1st.
- The longer view on rates is a dangerous game at the casino, but we believe that rates to the East Coast and Gulf will decrease due to pending capacity increases and what begins to look a lot like market share “sharky” behavior from the carriers.
- Oh, by the way, Buddha (first human to achieve nirvana) was born in 564 BC, and Socrates and his method were born in 469 BC. And, they both believed that human beings had an ethical responsibility to do what is right. This sounds exactly like ocean carriers, shippers, and (gasp) forwarders, right?!
