Featured Headlines:
Fishy Import Restictions on New Zealand
Well, Would You Look at That, CTPAT!
European Tree Hugging Chugging Along
Shooting the Ship on Steamships
Fishy Import Restictions on New Zealand
- U.S. Customs and Border Protection (CBP) has announced the immediate imposition of import restrictions on certain fish and fish products from New Zealand in response to the Court of International Trade (CIT) order (Slip Op. 22-130).
- As a result of the action, the following fish or fish products caught with a set net or trawl within the Maui dolphin range of the west coast of New Zealand’s North Island are prohibited from entry into the United States: snapper, tarakihi, spotted dogfish, trevally, warehou, hoki, barracouta, mullet, and gurnard fish.
- Admissibility procedures and additional information will be published by the National Marine Fisheries Service (NMFS) when available.
- Click here to see the full list of affected HTS codes.
Well, Would You Look at That, CTPAT!
- The CTPAT Trade Compliance Program is a voluntary program within the CTPAT umbrella that provides importers who have made a commitment of resources with the opportunity to assume responsibility for monitoring their own compliance in exchange for certain benefits.
- As previously covered in ShapTalk, CBP officials outlined (6) six new forced labor requirements for Tier II or Tier III Customs-Trade Partnership Against Terrorism (CTPAT) members at the 2022 Trade Facilitation and Cargo Summit earlier this year.
- However, in November, CTPAT just announced three (3) additional benefits to Trade Compliance Partners that could save eligible importers a ton of money; these include:
- Front of the line admissibility review for shipments detained due to forced labor;
- Redelivery hold intact at their facility if already delivered; and
- Detained withhold release order (WRO) shipments are allowed to move to a bonded facility.
- For more information regarding CTPAT, click here!
Where Houses of Wares?
- After the wild, uncontrolled, impulsive, panic buying of early 2022—you “nauti” shippers—US warehouse vacancy rates are down to below 4%.
- Between 2015 and 2020, the nationwide average vacancy was just above 10%. At most major seaports today, that rate is believed to be beneath 1%.
- And you don’t need a Master’s in Macroeconomics to know what we’re going to say next: Yes, the average prices for warehouse space are up over 30% from their six-year average.
- At just over $7 per square foot, warehousing has never been more expensive in the US. Hey, you pay about $14 per square foot for a hotel room…if you aren’t visiting New York City or San Francisco, that is!
- Steamship lines, long sick of being blamed for demurrage and per diem, have been muttering that there would be 0% or negative warehouse vacancy if they counted all the cargo in “temporary storage” inside maritime containers. Well, na na na, talk about hotel rates for commercial cargo! Also, negative vacancy isn’t even a thing, SS Lines!
- Sadly, at the end of the day, nearly 10% of surplus stock ends up in the landfill. Yes, seriously. Some $160 billion of US merchandise is simply tossed away each year…Blech.
The Export Report
- The Safeguard Tribal Objects of Patrimony (STOP) Act is expected to be signed into law by the White House. The legislation targets the export of Native American objects of lasting cultural or historical significance.
- A first offense gets you a year and a day in jail with a side order of hefty fines. Do it twice, and you could end up in the slammer for 10 years. So, if you do this in Birmingham, you’ll end up inside an Alabama Slammer (and not in a good way)!
- STOP also empowers CBP to seize these items before export, and it offers financial support to a coalition of tribes seeking the return of sacred objects already outside the US.
- With Taiwan already causing many uncomfy family dinners between China and the US, we were relieved to read that Beijing is allowing US access to Chinese companies in support of tougher US semiconductor export controls.
- While China isn’t really talking about it, they are passing the mashed potatoes and allowing inspectors to visit firms in Guangdong province, Shanghai, and good ol’ Wuhan.
- Long considered standoffish and snooty, the US and UK are at it again, gentle readers. Yes, they have formed yet another exclusive club, the UK-US Energy Security and Affordability Partnership.
- The partnership aims to limit global dependence on Russian energy exports while ensuring that the UK gets more access to US liquified natural gas (LNG). While details remain unclear, it is expected that there will be a dress code, special pins, and a one-of-a-kind handshake to solidify the exclusivity of this fraternity/sorority!
- The U.S. Commerce Department has added 24 companies and other entities (from Latvia, Singapore, Switzerland, Pakistan, and Russia) to the export control list for support of Pakistan’s nuclear activities and/or Russia’s military industrial base.
- The department cited threats to US national security and foreign policy concerns, and it also vowed to cross-check their list with Santa’s “naughty and nice” list!
- The Texas Tribune reported that the Biden administration has approved plans to build the nation’s largest oil export terminal off the Gulf Coast of Texas, which would add 2 million barrels per day to the domestic oil export capacity. It seems everything really is bigger in Texas, most especially high stakes fuel politics!
European Tree Hugging Chugging Along
- Yes, the title is a joke. Take it easy; we do know that the maritime shipping and airline industries are historically on the VERY naughty list for pollution!
- Deep breath here because this is hard to explain…After months of internal debate and negotiation, lawmakers from the European Parliament, European Council, and European Commission have announced a provisional agreement to implement a cap-and-trade emissions reduction system. Global high five!
- The Emissions Trading System (ETS) will require ship operators to buy (and surrender) ETS emission allowances with those costs starting at 40% of 2026 levels for 2024, increasing to 70% in 2025, and coming on home in 2026 at 100%. There will be a quiz on this at the end of this issue. Be ready!
- While we recommended “Dirty Digits,” European lawmakers are calling these pollution allowances, “EU Allowances.”
- There will be EU allowances for each ton of carbon dioxide (CO2) emissions, and there will be separate calculations for methane and nitrous oxide within the ETS system. European dentists are livid!
- Because fuel creates pollution during production and consumption, EU lawmakers stressed that a global approach to emissions reduction is the only truly effective pathway.
- The ETS system has the potential to be the model program for global shipping emissions reduction efforts. Bravo, EU!
- The safest and most effective means of shipping hydrogen is in the form of ammonia, and a group of 18 companies led by the Port of Rotterdam Authority knows it!
- These industrious Dutch folks are investigating the potential of a large-scale ammonia cracking facility, which separates the hydrogen inside the ammonia, to allow for the steady import of at least 1 million tons of hydrogen per year.
- To reach ambitious climate objectives, Europe must replenish the hydrogen gobbled up by terminals, trucks, and vessels along her many planned “green hydrogen shipping corridors.” Again, we suggested “scrubbed hubs,” but nobody listens to us in Europe.
Shooting the Ship on Steamships
- As expected, the 2M/Zim service connecting Tanjung Pelepas (near Singapore), Vung Tao (in Ho Chi Minh City), Yantian, Charleston, Savannah, and New York has been suspended. The service was branded “ZSE” by Zim, “Liberty” by MSC, and “TP23” by Maersk. Despite several shippers marching and chanting “give me liberty, or give me death,” the service went rather quietly in that good night.
- Cosco’s “BCO Express Line” service—the cleverly named CEN-X—has passed away peacefully in its sleep after a short illness. The speedy service linking Qingdao, Shanghai, and Prince Rupert had several cancelled voyages over the last several months, and many people said, “she just hadn’t been the same of late.” Several NVOs expressed their opinion that had the service been named “NVO Express Line,” she’d still be with us today.
- As prices plunge and volumes pucker, profits progress. That’s the message we received from Hapag Lloyd and CMA CGM after their Q3 earnings reports.
- Despite a volume shrinkage of 1.5% versus Q2, Hapag reported handsome profits of $5.3 billion for Q3 and about $15 billion for 2022 YTD.
- Despite a revenue slippage of nearly 2% versus Q2, CMA CGM will walk with a tidy $7.6 billion for Q3.
- It will be fascinating to see what Q4 brings for a steamship industry grappling with severe rate erosion and the high costs of blank sailing programs!
TransPacific Specifics
- Where are rates down 87% or $10,000 per FEU in the last six months? Yes, the US West Coast (USWC)!
- At $1400 per 40’ from Base Ports in Asia, have we reached carrier breakeven? Have we hit rock bottom at last?
- US imports were down 21% in November compared to October, but vessel load-factors—especially to the USWC—have improved considerably in early December as shippers look to beat any pre-Chinese New Year (CNY) rush. While this will not support meaningful general rate increases (GRIs), it will help rates from sinking farther for the USWC.
- East Coast (USEC) load-factors have been softer in the last several weeks, and we continue to see weekly rate erosion, though reductions have shifted from $300/FEU per week to below $200.
- Underlying all of this, blank sailings continue to hit nearly 25% each week, and the ocean carriers have done a nice job creating as much loading efficiency as possible in what can only be called a slack season.
- Mabel, go buy a lottery ticket! For the first time in two years, only one US seaport has more than 10 vessels at anchor! Woot…Woo Hoo!!
- Poor Savannah is still choked with 29 vessels—but we’ve hit single digits from the Pacific to the Gulf to the mighty Atlantic.
- With demand softening like butter in the microwave, Chinese factories see no reason to butter up their demanding clients. Most reports are calling for a four-week hiatus for CNY in 2023; typically, factories close for only two-three weeks. Remember—January 22, 2023 is our next joyful joyride through CNY!
