Featured Headlines:
CBP Celebrates 20 Years Under the Siege
You Can’t Handle the Smelt…or Can You?
An Operational & Situational Update from CBP
Going Green Will Cost Some Green
CBP Celebrates 20 Years Under the Siege
- Did you know that U.S. Customs and Border Protection (CBP) celebrated its 20th anniversary at its headquarters in Washington D.C on March 17?!
- In attendance at the event were five former CBP commissioners, along with current Acting Commissioner Troy Miller and Acting Deputy Commissioner Benjamin Huffman.
- A little bit of history on CBP:
- The U.S. Customs Service (USCS) was founded on July 31, 1789; but the security, compliance and handling of international commerce and travel were conducted by multiple agencies connected with USCS.
- Once CBP was formed on March 1, 2003, it became the first comprehensive border security agency in the country. It took control of all the roles and responsibilities previously handled by other agencies and developed new and improved security procedures and regulations.
- Happy Birthday, CBP! Click here to view a video recording of the event.
You Can’t Handle the Smelt…or Can You?
- Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EDT on April 10, 2023, importers of some aluminum articles and aluminum derivative articles from all countries of origin, regardless of whether Section 232 duties, quotas, exclusions, or general approved exclusion apply, shall report the following information on the entry summary:
- Primary Country of Smelt: Report the country where the largest volume of new aluminum metal is produced from alumina (or aluminum oxide) by the electrolytic Hall-Héroult process.
- Secondary Country of Smelt: Report the country where the second largest volume of new aluminum metal is produced from alumina (or aluminum oxide) by the electrolytic Hall-Héroult process.
- If Russia is not the country reported for the primary country of smelt, and any primary aluminum used in the manufacture of the product was smelted in Russia, report the ISO code for Russia as the secondary country of smelt.
- Products of the U.S. are not covered by the countries of smelt and cast reporting requirements. Until further notice, for products of the U.S., filers may report “N/A” for the countries of smelt, and U.S. for country of cast.
- Country of Cast: Report the country where the aluminum (with or without alloying elements) was last liquified by heat and cast into a solid state. The final solid state can take the form of either a semi-finished product (slab, billets or ingots) or a finished aluminum product.
- Products of the U.S. are not covered by the countries of smelt and cast reporting requirements. Until further notice, for products of the U.S., filers may report “N/A” for the countries of smelt, and U.S. for country of cast.
- Any questions? Feel free to reach out to our compliance experts! And never forget… whoever smelt it, dealt it!
An Operational & Situational Update from CBP
- On March 15, CBP released its monthly operational update reports for February 2023; read on for some of the highlights…!
- Ocean-routed trade accounted for more than 41.08% of the total import value, followed by air, truck, and then rail.
- CBP processed more than 2.6 million entry summaries valued at more than $241 billion; and identified nearly $6.3 billion in estimated duties to be collected.
- The agency seized 1,590 shipments that contained counterfeit goods valued at more than $182.4 million.
- CBP completed 22 audits that identified $6.5 million in duties and fees owed to the U.S. government from goods that have been improperly declared.
- Total drug seizures nationwide also increased by 6% in weight in comparison to January, including heroin—which increased by an eye-popping 99%.
- The agency saw more entries targeted for forced labor and more seizures related to intellectual property rights (IPR).
- Specifically, it targeted 481 shipments valued at more than $109 billion for suspected use of forced labor in the production of imported goods.
- This included a mixture of goods subject to withhold release orders (WROs), forced labor findings or the Uyghur Forced Labor Prevention Act (UFLPA).
- Learn more about How to Avoid Forced Labor Violations on Your Imports!
- For more information on the February 2023 Monthly Operational Update, click here.
No Embargo For Mexico
- Mexico is not only home to the world’s largest pyramid (look it up skeptical readers!), but she is getting plenty of press from Mattel, Tesla, Phillips, and other corporate titans for establishing new manufacturing sites to lower their dependence on current Asia-dominated sourcing options.
- From China, Section 301 tariffs importers face, and political tensions are rising all over the place. There’s a case for disgrace on pace with China’s support for Russia hard to erase. So, the ace to replace China is to embrace Mexico!
- According to US Bureau of Transportation Statistics (BTS) data, US imports by truck from Mexico continue to grow despite US economic contraction and what amounts to a broader import collapse! There must be something in those trucks, right?!
- North-bound trucks from Mexico exceeded 7 million units for the first time in history last year, finishing 2022 with 4.5 percent growth and a total of 7.3 million truck trips. In 2021, import truckloads from Mexico grew by an impressive 10%.
- By contrast, the number of rail containers, empty and loaded, headed from Mexico to the US declined in 2022. According to more BTS data, the total number of import rail containers dropped by 65,328 to 1,050,635, a 5.9 percent drop YoY.
- Well, at least some clever Canucks in the railroad business see Mexico as the land of opportunity! The Canadian Pacific Railroad (CP) and the Kansas City Southern (KCS) merger, a deal worth $27B, was approved by the US Surface Transportation Board (STB).
- People don’t know this, but the STB also approves all acronyms, and they have approved the CP-KCS married name as (wait for it…) CPKC!
- The combined networks will create the first single-line rail connections between Canada, the US, and Mexico. The clever geeks at S&P Global estimate that the CPKC will divert at least 60,000 truckloads to rail in their first year.
- Tire companies are said to be quite salty since conversions to intermodal rail of this magnitude could reduce long-haul trucking miles in the US by over 85 million!
Rail Safety Dance
- As Shapiro enters our 108th year in business, we FINALLY get to quote a song by Men Without Hats! In 1982, this bizarre song was released, and we tip our hats to the band!
- Safety is no laughing matter, however, for Norfolk Southern (NS) and all US railroads after NS’s horrific spill of horrific-sounding chemicals like ethylhexyl acrylate, vinyl chloride, and isobutylene in East Palestine, OH on February 3rd.
- In total, 149 railcars derailed on that fateful day, and the long-term health consequences for the 5,000 denizens of East Palestine and beyond are unknown. The state of Ohio has sued NS over groundwater and river contamination concerns.
- Alan Shaw, CEO of Norfolk Southern may be taking extreme heat from Congress, but at least his company’s stock value has plummeted 21% since the accident! That is 1/5 of the stock value of NS.
- NS and Shaw are under pressure from federal safety regulators and senators to greatly improve their commitment to safety regulations. Shaw supports provisions in the act for railroads to fund training for emergency crews, a review of regulations for rail car inspections every three years and accelerating the phaseout of older tank car models.
- The cost of the clean-up and repairs is estimated at $250M or more, and engineers (not THAT kind!) estimate that NS’s main line will be blocked by the construction efforts for at least eight weeks.
- While most accidents are far-less extreme and involve fewer cars, there are more than 1,000 train derailments a year in the US. Interestingly, this is half the number we witnessed in an average year 20 years ago!
Going Green Will Cost Some Green
- When the International Maritime Organization (IMO) meets in July, they are expected to call for a 100% reduction in carbon by 2050. This is a 50% “increased decrease” goal!
- The shipping community has been quietly critical of the IMO’s somewhat unclear pathway for rating vessels by carbon intensity and requiring carriers to repair or remove those boats not in compliance.
- In July, the IMO is expected to firm up the rating process, to discuss carbon levies, and to provide a clear plan for enforcement.
- While the costs for decarbonization are notoriously hard to estimate, Drewry believes that bunker costs and emission-related taxes will increase total fuel costs by as much as 50%.
- That is quite a lot of green to go green!
- The World Shipping Council (WSC), a group headed by cigar-toting steamship line executives, has called for a “package of sensible measures”. According to the WSC, new regulations should apply equally to all, and there needs to be a standard agreement on what constitutes a ‘green fuel.’
- The WSC also wants clarity on life cycle emissions limits and market-based measures that must provide a cost incentive for the lines to use low-carbon fuels.
- One witty shipper indicated that the trade must brace for the “mother of all BAFs.” The International Federation of Mothers (IFM) strongly objected to the quip!
- One thing is certain, the shipping public will be watching the IMO’s July meetings like the mother of all mothers watching over her brood, and that, dear readers, is IFM approved!
Air Cargo Lacks Gusto
- As passenger travel steadily upticks, air cargo executives are steadily ticked off! The reason is that air cargo capacity is up by double digits for ALL global regions and sits an average of 15% up globally YoY.
- Unfortunately (for airline profits at least), global chargeable kilograms are down 8% YoY though the trend line is improving if only slightly.
- Last March, the average worldwide cost for a kilo of airfreight hit $4, but it stands at just $2.74/kilo today. Before we unleash a compelling series of silent auctions, bake sales, and walk-a-thons for impoverished airline fat cats, please remember that $2.74 is significantly higher than pre-Covid average airfreight rates!
- For those of you looking for bargains out of China, the air export market there is warming up steadily with rates sitting between $5.50 and $6.50 per chargeable kilogram. Hurry up, shippers! Shapiro is sitting here waiting with our phones in hand to take your plentiful and extremely heavy bookings, request a quote today!
SoCal Locale
- In a staggeringly bold statement, the Pacific Maritime Association (PMA), has accused ILWU Local 13 of not staggering lunch breaks! They supposedly also say that the ILWU sometimes steals chips from their lunchboxes. The nerve!
- But these are not just schoolroom hijinks, wise readers. As recently as February the two sides, now operating without a contract since July 1, 2022, pledged that they were making progress and would not air their grievances publicly. So much for that!
- After the recent staggering spat, a group of more than two hundred shippers, logistics providers, and retailers called on the White House to intervene.
- In a letter to President Joe Biden, groups including the American Trucking Association, the National Retail Federation, and the U.S. Chamber of Commerce, urged the administration to help speed the agreement on a new labor contract.
- A look at the number of containers transiting San Pedro Bay to Long Beach and LA is indeed staggering. Imports are down about 40% YoY, and the movement of empties back to Asia is reduced by almost 50%.
- Shippers are loath to commit to annual contracts utilizing West Coast ports without a firm deal in place, and the diversion of current cargo flows to the Gulf and East Coast has increased steadily in the last four or five months.
- Some of the more creatively paranoid shippers and 3PLs have been heard muttering, “oh, what a coincidence that a staggering spat happens as ocean carriers stagger into contract talks with spot rates below their costs!”
- Talk about a quick pathway to higher East Coast and Gulf rates! But that would be one expensive highway, for ALL of us!
