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The Carriers, ports, and shippers say the current spike in US imports from Asia that began in early July will last at least through August, but their vision is blurred beyond that.
Some stakeholders, including the importers themselves, say US inbound volumes from Asia will remain at current levels through September, while others forecast a dip in late August followed by a short peak season in late September.
After Friday’s unusually large increase in spot rates, carriers and forwarders seem to agree, though, that spot rates in the eastbound trans-Pacific will stay stable through September as carriers continue to manage capacity.
The uncertainty that marks cargo forecasting in the largest US trade lane is largely a reflection of consumer purchasing habits, which have not followed normal seasonal trends due COVID-19.
Volumes to remain strong through August
Some carriers are optimistic that bookings will stay strong at least through August, as import bookings were robust in July and forward bookings for the next several weeks indicate there will be no drop in demand. However, it is difficult to predict what will happen beginning in September.
Feedback from both shippers and carriers indicates imports will be fairly buoyant through September. However, there could be a slight tapering of imports in the second half of August, which would be accompanied by a slight decline in freight rates. Any additional capacity carriers may bring on this month in terms of reinstating blank sailings or extra-loader vessels would be confined to Pacific Southwest services to the ports of Los Angeles and Long Beach.
Blank sailings prop up spot rates
Although year-over-year imports continue to trend downward by double-digits, the spot rate to the West Coast is 121 percent higher than it was on Aug. 1, 2019, and the East Coast rate is 24.8 percent higher. Carriers have been able to keep spot rates near or at 10-year highs by managing capacity through blank sailings. Carriers cancelled 102 sailings from Asia to the US from May 1-July 30.
However, carriers have announced only three blank sailings from Aug. 1 through mid-September to the West Coast, and three blank sailings to the East Coast during the same period. Industry sources say it appears that carriers have achieved the supply-demand balance they feel will keep spot rates in the general range where they are now.
Op-Ed: Carriers Need to Collaborate to Help Solve ‘Chassis Crisis’
When truckers began advocating for the adoption of empty appointments, it was to help avoid the impact of extreme congestion at marine terminals generated by empty returns directed by the ocean carriers. The concept was based on the belief that appointments would be guaranteed and used as a tool by both the marine terminal operators and the ocean carriers to forecast when and where containers were being directed for termination in advance.
The goal was to provide the trucker a guaranteed return slot that could be coupled with an import appointment through the appointment system, and would facilitate an increase in moves that feature an in-gated and out-gated container, commonly referred to as a dual transaction.
Simply put, dual-transactions are more productive, reduce congestion from truck traffic, and are better for the environment by eliminating truck trips. Dual transactions will help all port stakeholders provide better services for shippers, as well as meet stringent sustainability milestones in California.
Major issues with empty appointments
Truckers are told by the ocean carriers to secure appointments as soon as they become available, without providing any information on where the empties will be accepted on the day the appointment is set. In fact, truckers may be forced to make appointments as many as three days in advance or risk not being able to secure a slot. The ocean carrier will then direct where the empties will be accepted by 4:00 p.m. the day prior to the appointment date, whereas the empty receiving locations should be identified when the appointments are made.
Terminal operators are currently seeing a high percentage of appointments go unused because in many cases the trucker is forced to “ghost” appointments to be able to respond to the ocean carrier receiving locations.
Carriers need to be ‘partners’
If all parties truly want to solve the “chassis crisis,” the terminal congestion, per diem and demurrage charges, and meet sustainability goals, all parties must commit to collaboration. Ocean carriers, truckers and shippers need the processes to be more equitable so all parties can overcome this major supply chain hurdle.
Prohibited Export of PPE Extended by FEMA
FEMA has issued an Advanced Federal Register Notice to extend the restrictions on exporting covered PPE items. This advanced FRN takes effect on August 10, 2020 and lasts until December 31, 2020. The list of PPE items covered by this FRN was updated to remove some respirators and add certain types of surgical gowns.
The covered PPE will be updated to the following on 8/10/20:
The exemptions that are currently in place will continue to be effective through this extension.
The available exemptions are:
BRi USA can assist with compliance reviews to ensure your supplier and shipment adhere to regulatory standards for PPE shipments.
USTR Issues New Exclusions, Exemptions, and Call for Public Comments
USTR has issued several updates for Section 301 tariffs including exclusions, exemptions, and requests for public comments.
List 3 - Extension of Exclusions
The U.S. Trade Representative announced the extension of 266 China Section 301 List 3 product exclusions that were previously set to expire August 7, 2020.
Certain exclusions were extended through December 31, 2020 under exclusion subheading 9903.88.56. The remaining product exclusions expire after today.
Extended List 3 product exclusions include products such as certain seafood, chemicals, disposable gloves, fabrics, glass, bicycles, engines and engine parts, and electric parts.
Please note: ANNEX B of this notice includes a table containing a list of the original product exclusions that are being extended by this notice.
The original product exclusions were provided for in various subdivisions in note 20 to subchapter III of chapter 99 and an associated 9903.88 heading. In addition, the table contains the corresponding subdivisions in new note 20(iii) to subchapter III of chapter 99 and new heading 9903.88.56 for the product exclusions that are being extended by this notice.
List 4 - Notice of Exclusions
The U.S. Trade Representative announced determination to grant certain exclusion requests, as specified in the Annex to this notice (exclusion subheading: 9903.88.55).
The product exclusions announced in this notice apply as of September 1, 2019 - the effective date of List 1 of the $300 billion action - and extend to September 1, 2020
As set out in the Annex, the exclusions are reflected in one existing ten-digit HTSUS subheading and 9 specially prepared product descriptions, which together respond to 25 separate exclusion requests.
Extended List 4 product exclusions include doorway dust barrier kits and parts, locking zip tie fasteners, decorative glassware, digital optical scanners, slingshots, swing sets, and trap shooting launchers.
List 4 – Request for Comments for Extension of Latest Exclusion
This USTR notice announces the U.S. Trade Representative’s decision to consider a possible extension of particular exclusions granted under the eighth notice of product exclusions (the exclusions just granted under subheading 9903.88.55 listed above).
Public comments regarding the extension of particular exclusions under the eighth notice must be filed under docket USTR-2020-0031.
Commenters first must register on the portal at https://comments.USTR.gov.
After registration, the commenter may submit an exclusion extension comment form to the public docket. The public docket will be open until August 20, 2020.
CBP Implements Merchandise Processing Fee (MPF) Increase
As previously announced in 85 FR 45646, published July 29, 2020, various changes to user fees within the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 will take effect in October.
Effective October 1, 2020 the Merchandise Processing Fee (MPF) will change as follows:
The ad valorem rate used to calculate MPF, 0.03464%, will not change.
BRi ERP and Order Management Program
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The information in PATHWAY is real-time and available 24/7.
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As a valued customer, we hope that you will continue to trust us to source the best options for your supply chain needs now and into the future. Should you have any questions regarding USA News, please feel free to contact your BRi Customer Solutions Representative.
Keeping you updated,
BRi Customer Solutions Team
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