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Incoming cargo to the Port of Los Angeles is surging as businesses restock depleted inventories and shippers prepare for an early holiday season. Workers unloaded 17% more TEU than the year earlier, marking the second month of robust import gains at the No. 1 gateway for U.S. trade with China.
That increase has carried into October, said Gene Seroka, executive director of the Port of Los Angeles, where there are now 16 vessels docked and 10 at anchor with cargo waiting to be unloaded.
"We continue to see the replenishment of warehouse and distribution centre inventories along with retailers prepping for year-end holidays," Seroka said.
The trend is a turnaround from earlier this year, when pandemic related shutdowns - first in China and then in the United States - slowed ocean shipping traffic to a trickle, but the jump in cargo - some of it unexpected - is beginning to cause backups that could ripple through U.S. supply chains.
Port workers are racing to process incoming containers, as the arrival of 18 unscheduled ships in August and September made labour scheduling more complex. COVID-19 safety measures, such as reduced staffing and physical distancing, have resulted in longer turn times, meaning it is taking longer to get containers out of the port.
Several terminal operators are operating additional gate hours to work the incoming cargo; however, dwell times remain high. Also, equipment and capacity shortages, coupled with difficulties in returning empty containers to the terminals further compound congestion issues.
US Ag Exporters Want an End to Changing ERDs
US agricultural exporters are demanding shipping lines end frequent changes to earliest return dates (ERD) – the earliest an export container can be delivered to the carrier – which can incur significant extra costs.
According to a survey conducted by the US Agriculture Transport Coalition (AgTC) and tech company Trade Lanes, more than three-quarters of responding exporters reported that at least 5% of their shipments incurred more costs as a result of ERD changes..
The concerned parties say that without accurate and timely ERD information, exporters, freight forwarders, truckers and other supply chain participants cannot schedule dray to the terminals; and exporters cannot reliably schedule production, truck, rail, and other logistics – resulting in excess costs (including demurrage, storage, chassis rental, etc). They further state that “the costs and disruption related to ERD are presenting special challenges to our already embattled industry.”
Since Covid-19, more than 25% of shipments have had ERD changes, 7% of surveyed exporters say they had faced additional costs of some $1,000 or more per shipment as a result, while 87% saw extra charges of more than $100. These charges are rarely waived: 55% of respondents reported they had been unable to persuade carriers or terminals.
Peter Friedmann, executive director of AgTC, said: “Costs and disruption imposed by inaccurate and changing ERDs for containers are eroding margins. Restoring ERD integrity is a top priority for our industry.”
US, EU Trade Tariff Threats After WTO Ruling
The European Union and the U.S. exchanged tariff threats this week after the World Trade Organization, in its ruling over illegal state aid America provided to Boeing Co., gave the EU permission to impose duties on $4 billion worth of U.S. goods.
French Finance Minister Bruno Le Maire on Friday said he’s in favour of moving forward with retaliating against the U.S. in order to encourage a resolution to the dispute. Le Maire’s comments came a day after President Donald Trump said the U.S. will “strike much harder” if the EU goes ahead with the plan.
To date, the U.S. has not applied the full thrust of its $7.5 billion tariff award that the WTO granted last year in a parallel dispute against Boeing’s European rival, Airbus SE.
That ruling led the U.S. to impose 15% tariffs on Airbus aircraft and 25% levies on an array of European exports including French wine, Scotch Whisky and Spanish olives. Washington could raise those import taxes to 100%, which for many European products would effectively block their entry into the U.S. marketplace.
Meanwhile, the EU—which has drawn up a list of American products that will face tariffs—will likely hold fire until after the U.S. presidential election on Nov. 3, according to three officials familiar with the bloc’s thinking.
Le Maire said he plans to discuss the matter with German Economy Minister Peter Altmaier later Friday.
The EU’s draft retaliation list aims to target politically sensitive U.S. industries, such as aircraft, coal, farm products and seafood.
The earliest date that the EU could trigger new U.S. tariffs is Oct. 26, when Brussels can request and the WTO can grant formal authorization to retaliate legally under international rules.
The top trade officials from the U.S. and EU have said they prefer a negotiated solution to the 16-year-old aircraft dispute rather than engage in a damaging round of tit-for-tat tariffs. On Tuesday the EU’s trade chief, Valdis Dombrovskis, said the bloc’s “strong preference is for a negotiated settlement. Otherwise, we will be forced to defend our interests and respond in a proportionate way.”
The U.S. Trade Representative’s office said Brussels has no basis to impose tariffs and said the U.S. has “exercised restraint” with its WTO judgment. USTR Robert Lighthizer said he’s “waiting for a response from the EU to a recent U.S. proposal and will intensify our ongoing negotiations with the EU to restore fair competition and a level playing field to this sector.”
Lighthizer previously said he’s seeking two things: a pledge from Europe to end its aircraft subsidies and for Airbus to repay the subsidies it received from France, Germany, Spain and the U.K.
European industry officials argue that the U.S. demands are too heavy-handed and the pandemic has complicated the prospects for a deal.
Both sides are mulling ways to support their airline industries through a period in which global travel restrictions have hammered passenger air travel.
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