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US imports from Asia increased to 1.27 million TEU in June, up 9.5 percent from May, reflecting the spurt in consumer demand generated by the reopening’s of stores and restaurants in some states.
Imports from China, meanwhile, totalled 855,722 TEU, up 13.8 percent from May, according to PIERS.
Higher imports, coupled with 86 blank sailings in the trans-Pacific in May and June, sent spot rates from Asia spiking by more than $1,000 per FEU to the West Coast and almost $700 per FEU to the East Coast.
However, the escalation of imports and spot rates in the largest US trade lane has likely peaked for now because some states that reopened their economies in May are considering new shutdowns as COVID-19 cases nationwide surged to over 3 million this week.
US June imports from China, while higher month on month, were down 0.9 percent from June 2019. Still, that was an improvement from the 16 percent decline in imports in May from May 2019. China continues to underperform the rest of Asia because of the two-year-old US-China trade war.
Aggressive capacity management pushes spot rates higher
Citing the cancelled sailings in May and June that were reported this week, shippers say spot rates in the Asia-US trade reached a 10-year high because carriers reduced total capacity in the trade below demand. In the first week of July, spot rates were pushed higher by general rate increases (GRIs) as well as peak-season surcharges.
The West Coast spot rate from Shanghai last week was up 69% over the rate in April, according to the Shanghai Containerized Freight Index. The East Coast rate was also up 25% over the rate in April.
The June import spike from Asia, which has extended into the first two weeks of July, was due to inventory replenishment by retailers, seasonal imports such as back-to-school merchandise, and continued strong movements of personal protective equipment and other medical supplies. However, it appears that imports could pull back as early as next month if back-to-school sales disappoint and retailers are forced to shut down again.
United Airlines and American Extend Suspension of Hong Kong Flights
United Airlines Inc. extended its suspension of flights to and from Hong Kong, citing new coronavirus testing protocols for crew arriving to Hong Kong, while American Airlines Group Inc. also cancelled plans to resume services from Dallas/Fort Worth.
Hong Kong updated its COVID-19 prevention and control measures this week, requiring all air-crew members arriving at the city’s airport starting Wednesday to provide throat saliva samples at a government facility nearby.
United says that they are currently assessing how this affects future operations. Meanwhile, American has extended its suspension of flights to Hong Kong until Aug. 5 as it works with the appropriate authorities to address the concerns regarding the testing mandate. said Patrick O’Rourke, vice president of the Allied Pilots Association, a union representing the carrier’s pilots.
The Allied Pilots Association, a union representing the American Airlines pilots, expressed concern that anyone who tested positive in Hong Kong would be admitted to a hospital as soon as possible and anyone refusing to undergo a test would be subject to a fine and imprisonment.
The United and American flights were due to be both airlines’ first commercial passenger operations to the city since they suspended services in early February.
While this highlights the effects of flights for United and American, it is our expectation that global carriers will follow suit until protocols are in place to comply with Hong Kong's new COVID-19 preventative measures.
Importers: MPF Not Refundable For Post-Importation Claims Under USMCA
Under the new United States Mexico Canada Agreement (USMCA) importers may file USMCA post-importation claims for refunds of duties assessed on goods entered for consumption or withdrawn from warehouse for consumption on or after July 1, 2020. However, unless USMCA is amended, refunds for merchandise processing fees (MPF) are excluded from all USMCA post-importation claims.
Concerned Importers may send questions to Customs at OT-RECONFOLDER@cbp.dhs.gov.
Additional Section 301 Product Exclusions
The Office of the U.S. Trade Representative (USTR) has announced that 12 products imported from China will continue to be excluded from the Section 301 additional 25 percent tariff through the end of the year. These products; on List 1, include pump casings, actuators, rotary switches and compressors. See the full list in the Federal Register notice here. The product exclusion extensions announced were effective July 9, 2020, and extend through December 31, 2020 under heading 9903.88.52.
The USTR has also announced additional goods are being excluded from the Section 301 List 4A additional tariff (currently 7.5 percent) on goods from China. The product exclusions in this notice apply as of September 1, 2019, the effective date of List 1 of the $300 billion action, and will extend to September 1, 2020 under heading 9903.88.51. The products range from plastic materials, art objects, athletic gear, wire and several steel products.
Prince Rupert, Vancouver Congestion Issues
BRi USA has been advised by carrier ONE that they are experiencing the following vessel and rail delays at the Canadian Ports of Prince Rupert and Vancouver:
Vessel: Due to import rail backlogs and high cargo volumes, Delta port (VAN) and Prince Rupert terminals are facing yard congestion which will start to impact the terminals’ ability to work vessels.
Rail: Import rail dwells of over seven days in Vancouver and over five days in Prince Rupert due to high import volumes and car shortages. The CN car supply has been short due to washouts on their network following heavy rains and crew shortages. The backlogs are expected to continue through the month of July.
We will continue to monitor the delays and provide updates as they are made available. If you have any questions or concerns regarding your shipments, please reach out to your BRi Customer Service Rep or feel free to respond to this email
BRi ERP and Order Management Program
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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 relating to USA News, please feel free to contact your Customer Solutions Representative.
Keeping you updated,
BRi Customer Solutions TeamBack to News Page