COVID-19 Latest Updates

Tariff Delays, Port Disruptions, and Falling Oil Prices

By April 2, 2020 No Comments

U.S. Customs

In a reversal of previous statements, the Trump Administration announced that the president is poised to sign an executive order allowing importers a 90-day grace period on tariff payments to ease the financial burden imposed by the pandemic. No order has been signed yet, and we will post further updates when official instructions are received from U.S. Customs.

Global Ports

Global ports are bracing this week for disruptions of every kind. The Port of New York and New Jersey is expecting up to a 20% increase in truck moves as imports levels recover with the reopening of Chinese factories. As these goods reach their destination ports, U.S. economic activity continues to slow, leaving a lot of supply with little demand for it. As importers try to stall shipments to reduce congestion at warehouses that are reaching their capacity limits, container lines are offering importers storage. By moving containers to storage, importers can avoid demurrage fees, and ports can reduce congestion to make room for essential goods to pass through without delays.

The Port of Savannah is making several changes to its operating hours in response to blank sailings and store/factory closures. Notably, the port will be closing its gates to truckers every Saturday for the month of April. 

Those shipping in southern Asia can expect trouble as ports in India remain closed to all but essential goods. The nation is set to remain under lockdown until April 14th, and the limited cargo that does get through faces major delays as ports, airports, and container freight facilities work with minimal staffing. Sri Lanka is following a very similar closure, so the same delays can be expected there. Freight moving through Pakistan and Bangladesh is moving at a closer-to-normal pace, in spite of limited staffing at ports and yards. The two nations are still suspending passenger flights. Due to the restrictions in the area, cargo freighter operations are limited, sending airfreight rates soaring and making them increasingly volatile.

Trucking 

The guidelines for drivers with learner’s permits attempting to obtain a commercial driver’s license (CDL) are being relaxed by the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA issued a waiver on March 28th, acknowledging that certain state driver licensing agencies have closed in response to social distancing guidelines. The waiver allows for drivers to test for their CDL while abiding social distancing orders and ensures drivers are available to meet the immediate need for transportation of essential equipment and supplies. 

Ocean 

An advisory board of container-shipping industry executives will be convened by the U.S. Federal Maritime Commission (FMC) to address challenges posed by the COVID-19 pandemic. According to the official declaration the board will consist of innovation teams tasked with addressing bottlenecks and issues in national and global supply chains. If you have information to share with the FMC advisory board, you can email them at [email protected]. 

While the IMO 2020 regulations have been in effect for a full 3 months now, carriers that had planned to retrofit their ships with sulfur scrubbers are starting to back out. As oil prices continue to plummet, the expensive low-sulfur fuel oil now required for ships without scrubbers has fallen dramatically since the beginning of 2020. While this could be good news, reducing the number of blanked sailings that had been planned to allow for retrofitting ships, it has significantly reduced the earnings for scrubber-fitted vessels, extending the payback time of their investment ($2.5 million, on average) to years instead of months.

Carriers

FedEx has suspended their Money Back Guarantee for Express, Ground, Freight, and Office services immediately and until further notice, and they have also stopped collecting physical signatures on most deliveries in favor of recipient name verification. In addition, FedEx has announced service suspensions in certain regions and additional transit time adjustments in other areas. 

Similarly, UPS has suspended their service guarantee effective for all shipments originating on or after March 24, 2020 for all U.S. origin shipments. For all non-US shipments, the origination date cutoff is March 26, 2020.