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USMCA Moves Forward, the FMC Announces Contract Leniency, and the Outlook for Intermodal

By April 28, 2020 No Comments

North American Trade

The Trump administration announced that the U.S.-Mexico-Canada Agreement (USMCA) will go into effect on July 1, 2020. The decision was made despite objections from various North American business leaders including private sector committee convened by Congress and the Senate Finance Committee itself. If you’d like to explore the impacts of the USMCA on your business and your supply chain, contact a customs expert at Navegate.



Despite the Federal Aviation Administration (FAA) imposing hour cuts at about 100 air traffic control towers this month, operational capacity is not expected to be impacted. With obvious increases in flights carrying goods from online retailers and essential medical cargo, overall air volumes still have fallen dramatically with passenger flight volumes nosediving. The FAA stated that these hour cuts are meant to ensure the safety and health of workers, and the proactive cuts could end up preventing a large-scale shutdown if a control tower becomes heavily contaminated with COVID-19. 



While the IMO 2020 regulations on sulfur emissions have been in effect for a full four months now, it hasn’t affected supply chains in quite the way we had expected. With rock-bottom fuel prices, many carriers are scrapping their plans to install scrubbers, or Exhaust Gas Cleaning Systems (EGCS), and taking advantage of the now very affordable low sulfur fuel. The ways that carriers are handling these changes in regard to customers, though, varies greatly. CMA CGM recently announced that it would scrap low-sulfur surcharges for customers, while many box carriers are simply ignoring calls from customers to do the same. 

In a recently published rule, the Federal Maritime Commission (FMC) announced that it will allow service contracts to be filed up to 30 days after they take effect until December 31, 2020.  The FMC announced this change, effective as of the 27th of April, citing the need for flexibility amid the COVID-19 pandemic.



U.S. Ports and freight forwarders predict that blank sailings will reduce capacity to the west coast by 25% and to the east coast by 20% in the mid-May and June period. These volume cuts – largely due to the absence of the back-to-school surge – remedy concerns about capacity bottlenecks as ports and forwarders try to adapt to working guidelines that maintain social distancing and worker safety.  



North American intermodal volumes are experiencing their worst April since the 2008 recession, and forecasts anticipate May being even more grim. With overall freight demand decreasing, the goods that are moving are more often put on airfreight, whether it’s PPE or CPG. In an effort to mitigate the costs associated with running half-empty routes, intermodal operators are slashing the number of trains in use and reducing days of service. For shippers, that may mean slight delays in service for now.


Looking Up

While the pandemic persists globally, some nations are beginning to turn the tide in the battle against COVID-19. Namely, South Korea and New Zealand have begun to relax social distancing policies with new case totals dropping daily in both places. Meanwhile, states across the U.S. are coordinating plans to slowly reopen their economies while still keeping citizens healthy.