COVID-19 Latest Updates

Reversal of Duty Deferrals, Export Ban, and Soaring Air Freight Rates

By April 7, 2020 No Comments

U.S. Customs

Despite the April 2nd closure of the Customs and Border Protections (CBP) office at the Port of Alaska, the port has released an official statement that it will be open and operating as normal during the COVID-19 crisis. The statement comes after a report that a CBP employee at the port had tested positive for coronavirus, which prompted notices that the port would close for two weeks.

In yet another reversal of previous statements, National Economic Council Director Larry Kudlow announced yesterday that the White House will not be considering any deferrals for tariff payments. Previous statements from the Trump Administration announced that the president was poised to sign an executive order allowing importers a 90-day grace period on tariff payments.

North American Trade 

Although announced just last Friday, the Trump administration has reversed course on its essential product export ban. The ban, instated after a high-profile clash between President Trump and Minnesota-based manufacturer 3M, prompted extreme backlash from trade partners around the globe. Retaliatory threats from those nations were poised to threaten the United States’ importation of essential goods, which is historically 6 times the volume of exports. 

The USMCA, the trade agreement replacing NAFTA, will not be implemented on June 1, 2020 as originally planned as leaders from the 3 involved nations – the US, Canada, and Mexico – missed a crucial deadline on March 31. While the new implementation date is tentatively July 1, 2020, reports suggest it could be delayed until 2021. 

 

Global Ports

Chittagong port in Bangladesh has reached its container storage capacity amid a massive operational cut in response to COVID-19. The port, which is struggling to get importers to retrieve deliveries, is open just 2 hours each day, and is only releasing cargo carrying medicine or food. 

Ports continue to be threatened by container backups as U.S. retailers and manufacturers fail to pick up imported containers amid financial difficulties imposed by the stalling economy. Concerned with congestion and the availability of chassis, container lines are working to encourage customers to pick up containers and are offering storage to mitigate demurrage and detention fees.

 

Air

High and immediate demand for medical personal protective equipment has raised air rates on the China to Europe to unprecedented levelsLast week alone, the price on that route rose 42% to $7.33/kg as airlines scramble to increase capacity by deploying passenger planes to move cargo. 

Joining the fight to increase air capacity, Southwest Airlines is making drastic moves to recoup lost passenger flight revenue by offering cargo-only flights to freight forwarders. While moving passenger planes with only cargo is rarely financially justifiable, current rock-bottom fuel prices are making such moves possible.

 

Ocean 

Maersk and Mediterranean Shipping Co. have announced that they will each suspend one weekly string from South Asia to the U.S. East Coast and one weekly string from North Asia to the U.S. West Coast. These suspensions are in addition to 32 total blank sailings announced by the same carriers last week, and will last the entire second quarter of the year as consumer demand continues to fall globally. 

Charges levied by the Port Authority of New York and New Jersey for infrastructure improvements will soon be passed on to Hapag-Lloyd customers, according to a notice from the carrier. The charges have been absorbed by Hapag-Lloyd since their implementation in 2011, designed to fund infrastructure improvements on April 20 (for imports to NY-NJ) and May 1 (for exports out of NY-NJ). The carrier announced that it simply can no longer afford to shoulder these costs on its own.

The International Maritime Organization (IMO) released preliminary recommendations on how essential businesses like shipping lines and ports can safely facilitate trade and the transport of essential goods during the COVID-19 crisis.  Among the recommendations are measures to protect the health of port workers, measures to facilitate crew changes, and recommendations that quarantines are not imposed on ships themselves so they don’t prevent access to berths at ports.

Medical Supplies & PPE

American medical suppliers have been given permission by the Justice Department to collaborate in hopes of creating greater supply chain efficiencies. The involved suppliers requested the Department make a statement on antitrust rules and enforcement intentions, and the statementmade by Assistant Attorney General Makan Delrahim indicates that these firms will not be prosecuted under antitrust laws for their efforts in coordinating sourcing and logistics during the COVID-19 crisis. 

The American Hospital Association (AHA) has launched the 100 Million Mask Challenge in hopes of addressing PPE shortages nationwide. This challenge calls upon manufacturers, logistics providers, and any company or individual able to help provide healthcare workers with the necessary supplies. Kaas Tailored and Alaska Airlines have notably stepped up in recent days to help the AHA meet its goals. 

Delta Airlines has begun manufacturing face shields to deliver to health care facilities as national shortages of personal protective equipment (PPE) threaten the safety and effectiveness of doctors and nurses.