COVID-19 Latest Updates

Hong Kong No Longer a Country of Origin, Spot Rates Reaching Highest Levels in Decades, and HOS Exemptions Extended

By August 13, 2020 No Comments

Customs 

The U.S. Trade Representative (USTR) is requesting comments on Section 301 exclusions valued at approximately $34 billion, which are set to expire in October. Submit your comments by August 30th.  

massive list of Section 301 List 3 exclusions were set to expire on August 7th, and over 700 exclusions did expire. However, just hours before the expiration, the USTR issued a notice extending 266 of those exclusions through December 31, 2020. 

Last week, the Trump Administration announced plans to reinstate Section 232 duties— a 10% tariff on aluminum imports from Canada, set to take effect on August 16th. On Friday, Canada promised retaliation in the form of tariffs on a wide array of U.S. products that contain aluminum, set to be implemented on September 16th 

U.S. Customs and Border Protection (CBP) and the Department of Homeland Security are no longer recognizing Hong Kong as a country of origin for imports. Following an executive order from the President, CBP will now require any goods originating in Hong Kong to list China as the origin countrydue to the determination that Hong Kong is no longer sufficiently autonomous to justify differential treatment in relation to China.  Effective immediately, a grace period will extend through September 25th. 

Ocean 

Trans-pacific spot rates to the U.S. west coast are reaching their highest levels in a decade, as the 4th general rate increase since June 1 pushed the price to $3,600 per FEU. Rates from Asia to the U.S. East Coast are also soaring as they top out at $4,100 per FEU. Searching for a source of this surge, many industry insiders point to a second surge of PPE imports as schools open amid growing case counts. 

The spike in pricing is coinciding with an early and shortened peak season for trans-Pacific imports. The regular peak season, spanning August to October, began in July this year as retailers tried to restock their shelves and prepare for back to school and holiday season. It is expected to be shorter than a regular peak season as to retailers shy away from overstocking their warehouses in preparation for a second wave of shutdowns. 

Recent indications from shipping lines forecast large increases in rates from China to the U.S. West and East Coasts and the Gulf of Mexico. Large shippers like Amazon, Lowe’s and Wal-Mart have booked abnormally large amounts of space starting as early as August 15, and many believe this is a move to mitigate the uncertainty that many supply chains experienced during the initial outbreak of COVID-19. The decreased capacity means other shippers will have to outbid each other for the remaining space on vessels. 

Ports 

The surge of traffic that hit southern California causing chassis shortages over the past month has moved north to Oakland. While Oakland has significantly less import traffic than Los Angeles or Long Beach, the port is a major export hub, and demand for food exports is expected to compound the equipment shortage and congestion. 

The Port of Montreal is still caught in a labor dispute with the longshore workers, as they staged their 4th walkout since July 1 on Monday. After talks between the two parties broke down, the longshore workers launched an indefinite strike. The Canadian government has declined to intervene in the interest of re-opening the port to full capacity operations, so a resolution is still on a questionable timeline. 

While diversions to Tripoli are likely to continue for the foreseeable future, Beirut’s container terminal resumed partial operations this week. After a devastating explosion destroyed significant portions of the port area and city, the re-opening of the port is a promising sign of recovery. 

Trucking 

As businesses adjust to the new reality of operating amid a pandemic and some states begin in-person instruction in schools, demand for domestic transportation is rising significantly. Levels of congestion in Los Angeles are the highest in the country and only expected to rise, but as supply chains adjust to move away from LA, other regions could feel a capacity crunch. 

The Federal Motor Carrier Safety Administration (FMCSA) announced that it would extend its Hours of Service exemptions, set to expire tomorrow, through September 14th. In addition to the extension, restocking groceries and paper products for stores and distribution centers has been added back to the list of products that qualify, citing “current conditions.”