Ocean
Ocean capacity continues to be tight. Ports across the board in China continue to be extremely tight on space, with no space guaranteed even if booked through premium services. Additionally, equipment shortages continue with ocean carriers, further contributing to the congested network.
With rising COVID-19 cases, the Port of Yantian in China will take at least a week to clear. The terminal remains heavy with disinfection and quarantine measures continuously being implemented by local authorities to curb the spread of the coronavirus. Maersk expects continued terminal congestion and vessel delays of up to eight days. As of Monday, there were around 40 ships waiting to berth at the Yantian International Container Terminal, with the terminal carrying out operations as much as possible with 30% of full capacity. Yantian will only accept export-laden containers via an appointment app and within three days of a vessel’s scheduled arrival until June 6.
ICYMI: The National Industrial Transportation League (NITL) urges Congress to make changes to U.S. shipping laws. Because of the unprecedented and ongoing congestion, NITL is calling on Congress to take action by shifting the burden of proof onto carriers to show that their practices are reasonable and in compliance. Other demands include carriers providing more clarity on detention and demurrage fees, abiding by booking agreements, and allowing aggrieved customers to file complaints. These urges come as the Shipping Act of 1984 doesn’t address the challenges shippers are facing today in the supply chain industry.
Customs
The Regional Comprehensive Economic Partnership (RCEP) Agreement may impact negotiations on China-U.S. tariffs. The RCEP Agreement is a massive trade agreement between 15 countries in Southeast Asia and Oceania, designed to eliminate as much as 90% of the tariffs on goods between its signatories over the next 20 years. The agreement is currently being ratified, and with ratification from three-fifths of the deal’s 15 signatories, the agreement will enter into force in 60 days. If ratified, this agreement may impact negotiations on trade between the U.S. and China, and our Navegate team will keep you updated on how this may affect importing.
ICYMI: Aluminum import licenses will be required for entry for covered aluminum products starting June 28, 2021. On May 21, 2021, the U.S. Department of Commerce published a notice in the Federal Register confirming this regulation. The application system is available at https://www.trade.gov/aluminum, and for a list of the aluminum products required for the license, view the list on the International Trade Administration’s website.
Ports
Shippers are turning to the U.S. East Coast for port transloading options due to congestion on the West Coast. Because the congestion issues are significantly worse on the West Coast than on the East Coast, shippers are transloading on the East Coast to better get their freight inland and into stores. Ports like NY-NJ and Savannah have more transloading options, however, NY-NJ continues to experience capacity constraints.
Massive congestion continues at the Port of Oakland, with Seattle-Tacoma lacking railcars. According to Maersk, Oakland has surpassed the ports of Los Angeles and Long Beach in terms of vessel traffic. Wait times at Oakland are up to three weeks, while LA-LB is averaging between one to two weeks. Imports from Asia at Seattle-Tacoma are up 40.3% from January through April compared to one year ago. The ports are working with terminal operators and the International Longshore and Warehouse Union (ILWU) to address these congestion issues.
Air
Forwarders shift volumes to secondary airports due to overwhelming demand at major U.S. air hubs. Big air gateways like Chicago and Los Angeles are overwhelmed with air cargo, so forwarders are diverting their cargo to smaller airports not traditionally used as the main entry points for the U.S. Industry experts are saying that these smaller airports are good alternatives to transport goods as they do not face the same challenges as traditional gateways.
NATO and U.S. Military withdrawal of troops and equipment from Afghanistan may create temporary air transport shortages. Large commercial jets are being used to assist with the withdrawal of troops and equipment which could cause even more capacity issues for companies seeking airfreight space. Airlift support from the Air Force and commercial cargo carriers have already helped the drawdown be one-quarter complete. If you’re using air freight to transport shipments, delays are likely and space is limited due to this withdrawal.
UPS Air Cargo will be required to comply with TSA screening regulations for U.S. exports starting July 1, 2021. This requirement means that UPS Air Cargo will need to ensure that all U.S. exports bound for international destinations are screened before departing the U.S. If you have any questions regarding the details of this requirement, please contact one of our air experts.
Trucking
Truckload rates may extend to 2022. As the U.S. economy recovers and COVID-19 vaccinations continue, so too are volatility and difficulties for supply chains. With a shortage of materials and sufficient staff and high freight demand, the current truck pricing cycle will likely extend into late 2021 and even 2022, so shippers should expect high rates to continue for the foreseeable future.
Rail
Union Pacific (UP) will raise intermodal surcharges again. For all domestic intermodal customers in California who ship more than their contractual limits from June 13, UP will raise surcharges on these customers, the second time the railroad has increased its fees. The charge will be $3,000 per container on low volume shippers and $1,500 on all other shippers. This hike in surcharges indicates UP is concerned about having enough containers to service its core contract customers through this peak season.
U.S. railroads on both coasts tighten free time at inland terminals. To expedite the pickup of record import volumes flowing through busy terminals, U.S. Class I railroads tighten free time, narrowing the window for many domestic and international shippers. This move is intended to encourage quicker turns of containers and chassis to relieve inland ramp congestion. As of June 7, BNSF Railway will eliminate the industry standard 5 p.m. cutoff for calculating free time at all its facilities. Learn more about how railroads are tightening free time in an article by JOC.com.
Dallas intermodal ramp recovers after February winter storm. After the unprecedented February snowstorm in Texas disrupted supply chains in the area, shippers are now experiencing quicker delivery times because there are sufficient chassis that are available. Importers and chassis providers also say this turnaround is due to slowing container volumes from Southern California, allowing chassis providers to turn equipment faster.
Other
Biden Administration reviews that may affect freight markets: a power index by FreightWaves. Take a look at the top 10 Biden regulatory reviews and their effects on freight markets, their statuses (whether they are in effect, proposed, or under review), and why it matters to shippers and supply chains.
ICYMI: Stay updated on logistics and supply chain trends for the rest of 2021. As mid-year approaches, our Navegate experts identified key supply chain trends to watch for the rest of 2021. From continued capacity constraints to ongoing industry disruptions, learn how to manage and respond in our latest blog and how we can help.
