COVID-19 Latest Updates

Container Inflows Expected to Remain High, USTR Requests Comments, Biden Calls for 24/7 Port Operation

By October 14, 2021 No Comments

Ocean  

Container inflows are expected to remain high through 2022, with congestion restricting greater advances. Imports to the nation’s top retail container ports are expected to remain high until at least February, according to the National Retail Federation (NRF). The group recently reported that their estimates would have been even higher if it hadn’t been for congestion, capacity constraints, and labor shortages. Additionally, the NRF expects the current trend to continue at least into the first quarter of 2022 due to increased consumer spending and retailers still catching up on and pulling inventory forward. In comparison to a very strong comp from 2020, October is expected to drop 0.3 percent. That would be the first drop in a month since July of 2020.

Customs

The U.S. Trade Representative (USTR) requests comments Oct. 12-Dec. 1, 2021 as they consider reinstating Section 301 exclusions. USTR is considering whether to reinstate previously extended exclusions granted under the Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation by excluding certain products from the additional duties imposed in multiple tranches. The majority of Section 301 goods exclusion extensions were set to expire on December 31, 2020, or earlier this year. The Office of the United States Trade Representative is now seeking comments on whether certain product restrictions should be reinstated.

The U.S. Customs and Border Protection (CBP) agency is considering continuing education requirements for customs brokers. CBP published a notice of proposed rulemaking on September 10 to amend its regulations to mandate continuing education for individual customs broker license holders and to establish a framework for enforcing this requirement. Individual brokers would be required to complete at least 36 continuing education credits per triennial term, with some exceptions, according to the NPRM. Individual brokers who fail to record and certify their compliance with the continuing broker education requirement in a triennial report may face disciplinary action.

Air

Typhoons and COVID-19 cause air delays in China. A typhoon has caused heavy rainfall in Guangdong this week, potentially delaying flights. At the Hong Kong Airport, a COVID case has been confirmed, so air freight from HKG will be raised and possibly delayed as well, but the Hong Kong government is working to make sure it’s under control. 

As capacity continues to be an issue, air cargo rates surge. To avoid congestion at the ports and ocean shipping delays, shippers are scrambling to find capacity through air freight, which has caused skyrocketing rates—so much that they have climbed ten times in a single week.

The International Air Transport Association (IATA) urges the air cargo industry to work together to overcome current challenges. IATA wants the air cargo industry to work at the same pace and cooperation first seen in the beginning of the COVID-19 pandemic due to increasing demand and complications with congestion and crossing international borders.

Ports

Biden calls for a 24-hour-a-day port operation ahead of the predicted holiday supply shortage at a meeting with ports and labor. The president met with the leaders of the Los Angeles and Long Beach ports, as well as the International Longshore and Warehouse Union, and big-box retailers, to discuss supply chain challenges and solutions. Following Biden announced that the port of Los Angeles would start operating 24 hours a day, seven days a week to help alleviate bottlenecks, while several private-sector organizations will also expand their use of evening hours and 24-7 operations. A few weeks ago, the Port of Long Beach began working 24 hours a day, seven days a week.

U.S. ports urge Biden to promote and incentivize extended gates. Top U.S. port officials lobbied the Biden administration to encourage importers and their carriers to use extended gates, with the possibility of using national defense funds to assist in paying for the changes. Directors of the seven major U.S. ports said the funding would be merited under the National Defense Authorization Act of 2021 if the government deemed port congestion an economic threat. The port directors also urged Biden to ease importer limitations on cargo anti-dumping and countervailing charges of over 200 percent imposed on China Intermodal Marine Containers (CIMC), the world’s largest maker of chassis. Furthermore, port leaders encouraged Biden to support data-sharing platforms that give stakeholders access to predicted cargo flows so that landside operations can be better controlled. Schedule a demo to learn how Navegate’s collaborative, digital software can help you gain control of your supply chain.

Rail

Terminal fluidity improves at BNSF Railway’s Chicago terminal, but truckers still struggle with long turn times and no chassis. With containers clearing up in one of the terminals’ lots (Lot W), turn times continue to be a problem at the terminal, nearly doubling from a year ago. Truckers have pointed out that when drivers are stuck in a rail terminal, fewer loads can be delivered and it becomes difficult to retrieve containers before free time, causing more demurrage fees.

Other

Retailers expand warehousing to the East Coast to escape West Coast congestion. In an effort to help relieve West Coast warehousing congestion, retailers are now expanding to the East Coast, particularly in the New York/New Jersey area. Port congestion on the West Coast and the need to quickly fill e-commerce orders will likely increase the demand for warehousing on the East Coast. 

A severe shortage of labor has driven capacity constraints, not warehouse woes. Peak season always has warehouses and distribution centers filled with holiday merchandise, but this year, labor shortages are causing the constraints. COVID-19 has certainly caused woes for the industry, but more so exposed the problems warehouse operators face in terms of a lack of labor.

How did supply chains get so wrecked? A recap from FreightWaves tracks how supply chains and transportation congestion became the unprecedented cluster it is today from COVID-19 to a lack of equipment.