COVID-19 Latest Freight Updates

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What is Detention and Why Am I Paying It?

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What is Detention? Have you seen this word on an unexpected bill lately? Detention is one of those terms in the shipping industry that gets thrown around a lot, often...
Photo of shipping containers stacked in a storage area

What is Demurrage and Why Am I Paying It?

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What is Demurrage? So clearing your shipment took a little longer than planned and you weren’t able to pick up before your last free day. Or maybe your container arrived...
Photo of Wuhan, China's skyline at sunset

COVID-19 and Its Impact on Global Supply Chains

| Alert, COVID-19 News, News | No Comments
current as of February 4th, 7:00 p.m. CST. What is Coronavirus? Coronavirus is a type of virus, named for the appearance of its membranes, which resemble the sun’s corona. We’ve...
Photo of red and gold lanterns hung for Chinese New Year 2020

Chinese New Year 2020: How to Minimize the Impact on Your Supply Chain

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Chinese New Year, or Lunar New Year is a weeks-long celebration that begins on January 24th, on the Lunar New Year’s Eve. New Year’s festivities in China result in the...

Tariff Delays, Port Disruptions, and Falling Oil Prices

By | COVID-19 Latest Updates | No Comments

U.S. Customs

In a reversal of previous statements, the Trump Administration announced that the president is poised to sign an executive order allowing importers a 90-day grace period on tariff payments to ease the financial burden imposed by the pandemic. No order has been signed yet, and we will post further updates when official instructions are received from U.S. Customs.

Global Ports

Global ports are bracing this week for disruptions of every kind. The Port of New York and New Jersey is expecting up to a 20% increase in truck moves as imports levels recover with the reopening of Chinese factories. As these goods reach their destination ports, U.S. economic activity continues to slow, leaving a lot of supply with little demand for it. As importers try to stall shipments to reduce congestion at warehouses that are reaching their capacity limits, container lines are offering importers storage. By moving containers to storage, importers can avoid demurrage fees, and ports can reduce congestion to make room for essential goods to pass through without delays.

The Port of Savannah is making several changes to its operating hours in response to blank sailings and store/factory closures. Notably, the port will be closing its gates to truckers every Saturday for the month of April. 

Those shipping in southern Asia can expect trouble as ports in India remain closed to all but essential goods. The nation is set to remain under lockdown until April 14th, and the limited cargo that does get through faces major delays as ports, airports, and container freight facilities work with minimal staffing. Sri Lanka is following a very similar closure, so the same delays can be expected there. Freight moving through Pakistan and Bangladesh is moving at a closer-to-normal pace, in spite of limited staffing at ports and yards. The two nations are still suspending passenger flights. Due to the restrictions in the area, cargo freighter operations are limited, sending airfreight rates soaring and making them increasingly volatile.

Trucking 

The guidelines for drivers with learner’s permits attempting to obtain a commercial driver’s license (CDL) are being relaxed by the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA issued a waiver on March 28th, acknowledging that certain state driver licensing agencies have closed in response to social distancing guidelines. The waiver allows for drivers to test for their CDL while abiding social distancing orders and ensures drivers are available to meet the immediate need for transportation of essential equipment and supplies. 

Ocean 

An advisory board of container-shipping industry executives will be convened by the U.S. Federal Maritime Commission (FMC) to address challenges posed by the COVID-19 pandemic. According to the official declaration the board will consist of innovation teams tasked with addressing bottlenecks and issues in national and global supply chains. If you have information to share with the FMC advisory board, you can email them at [email protected]. 

While the IMO 2020 regulations have been in effect for a full 3 months now, carriers that had planned to retrofit their ships with sulfur scrubbers are starting to back out. As oil prices continue to plummet, the expensive low-sulfur fuel oil now required for ships without scrubbers has fallen dramatically since the beginning of 2020. While this could be good news, reducing the number of blanked sailings that had been planned to allow for retrofitting ships, it has significantly reduced the earnings for scrubber-fitted vessels, extending the payback time of their investment ($2.5 million, on average) to years instead of months.

Carriers

FedEx has suspended their Money Back Guarantee for Express, Ground, Freight, and Office services immediately and until further notice, and they have also stopped collecting physical signatures on most deliveries in favor of recipient name verification. In addition, FedEx has announced service suspensions in certain regions and additional transit time adjustments in other areas. 

Similarly, UPS has suspended their service guarantee effective for all shipments originating on or after March 24, 2020 for all U.S. origin shipments. For all non-US shipments, the origination date cutoff is March 26, 2020. 

Port Pile-Ups, Plummeting Volumes, and Force Majeure

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U.S. Customs

The United States Trade Representative (USTR) has opened a docket to field public requests for tariff modifications regarding essential products and medical supplies. According to the USTR, life-saving devices like ventilators and oxygen masks have never been subject to Section 301 tariffs, but if you feel certain currently-taxed products may be essential, you can submit comments hereThe USTR will take comments until June 25.  

Global Ports

Global ports have seen extensive pile-ups of containers as the effects of the pandemic spread across North America. Shippers with plummeting demand are increasingly cancelling orders, delaying the departure of shipments, or seeking storage at ports in an effort to slow down their supply chains. As importers delay pickups, ports are struggling to find room to store containers full of non-essential cargo. Some of the largest ports on the U.S. East Coast have been seen sourcing available land both on and off of terminal grounds to increase storage capacity for containers.

As a result, the Federal Maritime Commission (FMC) has brought renewed focus to the effectiveness of detention and demurrage fees in incentivizing the pickup and return of cargo and containers. Many expect a new interpretive rule to be announced in the near future. In the meantime, many carriers have been extending free time for beneficial cargo owners to reduce fees in association with current supply chain disruptions.

Ports across the U.S. are employing various strategies to keep workers safe and cargo moving during the crisis. Notably, the Port of Baltimore closed Seagirt Marine Terminal Monday, March 30th through today, March 31st, due to lagging volumes from China. New Orleans’ and Houston’s ports have taken less severe measures, closing accessory services and buildings while remaining fully operational. 

Air

The International Air Transport Association (IATA) predicts that air cargo volume will be approximately 20% lower in 2020 than in 2019 due, in large part, to the COVID-19 pandemic. According to the IATA, airlines are busy transporting food and medical supplies, and large-scale economic shutdowns have left a smaller appetite for typical air cargo like apparel and automotive parts. 

Ocean

Ocean freight volume projections are growing increasingly grim, anticipating a more than 17% decrease in total volume from March to May. As U.S.-based businesses cancel import purchases at large scale in response to decreased economic activity, container lines are forced to increase blanked sailings from Asia. Carriers have been announcing blank sailings rapidly, adding volatility to international freight routes. Make sure you’re constantly monitoring the status of your shipments in order to make alternate plans, if necessary.

As a result of the uncertainty in the freight market, experts also warn of a nosedive in spot rates, with declines of as much as 36% in certain lanes.  

Domestic Trucking

The Federal Motor Carrier Safety Administration (FMCSA) has issued an updated emergency declaration that exempts carriers transporting certain medically or economically necessary goods from Hours of Service (HOS) restrictions. In addition to the declaration, the FMCSA has also provided a FAQ page to help determine what types of cargo qualify for the exemption and the modified rest requirements for exempted drivers. 

The uncertain supply chain environment created by COVID-19 is making it difficult for truck brokers to make an accurate 14- or 21-day forecast for rates. This is causing brokers to price uncertainty into the equation, and truckload rates across the nation are significantly higher now than they were a month ago. As all parties grapple with this unprecedented disruption, brokers have also stated that alterations to long-term contracts may be appropriate. 

Force Majeure

Finally, watch out for two important words right now: Force Majeure. Major carriers are declaring this, citing that the effects of the COVID-19 pandemic on shipments are beyond the given carrier’s control. This declaration temporarily releases carriers from their contractual obligations, should they feel that they are impossible or impractical due to COVID-19’s effects. So far, CEVA and DHL are the biggest names to declare this, but don’t be surprised if this trend continues.

U.S. Customs Update | FDA & Delayed Duty

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Personal Protective Equipment (PPE)

As face masks, gloves, and other personal protective equipment (PPE) are in high demand right now, importers should be aware of FDA regulations surrounding the import of these products and the obstacles they may face at ports. We recommend reading the FDA’s latest policy statement, or getting in touch with your Navegate customs broker.

 

Delayed Duty Payments

Many rumors have circulated about the possibility of U.S. Customs accepting delayed duty payments in recent days. Their latest notice states that they will not be accepting any further requests for additional days for payment. You can read more in their latest statement. Feel free to reach out to your Navegate customs broker for any questions.

COVID-19 Freight Update

By | COVID-19 Latest Updates | No Comments

Over the last few months, the world and how it works has changed in ways few of us ever could have imagined. Now more than ever, supply chains need to keep moving, and that’s why we’ve launched our COVID-19 response center. We’ll update you with the latest news we hear, along with helpful guides and tips to keep your systems running.

This Week’s Latest

Global Ports

India has announced a total lockdown until the 14th of April, allowing only essential cargo to pass through air and sea ports. Pakistan and Sri Lanka have announced similar lockdowns.

China’s Port of Fuzhou has announced a 14-day quarantine for ships coming from 9 heavily virus-stricken countries—  France, Germany, Iran, Italy, Japan, Spain, Singapore, South Korea, and the U.S. The 14-day restriction begins when those vessels depart from their origin countries, and is meant to reduce the spread of the virus from visiting ships and their crews. This action represents a very real risk to ocean shipping, given how easily a virus could spread between crew members during a vessel’s voyage.

In the U.S., several ports have announced shifts in nightly closure times to allow for better cleaning and sanitization. Typical night hours are being shifted from 6 p.m. – 3 a.m. to 7 p.m. – 4 a.m. These changes are not expected to make an impact on terminal productivity and service. So far, these changes have been announced at Los Angeles, Long Beach, Oakland, Seattle, and Tacoma.

Air

Most governments internationally have greatly reduced the number of passenger flights allowed to and from their country.  In some cases, passenger flights have been cancelled altogether, resulting in airlines grounding up to 90% of their fleet. However, in an effort to free up air capacity, American Airlines, United, and Delta have announced that they’ll utilize their grounded passenger aircraft for cargo-only flights, with other carriers offering charter flights as well. Currently, 13 U.S. airports and 70 worldwide airports are available to ship to/from.

Ocean

Demand for space is high as importers continue efforts to increase/replace inventory after the suspension of shipping from China. The most pressing issue we’re seeing is a difficulty finding empty containers—both dry and refrigerated. Navegate has been monitoring these on-going container shortages at ports across America. For assistance finding a container, click here.

U.S. Domestic Trucking

Service and leads times have increased with the majority of the workforce working from home. Domestic connections are becoming less plentiful, so transit times have increased (typically by 1-3 days). Local and regional moves are seeing slight price increases, but low fuel prices have kept them close to normal.

Truck drivers, however, are struggling to keep things moving. While ELD regulations have been dialed back, removing HOS (hours of service) restrictions for drivers carrying essential goods, many drivers are having a difficult time finding open rest stops and restaurants along their routes. Cross-country moves are getting increasingly difficult to book, especially when moving west, as appointments face high chances of getting cancelled before arrival as warehouse capacity shrinks. Additionally, regulations being implemented by individual states create extra hurdles for drivers. For example, trucks are not allowed to exit or enter the state of Virginia without paperwork showing a confirmed appointment. Similar rules will likely pop up in other states, making long-distance moves increasingly cumbersome.

 

As always, Navegate’s team is here to help. Our expert teams are ready to answer any questions you may have or give advice for managing the current logistics environment. Additionally, if you need help moving freight or gaining visibility and control over your supply chain, we’d happily discuss what Navegate can do for you. Contact us!

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