Freight Market Updates

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Radiant Logistics Announces Record Results For The Third Fiscal Quarter Ended March 31, 2022

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For Immediate Release Radiant Logistics Announces Record Results For The Third Fiscal Quarter Ended March 31, 2022 Reports quarterly results with revenues of $460.9 million, up $224.4 million or 94.9%;...

Celebrating Women’s History Month | Women In Logistics & Supply Chain

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Celebrating Women's History Month Get To Know Some of the Inspiring Women Leaders at Navegate March is Women's History Month — a time to honor the bravery and achievements of...
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Radiant Logistics Announces Results For The Second Fiscal Quarter Ended December 31, 2021

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For Immediate Release Radiant Logistics Announces Results For The Second Fiscal Quarter Ended December 31, 2021 Continues trend with another quarter of record results for the second quarter ended December...
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Navegate Announces Acquisition by Radiant Logistics

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For Immediate Release We are excited to announce the acquisition of Navegate, Inc. by Radiant Logisitics, Inc. Navegate, Inc., a Mendota Heights, Minn.-based technology-enabled logistics and supply chain management company,...

Defense Production Act Invoked in Light of Formula Shortage, Biden Administration Temporarily Suspends 232 Tariffs on Ukraine Steel, Canadian West Coast Ports Can’t Handle U.S. Cargo Spillover

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Ocean

Container shipping indexes in Asia-U.S. down around 20%-30% from peaks. Shipping rates are continuing to fall and are now materially lower than they were a few months ago. FreightWaves reports that the Shanghai Containerized Freight Index (SCFI) logged its 15th consecutive weekly loss on Friday. Peak season volumes, the end of China lockdowns and possible port labor unrest have the potential to cause spot rates to spike again, however. Time will tell if that is the case, or if falling import demand due to inflation and unwinding port congestion will continue to lower ocean spot rates.

Shanghai lockdown creating lull in May import volumes. Over the last seven weeks, the Covid lockdown in Shanghai has effectively resulted in a lull in May import volumes through US west coast ports. According to recent statistics from the port of Los Angeles Signal data platform, “cargo expected to arrive on vessels this week is down 5% on the same week of last year, and volumes are predicted to see a 20% lag next week.” The Loadstar reports that the top ten US ports saw April container imports climb 7.1%, compared with the same month of 2021, to 2,189,744 teu, suggesting US consumers’ appetite for spending continues unabated.

Ports

Canadian West Coast ports can not handle U.S. cargo spillover. The ports of Vancouver and Prince Rupert will not be able to handle any cargo diverted from the US West Coast if disruptions are caused by ongoing longshore contract negotiations. Cliff Stewart, vice president of infrastructure at the Port of Vancouver, told JOC.com that “the terminals are full. There’s nowhere to put anything.” The ports are already at capacity with Asian imports bound for US and Canadian markets. 

Customs

Biden Administration temporarily suspends 232 tariffs on Ukraine steel. From the NCBFAA Monday Morning eBriefing: The Biden Administration on May 9 announced that it has suspended 232 tariffs one year for imports of Ukrainian steel. According to White House, Ukraine’s steel industry employs 1 in 13 Ukrainians. Russia has targeted Ukraine’s steel plants during its invasion. This includes one of the largest steel plants in Mariupol. “Many of Ukraine’s steel mills have continued to pay, feed, and even shelter their employees over the course of fighting. Despite nearby fighting, some Ukrainian mills have even started producing again,” the Commerce Department said. “Creating export opportunities for these mills is essential to their ability to continue employing their workers and maintaining one of Ukraine’s most important industries.”

Initiation of 4-Year Review Process of China tariffs. The first step of a statutory review process is underway to determine whether China tariffs issued pursuant to Section 301 of the Trade Act of 1974 should be continued beyond the 4-year mark since their implementation. The US Trade Representative (USTR) has issued a Federal Register notice that includes different comment periods and phases for the USTR to review and decide if the tariffs should be extended. You can read the FAQ for the U.S. Office of Trade Representatives 4-Year Review process here. 

Trucking

Matheson Postal Services Inc. files for Chapter 11 bankruptcy. The Sacramento-based trucking and logistics company, which has a contract with the U.S. Postal Service to haul mail, filed a petition on May 5 in the U.S. Bankruptcy Court for the Eastern District of California. FreightWaves reports that the filing lists its assets and liabilities as between $10 million and $50 million. Matheson has 248 power units and 383 truck drivers, according to the Federal Motor Carrier Safety Administration’s SAFER database.

Radiant Logistics reports record third quarter results. Radiant Logistics reported record results for its fiscal third quarter, with the company saying it’s not seeing any slowdown in the high demand. Founder and CEO Bohn Crain anticipates a “second surge” in freight flows when China lifts COVID lockdowns, which he believes will “reignite supply chain congestion and capacity issues”, reports FreightWaves. Navegate, a recent acquisition of Radiant, was also mentioned in the Company results announcement: “we remain very excited about the opportunities made available to us through our acquisition of Navegate. In addition to solidifying our presence in Shanghai, Navegate also strengthens our international services offering, particularly in the areas of customs brokerage, ocean forwarding and drayage services and brings to us a robust global trade management capability.”

Rail

Unions critical of BNSF’s controversial attendance policy. The Brotherhood of Locomotive Engineers and Trainmen (BLET) AFL-CIO have voiced concerns over BNSF’s attendance policy, saying “recent adjustments aren’t enough to overcome its shortcomings,” according to FreightWaves. Greg Regan, president of the Transportation Trades Department, said “BNSF’s proposed changes to its HiViz attendance policy are unimpressive. These changes do nothing to address the policy’s fundamental flaws.” The Transportation Trades Department is affiliated with the AFL-CIO. BNSF’s“HiViz” policy, which stands for high visibility, was implemented on Feb. 1. They claim that the purpose of the policy is to provide heightened transparency on absences in addition to more predictability for crews’ working hours. Union members shot back in response that the policy “shortchanges rest time and penalizes employees for time off.” BNSF has adjusted the policy several times since implementation in response to feedback, but the unions argue that the adjustments don’t address worker fatigue sufficiently. 

North Carolina awards $10.9 million in grants to freight rail and rail crossing projects. The North Carolina Ports Authority, along with 13 short line railroads through the agency’s freight rail and rail crossing improvement program received grants totaling $10.9 million from the North Carolina Department of Transportation. The grants will help fund upgrades to more than 35 bridges and 12 miles of railroad track in the state, and will benefit fourteen projects. 

Maersk offering an alternative Asia-Europe rail-sea service via Central Asia and the Black Sea. Maersk has been looking to develop rail routes since Russia’s invasion of Ukraine closed the China-Europe rail network going via Russia and Belarus. The war has also led to the closure of the Poland-Belarus border and a cease of operations at key hubs. Maersk’s newly revamped “Middle Corridor” service departs from various locations in China, crosses the China-Kazak border at Khorgos and continues by rail to Aktau, where containers are loaded on a barge to Baku in Azerbaijan, the Load Star reports. The rail route has an annual capacity of 150,000 teu and the transit time from origin to destination is around 40 days.

Air

EgyptAir signs deal with AEI to continue cargo expansion. AirCargoNews reports that EgyptAir has signed a deal with Aeronautical Engineers, Inc. (AEI) for the conversion of an B737-800 aircraft into a freighter configuration. The aircraft (MSN: 35560) is scheduled to be converted this October. Amr Abu El-Enein, chairman and chief executive of EgyptAir Holding Company, said “this order is part of Egyptair’s cargo and passenger fleet modernization plan. We will continue to increase the size of our fleet and open new freighter markets in the coming years to meet the growing needs of the local market in terms of exporting goods abroad, especially crops.” As of now, Egyptair owns three Airbus A330-200 freighters, with a capacity of 60 tons per aircraft.

International

Supply chain issues severely straining Tesla Shanghai factory. Output at Tesla’s Gigafactory 3 in Shanghai is at less than 50% as a result of ongoing supply chain issues. Giga Shanghai is producing 1,200 Model 3 and Model Y vehicles a day after operations resumed on April 19. That output number is only 45 per cent of the factory’s full capacity of 2,600 units a day. According to executives at Tesla’s car component vendors, the automotive maker had expected to fully restore production on May 16.

Other

Thousands of projects underway in U.S. funded by infrastructure package. 4,300 projects are underway with more than $110 billion in funding nearly six months after the signing of President Joe Biden’s $1 trillion infrastructure package. The roads, bridges and other projects are laying “a foundation for tremendous growth into the future,” said White House senior adviser Mitch Landrieu. Transport Topics reports that President Biden and various members of his administration have made more than 125 trips to “highlight the bipartisan investments in infrastructure.” 

Defense Production Act invoked in light of formula shortage. On Wednesday, President Joe Biden invoked the Defense Production Act to increase the manufacturing of baby formula in order to ease a nationwide shortage. The shortage was caused by the closure of a key plant in Michigan, Abbott Nutrition, after a number of babies fell ill due to bacterial infection after drinking formula produced by Abbott. On Monday, the FDA reached an agreement with Abbott to reopen the plant under “conditions subject to enforcement by a federal court,” CNBC reports. Abbott could reopen the plant within two weeks and consumers could see formula back on shelves within eight weeks. Biden is requiring suppliers to prioritize directing ingredients to baby formula manufacturers by invoking the Defense Production Act. The law gives the president authority to require companies to prioritize the manufacture and allocation of goods during crisis and was passed in 1950 during the Korean War.

Navegate now accepting payments through Paycargo. Contact a Navegate expert to learn more.

Recent developments amid Russia-Ukraine crisis:

Canadian government commits assistance to help export Ukrainian wheat stores. The Canadian government has announced that it plans to help Ukraine export stores of wheat to high-demand nations. Because of the Russian invasion, Ukraine’s seaports have been blocked off, effectively trapping dozens of foreign-flagged vessels and about 20 million tonnes of Ukrainian grain, according to the Maritime Executive. The Ukrainian wheat and other agricultural cargo is essential for the Middle East and Africa, who rely on Ukraine for certain food supply imports. Cargo ships will be dispatched from Canada to pick up Ukrainian wheat in the Black Sea states, then deliver the food to nations where it is needed most. 

Ocean Shipping Industry Requesting Overhaul on Emission Directives, CPSC Unveils E-Filing Plans During NCBFAA Conference, Surface Transportation Board Wants Improvement Updates from Class I Railroads

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Ocean

Ocean shipping industry requesting overhaul on emission directives. Bloomberg reports that the World Shipping Council (WSC) is asking the International Maritime Organization (IMO) to overhaul emissions directives so that all carriers are “working off the same rulebook as they make the expensive changes needed to cut output of harmful carbons,” and ensure the regulations are equally applied. The ocean shipping industry is one of the world’s biggest polluters and reportedly emits more carbon annually as Germany and the Netherlands combined, thus the need for emissions directives. 

Ports

Ports of LA/Long Beach to Reconsider Container Dwell Fee. Via the NCBFAA Monday Morning eBriefing: “The ports of Los Angeles and Long Beach have continued to postpone their “Container Dwell Fee,” and said they will reconsider its possible imposition on May 20. The executive directors of both ports will reassess fee implementation after monitoring data over the next week. Fee implementation has been postponed by both ports since it was announced on Oct. 25, but it remains a threat to the industry. Under the temporary policy approved Oct. 29 by the Harbor Commissions of both ports, ocean carriers can be charged for each import container that falls into one of two categories: In the case of containers scheduled to move by truck, ocean carriers could be charged for every container dwelling nine days or more. For containers moving by rail, ocean carriers could be charged if a container has dwelled for six days or more. The fee has been set at $100 per container, increasing in $100 increments per container per day of excess dwell time beyond the prescribed period. The port authorities have stated the fees collected from dwelling cargo will be “reinvested for programs designed to enhance efficiency, accelerate cargo velocity and address congestion impacts.” 

Customs

CPSC unveils e-filing plans during NCBFAA conference. An official from the Consumer Product Safety Commission (CSPC) outlined the agency’s plans to implement its ACE Message Set at NCBFAA’s Annual Conference on May 2. The plans will start with a pilot program involving participation from some importers and customs brokers. CPSC will continue the concept of a certificate “registry” which was first proposed in 2016. Importers will be allowed to upload the certificate enforcement data covering multiple shipments into a CPSC electronic registry. Brokers will then be able to provide a Product Registry reference number at entry for all shipments covered by the certificate, rather than having to enter the complete Message Set for each shipment. A Federal Register notice is expected by this summer, and the e-filing pilot is set to begin in 2023. CPSC expects that mandatory implementation of its CPSC Message Set will occur in 2025. More details are available in this Staff Briefing Package that was approved by CPSC in 2020.

Trucking

U.S. and Mexico considering expanded joint cargo processing efforts. The U.S. and Mexico are looking to expand the unified cargo processing program to speed up U.S.-bound shipments across the shared border. Under the initiative, officials from both the U.S. Customs and Border Protection (CBP) and Mexico’s Tax Administration Service (TAS) conduct joint cargo inspections of trucks at the facilities of the importing or exporting country. Should no issues arise, the driver and truck are released and the import is allowed to enter U.S. commerce directly. If an issue is uncovered, such as a prohibited good, the shipment is then sent for another examination, conducted jointly by CBP and SAT. 

Increase in trucking employment suggests confidence in freight demand. An increase in trucking employment last month indicates that demand for freight remained high and for-hire trucking firms were confident enough to keep adding jobs. According to unadjusted data released by the U.S. Bureau of Labor Statistics (BLS), trucking companies added 14,100 jobs in April, a substantial increase from the 9,000 jobs added last year in April 2021. Ongoing labor shortages and supply chain disruption were the direct cause for the need for new hires to haul freight that continues to land at US ports and leave factories and warehouses. The jump in trucking employment last month was the largest increase since April 2013, when trucking companies added 22,400 jobs in one month, according to JOC.com.

Rail

Surface Transportation Board wants improvement updates from Class I railroads. Four U.S. Class I railroads must each submit a report to the Surface Transportation Board (STB) outlining how they expect to improve rail service. Union Pacific (NYSE: UNP), BNSF (NYSE: BRK.B), CSX (NASDAQ: CSX) and Norfolk Southern (NYSE: NSC) are required to submit service recovery plans and provide biweekly written progress updates. They will also participate in biweekly conference calls with STB staff. Additionally, the board also wants data on operations and employment from all the Class I railroads. The request comes after STB’s two-day hearing in April held in response to reports from shippers about “deteriorating rail service,” according to FreightWaves. The plans and data submitted by the railroads will help STB assess whether further actions may be needed. The requirements also aim to “promote industry-wide transparency, accountability and improvements in rail service,” STB said. 

Air

Air Transport Services Group to lease freighters to Dublin cargo airline. A Dublin-based contract airline that serves customers such as Amazon Air and FedEx has ordered five Airbus converted freighters from Air Transport Services Group (ATSG). This builds on the first-quarter profit contribution of ATSG’s leasing arm. ATSG reported a revenue increase of 29% to $486 million and adjusted pretax earnings of $64 million, more than triple the amount in 2021, directly linked to a larger Boeing 767 fleet and greater passenger flying for the military. According to FreightWaves, ASL Aviation Holdings will lease ATSG’s first two A321-200 narrowbody freighters in the second half of the year, with a third aircraft scheduled for delivery in 2023. The airline will also receive two A330 retrofitted freighters in 2024.

International

Shanghai continues to tighten lockdown measures. China’s top leader Xi Jinping pledged to “unswervingly” double down on the country’s controversial zero-Covid policy, CNN reports. Millions of residents continue to be confined to their homes with no end in sight. Many videos showing Shanghai residents arguing with hazmat suit-clad workers and police officers while being forcefully taken away for government quarantine have since been removed by censors after sparking public outcry. Under the new policies residents with negative Covid tests can also find themselves placed into centralized government quarantine. Concerned about the recent developments in China and how they’ll affect your supply chain? Contact a Navegate expert to learn more.

Beijing shuts down public transportation in effort to curb continued Covid spread. Beijing has shut down many metro stations and bus routes in an attempt to avoid the same situation as Shanghai, where millions of people have been under strict lockdown for more than a month. More than 60 subway stations, about 15% of the network, and 158 bus routes were shut down, service providers said, most in the Chaoyang of Beijing.

Other

U.S. Trade Deficit Widens. On May 4 the U.S. Census Bureau reported that the trade deficit in the U.S. is continuing to widen. In March the deficit grew by 22.3% to $109.8 billion as imports continue to outpace exports. You can read the full report here.

Recent developments amid Russia-Ukraine crisis:

Transport providers face costs from Russian exit. In the rush to withdraw services from Russia in the wake of the Ukraine invasion, many transport providers are finding the undertaking to be extremely expensive. JOC.com reports that in its first-quarter results released this week, Maersk put the price of “disengaging from all activities in Russia” at $718 million, with almost half of that linked to unwinding its 30 percent investment in Russian port operator Global Ports International. 

U.S. House of Representatives approves $40 billion in aid to Ukraine. On Tuesday, the U.S. House of Representatives approved a $39.8 billion aid package for Ukraine, just days before the end of President Biden’s authority to fund military supplies to help defend Ukraine from Russian attack. The bill passed 368 to 57. It will now proceed through the Senate and then to the president’s desk. Senate Majority Leader Chuck Schumer said ahead of the vote that the Senate will act on the aid package “as soon as possible,” according to CBS News.

California Ports Brace for Another Cargo Surge, Price of Diesel at All-Time High, Maersk Stopping all Vessel Operations in Russia and Belarus.

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Ocean

FMC advised to expand oversight of demurrage fees to include excessive dwell fees. JOC.com reports that a shipper advisory group to the US Federal Maritime Commission (FMC) is recommending that regulators expand their oversight of unreasonable demurrage fees to include so-called excessive dwell fees that have been levied on the US West Coast. Last week, the National Shipper Advisory Committee (NSAC) unanimously approved the recommendation, pushing back against additional charges marine terminal operators say are “necessary to clear congested facilities.” The NSAC says the excessive dwell charges are unreasonable in situations where factors out of their control prevent the pickup of containers and represent an additional cost on top of already elevated container storage fees. 

Ports

California ports brace for another cargo surge. Peak season imports and an anticipated backlog of freight from mainland China are causing the ports of Los Angeles and Long Beach to brace for another cargo surge later this spring. Space for the next import surge is limited at warehouses in Southern California, as they are already operating near capacity handling merchandise for inventory replenishment. Arriving imports will soon be forced to sit on the docks until space becomes available at the warehouses. In a press conference in April, Gene Seroka, executive director of the Port of Los Angeles, said there were “46 container ships headed to Southern California, which is about normal for this time of year. But that number will increase soon enough as already-arriving back-to-school shipments, followed by early holiday merchandise imports, eventually collide with a delayed spike in shipments from Shanghai when COVID-19 lockdowns restricting goods movement in and out of the world’s busiest port are lifted.”

Customs

Customs and Border Protection update to FDA FSVP for Food Importers Data Requirements. Customs and Border Protection (CBP) published a message to the trade on April 28 that provides updates on entry data requirements for importers subject to the Food and Drug Administration (FDA) Foreign Supplier Verification Programs for Food Importers (FSVP) regulation. Currently, FDA guidance provides that FSVP Importers may temporarily submit “UNK” (unknown) in place of the DUNS number for the FSVP Importer in PG19. In issuing this guidance, FDA explained that while the agency expected all importers to provide their Unique Firm Identifier (UFI) in accordance with 21 CFR 1.509(a); the agency recognized that this was a new requirement, and some factors may have prevented importers from doing so. FDA therefore established a temporary policy providing FSVP importers unable to immediately obtain a DUNS number to transmit the value “UNK” in the UFI field for shipments subject to FSVP entry requirements. Starting July 24, FDA will end its temporary policy of permitting use of the entity identification code “UNK.” FSVP importers have now had ample time to familiarize themselves with the requirements in 21 CFR 1.509(a). Accordingly, consistent with 21 CFR 1.509(a), the FSVP importer must ensure that their valid, 9-digit DUNS number is provided in the Entity Number field. No earlier than July 24, 2022, CBP will reject an entry line of a food subject to the FSVP regulation when the importer’s DUNS number is not provided in the Entity Number field. CBP said the deployment dates in the CERT and Production environments will be announced in a future message. For details on the data requirements for entry filing relating to the FSVP regulation, please review CBP’s CSMS #17-000314 and the FDA Supplemental Guide for the Automated Commercial Environment. Read more from the FDA here.

Trucking

Price of diesel at all-time high. The national average price of diesel skyrocketed 34.9 cents to set an all-time record of $5.509 a gallon, according to Energy Information Administration data released May 2.

Rail

BNSF’s net Q1 income rose despite volume dip. First-quarter 2022 net profit rose 10% for BNSF despite a 3% decline in volumes. BNSF reported Monday that net income for 2022 quarter 1 was $1.37 billion, compared with $1.25 billion in the first quarter of 2021. Total revenues reportedly grew 10% to nearly $5.97 billion amid a 14% gain in average revenue per unit, which in turn was supported by higher fuel surcharge revenue, according to FreightWaves

Air

IAG Cargo benefiting from a 40% increase in flights between Spain and the U.S. The increase comes from its airline sister companies, Iberia and LEVEL. Iberia’s network includes regular connectivity between Madrid and Los Angeles, Boston, and Chicago, with flights to New York and Miami departing twice a day, and LEVEL has resumed flights between Boston and Barcelona. IAG Cargo now offers 120 weekly connections – a 40% increase since March

International

European ports expect surge in container volumes once Shanghai lockdown is lifted. The board chairman of the newly merged Port of Antwerp-Bruges. Says that the anticipated surge in container volumes once China’s COVID-19 lockdowns are lifted will be a “huge problem” for Antwerp. The port is already operating near maximum-capacity, reports JOC.com. “If ships come to Western Europe, they will come in one block and that is a huge problem if you don’t have the capacity,” said Annick De Ridder, port alderman of the city of Antwerp and board chairman of the port. Antwerp-Bruges will continue to focus on containers, breakbulk, roll on-roll off traffic, and chemicals.

Ocean Network Express adds new MIM connection service. Ocean Network Express (ONE), a Singaporean container line, has unveiled a new addition to its network connecting the Middle East, India and Mozambique. The new service is called MIM (Mozambique – India – Middle East) and will directly link Jebel Ali, Mundra and Maputo. The MIM service will start at Mundra on May 20. ONE’s new service will have a bi-weekly frequency and the following rotation: Jebel Ali – Mundra – Maputo – Jebel Ali.

Other

Construction begins for the world’s largest offshore wind farm. Offshore construction has commenced on the Dogger Bank Wind Farm located off the northeast coast of England. The installation of the first length of HVDC export cable off the Yorkshire coast began for the wind farm two years after onshore work began on the project. The farm will be fully completed in 2026 and will have the capacity to generate 3.6 GW.

Recent developments amid Russia-Ukraine crisis:

Maersk stopping all vessel operations in Russia and Belarus. In a statement posted to their website and sent out in an email Wednesday, Maersk announced that it has now stopped all vessel operations in Russia and service with Belarus. Domestic operations are gradually being winded down and/or divested, and the winddown does not allow for any new business in neither Russia nor Belarus. Maersk offices in Far East Russia, Novorossiysk and Kaliningrad are expected to close down during the summer of 2022. The Saint Petersburg and Moscow offices will run until the end of the year. The Belarus office will also be shut down during the summer. Read the full statement from Maersk here.

Spain turns away Maltese vessel for carrying Russian transshipment. Spanish authorities reportedly turned away the Black Star, a Maltese-registered product tanker last week citing information from the EU that the vessel was carrying a transshipped Russian cargo. The vessel was requesting permission from the Capitanía Marítima de Barcelona to arrive in port when authorities intervened and denied the vessel entry into the port, according to Maritime Executive. It was then ordered to vacate Spanish waters. The ministry cited the EU sanctions on Russian shipping for the order.

Strike-authorization Ballot to be Voted on by Alaska Airlines Pilots, Transportation Companies Pledge Aid to Ukraine, Cummins Files for Filtration Business IPO.

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Ocean

Environmentally friendly cargo ship in the works. SailCargo INC is developing a fleet of eco-friendly vessels with the goal of making emission-free shipping a reality. According to Interesting Engineering, SailCargo is “currently building its flagship vessel, the Ceiba, from locally sourced wood in the jungles of Punta Morales, Costa Rica, and expects it to be on the water and making shipments of coffee, cacao, and other value-added natural products sometime in the next year and a half, traveling between various points in North America and the Caribbean.” 

FMC to take action regarding export complaints. ​​Repeated complaints from manufacturers over the inability to export their goods continue to be one of the driving forces for new efforts to examine ocean carriers’ export services. Staff is reportedly moving forward “expeditiously” with the efforts to examine how key ocean carriers are serving U.S. export shippers, according to the latest report from the Federal Maritime Commission. The complaints are a key piece of the pending legislative reform to the Ocean Shipping Act. Maritime Executive reports that “after passing both the U.S. House of Representatives and Senate, the bill is currently awaiting a conference committee to address differences between the two versions of the bill. The FMC, however, has not been waiting for the new authorities it will be granted when the bill becomes law as well as the elements of the bill focusing on revising the export operations of the ocean carriers.”

Hapag-Lloyd to pay $822,220 in civil damages. A US administrative law judge has ordered Hapag-Lloyd to pay $822,220 in civil damages stemming from a Federal Maritime Commission (FMC) investigation. The investigation found that the carrier improperly assessed detention charges on 11 containers in mid-2021. The payment will go to a California drayage provider who asserted that attempts to have the detention fees waived were denied or ignored by Hapag-Lloyd. “We are thoroughly looking into this ruling and will then decide upon further legal action,” Hapag-Lloyd spokesman Tim Seifert told JOC.com.

Ports

U.S. imports from Asia continue to grow to meet demand. Despite warnings of rising inflation, growth in US imports from Asia in the first quarter indicates continued strength in consumer demand. Total volumes from Asia increased 2.7 percent to 1.62 million TEU in the first three months of 2022 from an already record-setting first quarter last year, according to PIERS. The data also shows an increase in East Coast market share for Asia imports to 34.6 percent, from 33.1 percent in Q1 2021, and a corresponding decrease in West Coast market share to 58.2 percent from 61.3 percent. According to the Journal of Commerce, that explains the increase in vessel backlogs at East Coast ports and the slight improvement in congestion at West Coast ports as retailers shift some of their imports away from the West Coast in anticipation of the expiration of the waterfront contract between the International Longshore and Warehouse Union and the Pacific Maritime Association on July 1.

Customs

FMC Provides Instructional Video on How to File Complaints. The Federal Maritime Commission (FMC) has released a video that provides instruction on options the public can use to bring complaints to the agency. The video has three segments that explain how to report a potential violation of the law to Commission investigative staff for possible enforcement action; how to work with the Commission’s Office of Consumer Affairs and Dispute Resolution Services (CADRS) to achieve speedy commercial solutions; and how to file small claims or formal civil complaints heard by the Commission’s Administrative Law Judge. Each segment provides detailed instructions on how to initiate a process, information the Commission will require to move forward, and an explanation of how each process will progress, including potential outcomes, the FMC said. Watch it here. 

New CBP Aluminum Import Monitoring (AIM) Requirements. U.S. Customs and Border Patrol CSMS #51720841: “Beginning June 29, 2022, U.S. Commerce Department (Commerce) Aluminum Import licensing applications will require both fields of “country of largest smelt” and “country of second largest smelt.” Commerce defines the field for the country of smelt for the largest (and second largest) volume of primary aluminum as the country where the largest volume of new aluminum metal is produced from alumina (refined aluminum oxide) by the electrolytic Hall-Héroult process. Based on public comments in response to the preliminary rule, it was determined that importers/brokers would need time to gather required information for the countries of smelt and a grace period was granted for these fields; importers were permitted to indicate “unknown” for one year upon implementation of the regulations. Commerce extended the temporary period to allow for license applicants to state “unknown” in the fields for country(ies) of smelt for the largest and second largest volume of primary aluminum until June 28, 2022. Commerce will begin requiring the requested information for these fields for license applications on or after June 29, 2022, meaning that filers may no longer state “unknown” for these fields after that date. For more information, please visit the Aluminum Import Monitoring (AIM) website at: Aluminum (trade.gov) and the Getting Started with AIM page (including the production process) or contact the aluminum licensing office at [email protected]

Trucking

Cummins files for filtration business IPO. Cummins Inc. submitted a draft registration statement with the U.S. Securities and Exchange Commission for its filtration business, proposing an underwritten initial public offering in the United States. The number of shares to be offered and the price for the IPO have not yet been determined or made public. The SEC will begin the review process before the IPO can commence. 

Rail

COFC Logistics to purchase 5,500 domestic containers. Over the next 12 months, 5,500 containers purchased by COFC Logistics will be delivered in a move designed to provide an alternative for shippers who do not want to follow Schneider National’s move to rival Union Pacific Railroad next year. COFC is a domestic intermodal provider partnered with BNSF Railway. Back in January, Schneider announced that it will be leaving BNSF at the end of 2022 to join UP. J.B. Hunt announced plans in March to increase its container pool by 40 percent to 150,000 containers within the next three to five years, in hopes of luring shippers back to BNSF.

Air

U.S. issues TDO for Russian carrier. The U.S. Bureau of Industry and Security (BIS) has issued a temporary order denying all export privileges for the Russian cargo carrier Aviastar. According to Aircargo News, the BIS said that the order had been issued due to “ongoing violations of the comprehensive export controls (EAR) imposed on Russia by the Commerce Department” in response to Russia’s invasion of Ukraine. The US requires that any aircraft controlled, chartered or leased by Russia or a Russian national that contains more than 25% controlled US-origin content is subject to a license requirement before it can travel to Russia. An investigation done by the US Office of Export Enforcement found that Aviastar operated multiple US-origin aircraft subject to the EAR into and out of Russia to China without a license. The website FlightRadar24 shows that since the order was issued on March 21, the carrier has performed several flights within Russia and between Russia and China.

Strike-authorization ballot to be voted on by Alaska Airlines pilots. Pilots at Alaska Airlines have been negotiating a new contract with the airline since 2019. If the ballot is passed by the pilots, the vote would authorize union leaders at the airline to declare a strike when the group is given permission to do so by the National Mediation Board (NMB). ALPHA said: “The pilot union’s leaders at Alaska Airlines unanimously voted to conduct a strike-authorization ballot among their pilots. This means union leaders are officially requesting the Alaska Airlines pilot group, represented by the Air Line Pilots Association Int’l (ALPA), give them the authority to go on strike when legally permitted to do so. This would only happen if negotiations break down and the federal government authorizes a walkout after the parties exhaust the required procedures of the Railway Labor Act.” There are approximately 3,100 ALPA pilots at Alaska Airlines. Aircargo News reports that It is not yet known whether any potential industrial action could impact freighter flights or air cargo flown on passenger flights. 

International

Urban-Air Port Ltd (UAP) opens U.K. demonstration hub for cargo drones. U.K. start-up Urban-Air Port Ltd (UAP) has opened Air-One in Coventry, designed for eVTOL vehicles such as air taxis and autonomous cargo drones. The hub in Coventry will provide a blueprint for more than 200 vertiports planned worldwide by UAP over the next five years. Aircargo News reports that “Air-One is expected to demonstrate how purpose-built ground infrastructure can unleash the potential of AAM to decarbonize transport and cut air pollution and congestion, whilst providing efficient deliveries.”

Other

Elon Musk to purchase Twitter for $44 billion. The deal will take the company private and shareholders will receive $54.20 in cash for each share of Twitter stock they own, matching Musk’s original offer and marking a 38% premium over the stock price the day before Musk revealed his stake in the company, according to CNN.

Recent developments amid Russia-Ukraine crisis:

Transportation companies pledge aid to Ukraine. Multiple companies in the transportation sector have stepped up to pledge help for Ukraine amid the Russian Invasion. The Trucking Cares Foundation donated $42,500 to Save the Children, the International Red Cross and the United Nations Children’s Fund. Trucking Cares Foundation Chairman Phil Byrd said in a statement March 16, “The war unfolding in Ukraine is a terrible tragedy. The trucking industry stands with the Ukrainian people and we’re proud to do even a little bit to ease their suffering.” Additionally, the UPS Foundation partnered with humanitarian relief organizations in order to provide $1 million in initial emergency funding and support in March. The support included 56,000 winter coats, 160,000 pounds of food for refugees, $4 million in medical supplies, 10,000 blankets and over 100 pallets of hygiene items, diapers, sleeping bags and mattresses. FedEx Corp. committed more than $1.5 million in relief aid to provide humanitarian assistance, which included a $550,000 cash donation to nonprofits.  

Russia cuts off gas to Poland and Bulgaria. On Wednesday, Russia cut off natural gas to NATO members Poland and Bulgaria and threatened to do the same to other countries. The Associated Press reports that European leaders decried the move as “blackmail.” The news comes just a day after the U.S. and other Western allies vowed to speed more and heavier weapons to Ukraine. The cut-off resulted in a major spike in gas prices in Europe. Poland has been a key portal for the delivery of weapons to Ukraine and confirmed this week that it is sending the country tanks. Bulgaria has openly supported sanctions against Russia over its invasion and has hosted Western fighter jets at a new NATO outpost on the Black Sea coast. According to the Associated Press, “the gas cuts do not immediately put the two countries in dire trouble. Poland has been working for several years to line up other sources of energy, and the continent is heading into summer, making gas less essential for households.”

Georgia Governor Declares Supply Chain State of Emergency, Airlines Drop Mask Mandate After Federal Judge Ruling, Biden Administration Requires U.S. Produced Materials Be Used for Infrastructure Projects

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Ocean

Chinese lockdowns may have lasting impacts on supply chain disruptions. The spread of COVID cases and city lockdowns in China may have massive effects on global supply chains that could have further reaching impacts compared to previous disruptions since the start of the pandemic. Shanghai, one of the largest manufacturing centers in China, home to the largest container port in the world and a major airport that serves inbound and outbound air cargo continues to be under strict lockdown. According to Freightwaves, most warehouses and plants in the city remain closed, trucks are sidelined, the port and airport are running at limited capacity, and freight is continuing to pile up, leading to extreme shipping delays. 

AP Moller-Maersk A/S has stopped shipping refrigerated containers into Shanghai. The news comes as a result of a strict Covid lockdown stalling the delivery of meat and seafood from the port into the city. Maersk says the port is reportedly running out of electric plug slots to keep refrigerated containers cool, while trucking remains limited and terminals are congested. The company has stopped all new deliveries of refrigerated goods and some hazardous cargoes into Shanghai until further notice and is waiving charges for customers to change the destination of their frozen goods already sailing to Shanghai.

Ever Forward refloated in Chesapeake Bay. Aided by two barges, five tugboats, and a full moon, the Ever Forward was finally refloated on Sunday morning after spending more than a month stuck in the muddy Chesapeake Bay. The ship’s hull will be examined by marine inspectors before the Coast Guard allows it to return to the Port of Baltimore to retrieve the containers that were offloaded during attempts to refloat the vessel.

CMA CGM notifies shippers it will no longer carry plastic scrap. According to a customer alert, CMA CGM will no longer accept plastic waste onboard any of the CMA CGM Group’s ships beginning April 15. During the One Ocean Summit in February, the carrier made the original announcement about its commitment to prohibit plastic waste. According to the February statement, the restriction on transporting plastic waste aboard its ships “will prevent this type of waste from being exported to destinations where sorting, recycling or recovery cannot be assured.”

Ports

Chinese carriers shipping more empty containers than loaded exports. According to CNBC analysis of exclusive trade data, two Chinese carriers are shipping more empty export containers than loaded exports out of the Port of Los Angeles and the Port of Long Beach, two of the largest ports in the U.S. CNBC analyzed the container data for 2020 and 2021 from the ports, as well as U.S. Customs and IHS Markit PIERS import-export data, which tracks U.S. Customs cargo shipping records. OOCL, headquartered in Hong Kong, and its parent company, COSCO, headquartered in Shanghai, are the top two carriers that transported more empty containers than loaded U.S. exports out of the ports.

Cargo volumes increase at Port of Los Angeles. The Chinese shipping backlog and rising dwell times are posing a threat to the rebound of the Port of Los Angeles. On Tuesday, port and union leaders expressed confidence in their ability to handle a potential surge. Cargo volumes were up in March, with 958,674 TEUs crossing the piers. The port ended Q1 with volumes up 3.5% YoY.

Trucking

Texas inspection order rescinded over border gridlock. After a week of heavy backlash and fears of economic losses, Texas Gov. Greg Abbott repealed his immigration order that backed up commercial trucks at the U.S.-Mexico border. The order had briefly required all commercial trucks from Mexico to undergo extra inspections with the intention of reducing the number of illegal immigrants and drugs entering the state. It ended up causing wait times of more than 30 hours for truckers to cross the border. 

Georgia governor declares supply chain state of emergency. Georgia Gov. Brian Kemp has declared a “supply chain state of emergency”, becoming the first governor to do so. Governor Kemp’s executive order goes into effect Saturday and runs until May 16. The order will ban price gouging on goods and services and will allow trucks with a gross vehicle weight of up to 95,000 pounds and with a maximum width of 10 feet to operate on Georgia’s state and local roads. The order does not apply to trucks operating on the parts of the interstate highway system that run through Georgia.

Rail

Union Pacific (UP) and BNSF addressing congestion and backlog issues. Union Pacific and BNSF are reducing the number of railcars in their network in order to reduce congestion and address problems caused by labor shortages and increased inventory levels. UP will reduce the number of its cars and plans to meter traffic beginning April 18 if shippers don’t voluntarily reduce inventory, according to a letter to customers. In a statement to Supply Chain Dive, the railroad said that potential limitations on traffic would not affect intermodal as “major international intermodal terminals remain fluid.” BNSF will instead work with private railcar owners and internal system fleet managers to reduce inventory levels. The railroad is confronting “challenges in generating significant overall velocity, inventory level, and fluidity improvement,” according to an April intermodal update.

CSX Transportation set to acquire Pan Am Railways. The Surface Transportation Board (STB) approved the acquisition of northeast US short-line operator Pan Am Railways by CSX Transportation.  STB says that “various side deals with Norfolk Southern Railway and passenger railroads allay anti-competitive and service concerns.” The ruling allows CSX to add 1,200 miles of track throughout New England to its existing 19,500 miles of track across 23 states. CSX has pledged to spend $100 million on upgrading the Pan Am tracks. Related agreements to give competitor NS access to east-west tracks “would not likely result in a substantial lessening of competition, creation of a monopoly, or restraint of trade.”

CF Industries criticizes Union Pacific’s (UP) plan to reduce rail congestion. Fertilizer producer CF Industries is saying that the plan made by Union Pacific to reduce the number of railcars on UP’s network in order to reduce congestion would result in delays to customers’ shipments during the spring application season. CF Industries said that as a result, it would be unable to accept new sales involving UP for the foreseeable future. In a service update on Monday, UP stated that it would be “removing 2% to 3% of UP-controlled cars from the network across multiple commodity groups to maintain fluidity and reduce inventories on the system,” according to Freight Waves. 

Air

Airlines drop mask mandate after federal judge ruling. After a federal judge’s ruling in Florida, various airlines including United, American, Southwest, Delta, Alaska, and others said they were dropping their face mask requirement effective immediately. The mask mandate had been set to expire Monday, but the Centers for Disease Control and Prevention announced last week that it would keep it in place until May 3 to “allow more time to study the BA.2 omicron subvariant of the coronavirus,” according to USA Today.   

Shanghai air cargo diversions causing more freight issues. Airfreight is being diverted from Shanghai’s Pudong airport as a result of lockdowns, causing China’s other major airports to become clogged, and resulting in a shortage of pallets for exports. Zhengzhou Airport (CGO) in the central Henan province has been hit the hardest by the shortage because of the volume of cargo diverted there from Shanghai.  Zhengzhou also began a two-week lockdown last weekend, causing even more freight issues.  

Silk Way West Airlines expands network with additional U.S. routes. The Baku-based freight operator Silk Way West Airlines has started a new weekly service from Baku to Cincinnati/Northern Kentucky International Airport (CVG) running one of its B747-400 freighters. Aircargo News reports that the service is operated with Crane Worldwide Logistics and is set to include 80 inbound and 80 outbound flights this year. The new operations will contribute 14,400 tons of cargo at CVG. During the summer months, activity will ramp up to two flights a week.

Cathay Pacific cargo throughput drops significantly due to capacity reductions. Cathay Pacific’s traffic figures for March 2022 report that the airline carried 97,166 tonnes of cargo last month, an increase of 16.6% compared to March 2021, but a 47.5% decrease compared with the same period in 2019 due to capacity reductions in response to Covid quarantine requirements.

International

Oman port looking to expand capacity to account for increased container volumes. Oman’s busiest cargo port is looking to begin expansion projects to handle increasing container volumes. The Port of Salalah maxed out its handling capacity last year at a record 4.51 million TEU, up 3.% from 2020. The Journal of Commerce reports that as a result, the port is “currently operating at 100 percent capacity,” according to Mark Hardiman, managing director at Salalah. Growth is expected to continue in 2022 and beyond and the port is looking to add approximately 1.5 million TEU of annual handling capacity, bringing total capacity at Salalah to 6 million TEU. 

Major African port damaged in flood. Extreme rains and subsequent flooding have halted operations at South Africa’s main port. Bloomberg reports that operations at the Port of Durban were suspended Monday night after the eastern city received 307 millimeters (12.1 inches) of rainfall within 24 hours. Durban is sub-Saharan Africa’s largest port and handles about 60% of South Africa’s shipments. The port also transports goods and commodities to and from nations in the region as far north as the Democratic Republic of Congo. 

Other

Biden administration requiring U.S. produced materials be used for infrastructure. The Biden administration has issued requirements for how projects funded by the $1 trillion bipartisan infrastructure package source their construction material. The guidance requires that materials purchased for infrastructure projects must be produced in the U.S. In anticipation of potential inflation or supply issues, the rules also set up a process to waive those requirements if necessary. AP News reports that “President Biden hopes to create more jobs, ease supply chain strains and reduce the reliance on China and other nations with interests that diverge from America’s.”

Johnson & Johnson settles opioid lawsuit for $99 million. In a settlement finalized on Monday, West Virginia will receive $99 million from Johnson & Johnson’s subsidiary Janssen Pharmaceuticals Inc. over the company’s role in perpetuating the opioid crisis in the state. West Virginia Attorney General Patrick Morrisey said that he believes the settlement is the largest in the country per capita with Johnson & Johnson’s Janssen. The drugmaker has faced litigation in dozens of communities throughout the U.S. regarding opioids. 

Amazon to implement fuel and inflation surcharge for fulfillment services. Beginning on April 28, Amazon will implement a 5% fuel and inflation surcharge on its fulfillment services for third-party sellers. The surcharge is a first for Fulfillment by Amazon and comes after Amazon raised fees in January to help offset increased operating costs. Amazon says that “It’s still unclear if these inflationary costs will go up or down, or for how long they will persist. Rather than a permanent fee change, we will be employing a fuel and inflation surcharge for the first time—a mechanism broadly used across supply chain providers.”

Recent developments amid Russia-Ukraine crisis:

EU Countries to ban Russian ships from national ports. Both Italy and Bulgaria have started to ban Russian vessels from their national ports as part of the latest round of Ukraine-related European Union sanctions against Russia. They are making exceptions for food and energy goods, among others. As of Sunday, Russian ships are banned from Italian ports, according to a statement from Italy’s Coast Guard. The Wall Street Journal reports that the sanctioned ships already in Italian ports “can remain in port until the completion of their commercial activities, at which time they will have to leave.” Bulgaria’s government said Saturday that the country had also begun implementing the port ban.

Evergreen Vessel Still Stuck in Chesapeake Bay, Trucks From Mexico Facing Hours-Long Delays at Texas Border Crossings, Air Freight Operations in Shanghai Continue to Face Constraints.

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Ocean

Hapag-Lloyd to launch direct service linking Mediterranean and Latin America. The service will take effect in the next month and will connect Mediterranean ports with Latin America. According to Container News, the new service “aims to deliver a direct service between the Mediterranean and the West Coast of South America with connections from and to Ecuador, Peru, Chile, as well as other destinations in the Caribbean and Central America.” Hapag-Lloyd will have six new container vessels deployed on the service route. 

Evergreen vessel still stuck in Chesapeake Bay. Evergreen’s Ever Forward vessel that’s been stuck for three weeks in the Chesapeake Bay has now become somewhat of a tourist attraction. The Wall Street Journal’s Julie Bykowicz reports that “Ever Forward’s plight is a testament to both global supply-chain clogs and Covid-19 pandemic boredom. It’s a sequel to last year’s drama in the Suez Canal with another Evergreen vessel, the Ever Given, with decidedly lower stakes since it isn’t blocking ship traffic.”  But with nearly 5,000 containers full of goods on board, shippers are becoming increasingly frustrated with the lack of progress in getting the ship unstuck. Dozens of the containers have been unloaded onto barges in an attempt to lighten the ship, and 210,000 cubic yards have been dredged from around the ship, but to no avail as of yet.

Maersk joined companies committed to purchasing steel with zero carbon emissions by 2040. Maersk has decided to join Climate Group SteelZero, an international effort aimed at accelerating the transition to a net-zero steel industry, in collaboration with Responsible Steel, the steel industry’s first global, multi-stakeholder standard and certification program. By having joined SteelZero, Maersk teams up with like-minded industry groups dedicated to climate-aligned steel procurement and progress in building a regulatory framework for responsible steel production and sourcing.

Customs

NCBFAA Monitors OSRA 2022 Making Its Way Through Congress. According to the NCBFAA’s newsletter, “the NCBFAA’s Transportation Committee, along with Transportation Counsel Ashley Craig of Venable and Legislative Counsel Nicole Bivens Collinson of Sandler, Travis & Rosenberg, are tracking the Ocean Shipping Reform Act of 2022 as it makes its way through the final stages of approval in Congress and eventually to the President’s desk for signature. The Senate version of the legislation (S.3580) passed the chamber on March 31 and now both the House and Senate are working to reconcile their bills. Congress is currently considering the first substantial amendments to the Nation’s shipping laws in over 20 years. This significant undertaking to alter the Shipping Act of 1984 is a result of the pandemic, as well as concerns raised by the shipper community as to ocean carrier activities and services. NCBFAA responded in mid-February with a position paper regarding this legislative effort in Congress, specifically requesting the separation of NVOCCs from the prohibited acts for common carriers and marine terminal operators.”

Forwarders Should Be Prepared as U.S. Piles on Russian Sanctions. The Commerce Department’s Bureau of Industry and Security (BIS) added 120 Russian and Belarussian entities to the Entity List on April 1, effective immediately. These additions to the Entity List are part of the continued response to Russia’s invasion of Ukraine with the intention to hinder specific Russian and Belarusian sectors including defense, aerospace, and maritime. You can read more here.

U.S. Customs and Border Protection Suspending Normal Trade Relations with Russia and Belarus. CSMS #51575437 – GUIDANCE: “On April 8, 2022, President Biden signed into law H.R. 7108, the “Suspending Normal Trade Relations with Russia and Belarus Act.”  Effective for shipments entered or withdrawn for consumption on or after April 9, 2022, the rates of duty set forth in Column 2 of the Harmonized Tariff Schedule of the United States (HTSUS) shall apply to all products of the Russian Federation and of the Republic of Belarus. Pursuant to H.R. 7108, should the President increase the rates of duty applicable to products of the Russian Federation and of the Republic of Belarus above the Column 2 rates of duty, CBP will issue a follow-up CSMS message. For questions, please contact CBP’s Office of Trade, Commercial Operations, Revenue, and Entry (CORE) Division at [email protected]

Ports

Rhode Island Trucking Association backs governor’s request for Port of Galilee investment. The Rhode Island General Assembly is considering Governor Dan McKee’s budget request of $46 million for the 2023 fiscal year. The proposed investment will revamp the infrastructure of an important East Coast commercial fishing hub in the Port of Galilee, and will improve freight movements. The port, which has two port terminals, 40 docks and piers, and 240 commercial fishing boats, occupies 38 acres in the town of Narragansett. The Department of Environmental Management is currently overseeing a project at the port to replace asphalt, heavy piers and 1,000 feet of bulkhead. The proposed funds would go towards replacing docks, improvements to roads, raising bulkhead caps throughout the port by 18 inches to protect against sea-level rise, parking, electrical upgrades, new fire hydrants, and installing security cameras.

ILA wins chance to represent Florida port workers. Workers for Caribbean specialist carrier Tropical Shipping USA will be able to vote for union representation from the International Longshoremen’s Association (ILA). In a decision made last week, the National Labor Relations Board (NLRB) said that “a petition from 63 stevedores at Tropical’s terminal at the Port of Palm Beach to vote for ILA representation was the appropriate size for a collective bargaining agreement,” according to the Journal of Commerce (JOC). It was also reported that tropical management had argued that a larger unit of 132 workers, including repair and maintenance personnel, at the port should be allowed to vote in the election. According to JOC, the NLRB said that “the 63-person unit and 19 other terminal employees were the most appropriate to vote for a union because all those workers share the common, specialized task of moving cargo through the port.”

European Commission bans Russian vessels from accessing European Union (EU) ports. The ban affects both Russian vessels and Russian operated ships. The European Commission (EC) said there will be some exemptions to the ban, including essentials like agricultural and food products, as well as humanitarian aid. The EC says that it will also propose a ban on transport operators from Russia and Belarus. According to the EC,”This ban will drastically limit the options for the Russian industry to obtain key goods.”

Trucking

Trucks from Mexico facing hours-long delays at Texas border crossings. Extreme backups at Texas ports of entry have caused delays of commercial vehicles trying to enter the U.S. to deliver products from Mexico. Texas Governor Greg Abbott directed that state troopers increase inspections last week, causing the backup. The order is part of the governor’s push to heighten security at the border as the Biden administration plans to end an emergency health order that had allowed federal officials to turn away migrants, even those seeking asylum. 

Tesla semi in works to be unveiled next year. At the opening of Tesla’s newest factory, Elon Musk said that “We’ll be in production with Cybertruck next year, we’ll be in production with the Roadster, and with Semi.” Production is scheduled to begin next year. 

Truck Driver coercion complaints could reach record high. According to the latest data compiled by the federal government, it has been revealed that complaints of coercion filed by truck drivers could reach record highs in 2022. As of last week, nearly 500 complaints have been filed with the Federal Motor Carrier Safety Administration’s National Consumer Complaint Database against employers, shippers and other truck drivers.

Rail

BNSF facing rail backlog. BNSF Railway is struggling to deliver containers amid a Southern California rail meltdown. According to terminal operators, non-vessel operating common carriers (NVOs), and trucking companies, BNSF’s international intermodal network has been disrupted between Los Angeles and Chicago. BNSF says that conditions are improving and they are working to hire more people to address the problems. In a statement to the Journal of Commerce, BNSF said “we have seen increases in intermodal volume and improvements in our network fluidity over the past several weeks [and] we have an aggressive plan to hire approximately 1,000 additional train personnel this year to address crew availability needs.”

Union Pacific Railroad to reduce container surcharge. Union Pacific Railroad has said it will reduce the surcharge assessed on domestic intermodal loads out of Oakland and Seattle. The reason for the reduction is that more containers are available for shippers than there were previously. Last month,  shippers were paying up to $3,000 per container in Oakland-Lathrop and $2,500 in Seattle-Tacoma. Fees will drop to $500 for small shippers and $250 for large shippers effective April 10. 

Air

Maersk announces plan to launch cargo airline. The announcement comes on the heels of the company’s 2021 acquisition of Senator International, a shipping and air freight forwarder, and its plans to buy two 777Fs from Boeing. Maersk Air Cargo will be based out of Billund, Denmark and is taking over operations from Star Air. Maersk Air Cargo intends to add two new 777Fs (due by 2024) and three lease 767-300Fs from launch until 2024.  

Air Freight operations in Shanghai continue to face constraints. As Shanghai remains under lockdown, operations at Shanghai Pudong International Airport (PVG) continue to face pressure as supply chain operations are limited. The airport remains open and operational, but workers are mainly working to clear out freight that arrived pre-lockdown. Port congestion, equipment turnaround and schedule disruption are all affecting rate levels in addition to COVID in the city. 

International

Highway closures in central China causing severe trucking delays. Amid heightened COVID lockdowns, Chinese provinces are shutting down more highways, limiting import/export capacity through the region and restricting truck drivers. Provinces impacted by the closures and delays include Hangzhou, Shanxi, and Zhejiang. These closures are causing significant impacts on international trade and are exacerbating congestion levels. To minimize the impact of this situation and safeguard your supply chain against unprecedented disruptions, importers should work with a Navegate expert to plan alternative solutions. 

Covid-19 lockdowns slow onshore operations at Chinese ports. More than 470 bulk cargo ships carrying raw materials are queued up outside Chinese ports as lockdowns continue in Shanghai and other cities. Congestion has expanded to nearby Ningbo-Zhoushan as ships are attempting to divert to other ports in order to avoid the trucker shortage and warehouse closures in Shanghai. According to Bloomberg shipping data, there were 222 bulkers waiting off Shanghai as of April 11, 15% higher than the previous month.

Panama Canal exploring imposing tolls for empty containers. The Panama Canal Authority (ACP) is pushing a new tolling proposal for container ships that will levy a fee on empty containers returned to Asia for the first time. Tolls for other sorts of ships transporting loaded and empty containers would also be raised under the idea. The ACP presented a proposal on Friday that would cut the existing system of 430 separate fees based on ship and cargo type to less than 60. The plan would also phase out an incentive scheme put in place by the authority to entice ships to utilize Panama’s post-Panamax locks, which opened in 2016.

Other

White House to allow more ethanol in gas this summer. In an attempt to curb rising fuel prices, The Biden administration plans to temporarily allow high-ethanol content gasoline to be sold during the summer months, say senior administration officials. According to the Wall Street Journal, The decision will allow gasoline with 15% ethanol to be sold between June 1 and Sept. 15. Usually, only a 10% ethanol blend can be sold during that time period to reduce smog caused by the 15% blend’s higher volatility.

Dandelions could be used to make tire rubber. A fast-growing, durable species of dandelion that might serve as a domestic source of natural rubber for tires is the subject of an expedited commercialization effort led by the Department of Defense and involving tiremaker Goodyear, BioMADE, and Farmed Materials. The effort will build on previous research that examined over 2,500 plant species but discovered only a few with qualities appropriate for use in tires.

Drone crashes delay Amazon pilot program. Bloomberg News says that “a Bloomberg investigation based on internal documents, government reports and interviews with 13 current and former employees reveals a program beset by technical challenges, high turnover and safety concerns.” After a serious crash in June caused a brush fire, federal regulators questioned the drone’s abilities because of the failure of multiple safety features. Amazon plans to ramp up testing in the coming months, however they had completed less than 200 of their 12,000 test flight goal for 2022 as of February. 

Recent developments amid Russia-Ukraine crisis:

Russia defaults on foreign debt. According to credit rating agency S&P, Russia has defaulted on its foreign debt because it offered bondholders payments in rubles, not dollars. CNN says that “S&P said this was a “selective default” because investors are unlikely to be able to convert the rubles into “dollars equivalent to the original due amounts.” According to S&P, a selective default is declared when an entity has defaulted on a specific obligation but not its entire debt.” Russia now has a grace period of 30 days from April 4 to make the payments of capital and interest. S&P does not expect it will convert the rubles into dollars given Western sanctions.

Volvo sales take hit as Russian business halted. Volvo’s sales, production and services in Russia have been suspended since the war started and sanctions were imposed. About 3% of Volvo’s net sales came from Russia last year, causing negative impacts on operating income for this year. Volvo says that it has total assets worth about 9 billion kronor related to Russia, of which 6 billion kronor are classified as cash items. 

Record Number of COVID-19 Cases Reported Amid China Lockdowns, TSA Announces Gender-Neutral Screening at Checkpoints, California Ports Implementing Fee to Support Zero-Emission Drayage Goal

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Ocean

Shipping groups looking to halt White House antitrust immunity efforts. According to the Journal of Commerce Online, “Ports, labor unions, container lines, and US-flag interests are moving fast to halt efforts by the Biden administration and Congress to strip antitrust immunity from container lines, warning that the end of shipping alliances would create a seismic — and unintended — shift in how carriers serve US ports and shippers.” The focus on container shipping from the White House and US legislators has intensified in recent months, and could become a threat to carriers’ ability to operate within alliances, and highlights the use of antitrust immunity by marine terminal operators. The proposed legislation began as a review of detention and demurrage fees and ensuring exporters are able to secure vessel capacity. 

Coast Guard to remove 5,000 containers from Ever Forward. The Ever Forward, a 1,100 foot-long container ship, has been stuck in the Chesapeake Bay for more than three weeks and unable to move. The U.S. Coast Guard has decided to remove the nearly 5,000 containers on the ship to lighten the load and ease the dredging process. In addition, the ship is not showing signs of pollution in the surrounding area.

Customs

Newly reinstated HTSUS exclusions available April 12th. U.S. Customs and Border Patrol update to CSMS #51469298, issued March 31, 2022: “The functionality for the acceptance of the Section 301 China reinstatement of certain product exclusions under Harmonized Tariff Schedule of the United States (HTSUS) classification 9903.88.67 will be available in the Automated Commercial Environment (ACE) as of 7 a.m. eastern standard time, April 12, 2022. Reminder: importers, brokers, and/or filers should refer to CSMS 39587858 (Entry Summary Order of Reporting for Multiple HTSUS when 98 or 99 HTSUS are required) for guidance when filing an entry summary in which a heading or subheading in Chapter 99 is claimed on imported merchandise. Questions from the importing community concerning ACE entry rejections involving product exclusions should be referred to their CBP Client Representative.  For questions related to Section 301 entry-filing requirements, please refer to CSMS message 40969690 Information on Trade Remedy Questions and Resources.”

The National Customs Brokers & Forwarders Association of America, Inc. Annual Conference will be held May 1-4, 2022, at The JW Marriott Starr Pass Resort & Spa in Tucson, AZ. “Now in its 49th year, the NCBFAA Annual Conference brings together more than 600 of the international trade industry’s top representatives from around the United States. For four days in Tucson, Arizona, the nation’s leading customs brokers, freight forwarders, NVOCCs, OTIs, and service providers gather to update themselves on industry developments and connect with colleagues new and old.” You can find registration info here to attend.

Ports

Pennsylvania’s Intermodal Cargo Growth Incentive Program (PICGIP) to be extended. Pennsylvania Governor Tom Wolf said that the state will extend an incentive program for moving cargo through the Port of Philadelphia for another year. The Intermodal Cargo Growth Incentive Program will be extended from its June 2022 expiration until July 2023. Since 2015, newly eligible ocean carriers that have enrolled in the program receive a rebate of $25 per container unloaded at the Port of Philadelphia. Thirty-seven thousand thirty container lifts at the Port of Philadelphia were eligible for last year’s rebate incentives.

Coalition asking California court to halt plans to build stadium at Oakland port.  A coalition made up of shipping-industry groups, has asked a California court to stop plans made by the Oakland Athletics baseball team to build a new stadium at the Oakland port. The groups filed suit last week against the A’s, the city of Oakland, the city council, and the Port of Oakland on environmental grounds. The proposed stadium would replace the A’s current field with a huge undertaking that would include a hotel, retail shopping, and some housing directly on the Oakland waterfront. In addition, the coalition says that the plans would threaten the port by taking up valuable freight space.

Trucking

California ports implementing fee to support zero-emission drayage fleet goal. Los Angeles and Long Beach ports have begun assessing a fee of $10 per TEU on shippers whose containers are trucked into or out of the gateway. Of the estimated $90 million collected in the first year from these fees, most will be directed toward subsidies for the purchase of zero-emission trucks. An electric-powered truck costs approximately three times the price of a diesel truck ($350,000). Officials hope increased demand leads to mass production of zero-emission trucks resulting in lower costs. The goal of the fee is to increase the demand for electric trucks in support of a  zero-emission drayage fleet by 2035. 

White House celebrates federal investments in trucking industry. During a White House event on Monday, President Biden celebrated the administration’s strides in implementing its “Trucking Action Plan.” Introduced last year, the plan “increased federal funding to expedite the issuance of commercial driver’s licenses, expanded outreach efforts to veterans through the Department of Veterans Affairs, and established a joint initiative between the Departments of Labor and Transportation to expand recruitment and advocate for employees.”

Dow Jones Transportation Average drops nearly 5%. Last Friday (April 1), the 20-stock index fell by $771.72 and closed the session at $15,511.30. The Department of Labor reported that the number of truck transportation jobs fell in March after 21 consecutive monthly gains, causing the decline. In the first month-to-month drop since April 2020, the seasonally adjusted figures came in at 1,550,800 jobs, a decline of 4,900 jobs.

Rail

BNSF Railway Co. acquires land in Arizona with plans to develop. According to state records, the 3,508-acre piece of land in the Phoenix region will become its Western hub. The property was purchased for $49.1 million at an Arizona State Land Department auction. BNSF provided no details about plans for the site. Still, according to public records, the company is proposing a “logistics park along the north portion, a logistics center through the middle section, and an intermodal facility at the southeast segment.”

Air

Airfreight and supply chain disruption set to continue in Shanghai as city remains under lockdown. The city’s government has extended restrictions in Shanghai due to end on April 5, which now encompasses the whole city. In addition, reports say that congestion is rising at Shanghai Pudong International Airport (PVG) due to a backlog of goods, increased fares, and pressure on road transport. Similarly, space is limited across Greater China’s air terminals, with backlogs visible in Korea and Singapore. Furthermore, rates to the U.S. and Europe are rising. 

Concerned about the recent developments in China and how they’ll affect your supply chain? Contact a Navegate expert to learn more.

TSA announces measures to implement gender-neutral screening at its checkpoints. According to a press release, the Transportation Security Administration (TSA) announced new standards for screening transgender, nonbinary, and gender-nonconforming airline passengers at TSA checkpoints to improve the screening experience for all passengers. “Over the coming months, TSA will move swiftly to implement more secure and efficient screening processes that are gender-neutral, as well as technological updates that will enhance security and make TSA PreCheck® enrollment more inclusive. These combined efforts will greatly enhance airport security and screening procedures for all,” said TSA Administrator David Pekoske.

International

China reports record number of Covid-19 cases amid lockdowns in Shanghai and Kunshan. In an effort to curb the country’s worst outbreak in more than two years, lockdowns have been enacted in the Chinese cities of Kunshan and Shanghai. According to the National Health Commission, as of Monday, China recorded more than 16,400 new Covid cases. The lockdown in Kunshan, an important production center for electronics components, could severely affect the supply of laptops, mobile phones, TVs, automobiles, and other electronics. In addition, Shanghai logistics activity has been effectively halted due to the entire 25 million-strong population placed under an extended lockdown. 

Other

Select companies rolling out drone delivery options. A few companies have begun commercial drone delivery services in the U.S. The companies, such as Amazon, Alphabet, and others, are looking to become spearheads of a new delivery option once federal regulators enable broader rollouts.

UPS to begin testing electric cargo bikes for deliveries. UPS said that it will begin testing electric cargo bikes in select U.S. cities, and European and Asian markets. According to Reuters, The eQuad is manufactured by British firm Fernhay. UPS introduced the eQuad in Dubai at Expo 2020. The new eQuads are pedal-powered with electric assist and less than three feet wide. The body of the quad includes a storage bin for hauling items.

Staten Island Amazon workers vote for union representation. Workers at an Amazon.com Inc. warehouse on Staten Island, New York, voted to be represented by the Amazon Labor Union by a vote of 2,654 to 2,131. The victory marks the first time in Amazon’s history that company workers in the U.S. have agreed to union representation. The union was formed in 2021 by a group of Amazon (NASDAQ: AMZN) workers and is an independent union not affiliated with an international labor entity. The Staten Island facility is Amazon’s only fulfillment center in New York City.

Hershey shifting to SKU rationalization. Faced with challenges from the pandemic, Hershey is pivoting to rationalizing SKUs and placing two and three of the same product on shelves. Despite offering less variety, this strategy increases shelf space while freeing up capacity and reducing complexity. This places focus on the most popular Hershey products vs. products that are not performing as well. This method was more popular in the early stages of the pandemic to help drive efficiency, especially as inflation and supply chain constraints rose.

U.S. House of Representatives passes legislation requiring new DUKW boat safety measures. DUKW boats (or duck boats), the amphibious craft commonly used in tourist destinations, were designed for military use during WWII. Since then, the boats have caused several fatal accidents. New requirements will “restrict the use of canopies, require better bilge pumps, and minimize the number of through-hull penetrations.” The language in the proposed rules is currently being looked at by the Senate and would also require the Coast Guard to respond to NTSB safety recommendations within 90 days.

Recent developments amid Russia-Ukraine crisis:

U.S. halts Russian bond payments. In a move meant to up the pressure on Moscow and eat into its holdings of dollars, the United States has halted the payment of holders of the Russian Government’s sovereign debt. As the largest of the payments came due, the U.S. government cut off Moscow’s access to the frozen funds, according to a U.S. Treasury spokesperson. The move forces Moscow to make the decision of “whether it would use dollars that it has access to for payments on its debt or for other purposes, including supporting its war effort”, the spokesperson said. If Russia chooses not to do so, the country will face a historic default.

Spanish officials seize Russian-owned luxury yacht in Mallorca at request of U.S. Department of Justice. In the first coordinated seizure under the department’s Task Force KleptoCapture, the $90 million 255-foot yacht, named Tango, was seized by Spanish Officials. KleptoCapture is tasked with enforcing the sanctions placed on Russia in response to its invasion of Ukraine. The yacht is owned by Russian oligarch Viktor Vekselberg, who heads the Renova Group and is currently under sanctions.

Sanctions on Russian imports causing backup at Rotterdam. Thousands of shipping boxes bound for Russia are currently sitting at the Dutch port of Rotterdam, waiting to be inspected to ensure that moving them won’t breach sanctions. According to Bloomberg, many container terminals and shipping companies have said that they will no longer handle cargo bound for Russia following its invasion of Ukraine, and multiple agencies are also keeping a close eye on ships and cargo coming from Russia.

Western nations and allies agree to release oil from reserves. The nations join the U.S. in an attempt to curb skyrocketing oil prices caused by the Russian invasion of Ukraine. The International Energy Agency (IEA) said that it would announce the amount of the release early next week. According to the IEA, its members have 1.5 billion barrels of oil in reserve.

Major Carriers Scrambling Over Shanghai Lockdown, White House Aims to Increase Funding for Trucking Regulators, Johnson & Johnson Suspends Sales in Russia

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Ocean  

Indian ports seeing connectivity rush amid carrier expectations of trade growth. Pacific International Lines (PIL), Regional Container Lines (RCL), and Interasia Lines (IAL) have reached a new consortium agreement, just after last week’s Wan Hai Lines announcement of an independent routing between South China, Vietnam, and East India. Ningbo, Shanghai, Ho Chi Minh, Singapore, Chennai, Visakhapatnam, Port Klang (West Port), Ho Chi Minh, and Ningbo will be in the joint loop. The inaugural call is scheduled for April 22 at Ningbo, and a fleet of four vessels with a 2,000 TEU average capacity will be deployed.

Shippers and major carriers left scrambling over Shanghai lockdown. Home to the world’s busiest container port, many major carriers are worried about the Shanghai Lockdown order’s effects on worldwide shipping. 26 million residents of Shanghai are affected by the lockdown. China announced it would be locking down the eastern side of Shanghai for five days to employ mass COVID testing and screening, followed by similar protocols for five days on the western side of the city. All people must stay home, and all businesses except essential services were ordered to close. Workers were told they must work from home and all transport services were halted across Shanghai. This is the most significant restriction in China since the emergence of the COVID virus in Wuhan in 2019.

Customs

U.S. Customs and Border Protection (CBP) General Order Discretion for Expeditors International Shipments. U.S. Customs and Border Protection issued the following bulletin in regards to a recent cyberattack: CSMS #51431651 – CSMS Message: “Due to issues stemming from a cyberattack, CBP is exercising discretion in the issuance of liquidated damages and penalties for shipments, where Expeditors International is the Customs Broker, that do not move to a General Order warehouse within the regulatory timeframes. The purpose of this CSMS is to notify carriers, terminal operators and other custodians of unentered merchandise to exercise similar discretion in affected shipments and to prevent unnecessary cost of General Order. This guidance applies to both direct arrival into the U.S. and in-bond movement to subsequent ports. This discretion will expire upon Expeditor’s return to full automated operations. CBP will issue a notice advising of the end of the discretionary period.”

Ports

U.S. Supreme Court steps in to stop efforts to end NY/NJ Waterfront Commission. The U.S. Supreme Court has stepped in to decide the matter regarding the ongoing dispute between New York and New Jersey over the fate of the harbor commission. The commission was originally designed to eliminate organized crime and corruption in the operations at the ports in New York and New Jersey. The court agreed to review the case and issued a preliminary induction. In 2019, a federal judge blocked New Jersey’s efforts to disband the commission, and New York has been fighting the case through the court system ever since. According to New York, the original agreement says that it can only be ended under mutual agreement between the two states.

Ocean carriers hauling empty containers from ports along U.S. West and East coasts. Marine terminals across the country are overcrowded, and concerns are growing about another import wave. Sweeper ships are aiming to remove huge numbers of empty containers from both marine terminals and motor carriers. Truckers say they are not getting fully compensated for handling costs of empty containers, and not all carriers are timely in retrieving the empty containers.

Air

Antonov issues appeal to raise funds to replace AN-225 “Mriya” aircraft. The unique craft was reportedly recently destroyed during the conflict in Ukraine. On March 25, the Ukrainian aircraft design and manufacturing company Antonov issued a statement on Facebook outlining its plans to create an international fund to enable the building of a new version of Mriya. 

DHL Express enters long-term agreement with freighter operator Cargojet. The express firm may potentially acquire shares in the freighter company. Cargojet will provide an extra five B767 freighters in addition to the 12 freighters currently used by DHL Express. The five-year deal has an option for an extra two years. The extra aircraft will be put into action in 2022 and 2023 and will support DHL’s requirements for Asia, Europe, and North, South, Central and Latin America. CargoJet intends for DHL to be its inaugural launch customer for the B777 widebody long-range conversion cargo aircraft.

Rail

Four Class I railroads donate nearly $2.3 million to support humanitarian efforts in Ukraine. Canadian Pacific, Union Pacific, Canadian Railway, and Kansas City Southern have donated nearly $2.3 million to support humanitarian efforts in Ukraine and the surrounding region. The support by Class I railroads and other rail companies over this past month come as rail sector officials in Europe and the U.S. form a multinational Support Ukraine Rail Task Force that will coordinate technical, mechanical, and policy support for Ukrainian freight and passenger rail companies.

Trucking

High fuel costs could affect availability of truck capacity. Higher fuel prices and market volatility make it unclear how far truckload spot rates might drop, as the U.S. truckload spot market is on the edge of a turn in its pricing cycle. Increases in fuel costs and surcharges are met with declines in linehaul rates and may affect the availability of truck capacity in weeks to come. Many U.S. shippers are struggling to keep rising transportation costs within budget and agreed to substantial rate increases in annual contract renewals during the first quarter in order to secure truck capacity.

Navistar Inc. recalling 2,804 of its flagship International LT tractors across five model years. Improper battery cable wiring in specially upfit trucks can lead to a fire in the suspect population. Affected vehicles include those upfitted by Navistar Truck Specialty Center (TSC) between February 2017 and February 2022 with a 1500W Purkeys inverter system. Similar vehicles are reportedly unaffected. According to the National Highway Traffic Safety Administration, the inverter cables were not routed according to Navistar’s routing and clipping standards. The condition can only be detected by removing the driver-side skirt.

White House budget proposal aims to increase funding for federal trucking regulators. Revealed March 28, the Federal Motor Carrier Safety Administration’s (FMCSA) main accounts would see a slight increase over the most recently enacted budget in President Biden’s latest budget request. The White House is requesting $367.5 million for 2023 for FMCSA’s safety operations and programs. The budget proposal for the agency’s safety grants division is $506.1 million. The budget request responds to supply chain disruptions, and includes allocating $1 billion for a Department of Energy program that would assist in facilitating supply chains.

International

European importers face growing shortage of available storage in container yards and warehouses. Lead time delays, disruption and unreliable supply chains are forcing European importers to increase orders and build inventory buffers. Schedule reliability continues to reflect record lows, and growth in demand and congestion is persistent across Northern Europe. According to Sea-Intelligence Maritime Analysis, the on-time performance of vessels on the Asia-North Europe trade lane dropped to 15 percent in February. That’s down 2.6 percentage points compared with the previous month and a 12-percentage-point decline year over year.

Other

California Governor proposes new plan to ease burden of gas prices on state drivers. California Gov. Gavin Newsom proposed a new plan including reduced fuel taxes, cash for car owners, and temporarily providing free public transportation in order to ease worries caused by higher gasoline prices. The package, unveiled Wednesday, is worth $11 billion and would include $400 direct payments to Californians per vehicle they own, up to two vehicles, and does not have an income cap. 

50th anniversary of Boeing delivering first widebody freighter aircraft. March 2022 marks the 50th anniversary of Boeing delivering its first widebody freighter aircraft. The Boeing 747 marked a new era in cargo shipping with its extended cargo capacity and nose door that allowed for large objects. It allowed goods that had to be transported by sea for years to finally be shipped by air. 

Hot wings to fly over Texas in time for NCAA Final Four. Just in time for the NCAA Final Four, hot wings will be flying in Texas via drones. Brinker International, the owner of Chili’s Grill & Bar, Maggiano’s Little Italy, and virtual brands It’s Just Wings and Maggiano’s Italian Classics, has taken to Granbury, Texas, to operate a new drone powered food delivery pilot program. Brinker has partnered with drone provider Flytrex and its longtime partner Causey Aviation Unmanned, and the new pilot is an expansion of their already existing relationship. Newly granted Federal Aviation Administration approval to fly a delivery radius of one nautical mile allowed the delivery service to operate. Eligible customers that have opted into the service can use the Flytrex app to order food.

Recent developments amid Russia-Ukraine crisis:

President Biden says Russia should be removed from Group of 20 over actions in Ukraine. President Biden’s comments come after Russia confirmed that Putin plans to attend the G-20 summit later this year. He requests that Ukraine be allowed to attend if Russia will be there. China has said the bloc needs to work together on issues from global economic growth to the recovery from the pandemic and signaled it stands by Russia’s continued G-20 membership. Expulsion from the group requires a unanimous vote among members.

Russia and Ukraine prepared to hold ceasefire talks in Turkey. The cease-fire would mark an end to more than a month of war. Russian forces have continued to fire missiles at several Ukrainian cities, and Ukrainian forces are continuing their advance to retake territory north of Kyiv. Ukrainian President Volodymyr Zelensky has outlined the conditions under which Ukraine might accept neutral status as part of a peace settlement with Russia over the weekend and has said that his country could only hold a referendum on neutrality after Russian occupation forces leave Ukraine.

$63 billion worth of damages to Ukraine’s infrastructure caused by war. According to an estimate by the Kyiv School of Economics, Russia’s war has caused $63 billion worth of damages to Ukraine’s infrastructure so far. As one of Europe’s poorest countries, the damage will be a huge challenge for Ukraine. The amount is equivalent to more than a third of its gross domestic product of $155 billion in 2020.

Johnson & Johnson suspends sales of personal-care products in Russia. Johnson & Johnson suspended sales of its personal-care products in Russia, though the company says it will continue to sell medicine and medical devices there. In a statement posted online Tuesday, the company outlined new steps it is taking as a result of the Russia-Ukraine crisis. J&J cited the “increasing scale of the humanitarian crisis” for its decision to suspend the supply of personal-care products to Russia. They did not specify which products would be affected, and also specified that they would be doubling their donation to support humanitarian assistance from $5million to $10million.

 

Nestlé To Quit Selling Pet Food, Coffee, Chocolate in Russia, U.S. Reinstated 352 Product Exemptions From China Tariffs, After Arbitration Agreement, Canadian Pacific To Resume Operations

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Ocean  

FMC looking into big liners and ‘pop-up’ carriers for U.S. export service. The U.S. Federal Maritime Commission (FMC) will audit 16 ocean carriers in two separate cases regarding their U.S. export operations, a group that includes five “pop-up” carriers that have recently appeared in the trans-Pacific market in response to growing import demand, according to the FMC. The FMC said Monday that it will have meetings with 11 major carriers, including CMA CGM, Cosco Shipping, Evergreen Marine, Hapag-Lloyd, HMM, Maersk, Mediterranean Shipping Co., Ocean Network Express (ONE), Yang Ming, OOCL, and Zim Shipping.  The audits are part of the FMC’s continuing investigation of the various costs that ocean carriers charge shippers for container usage, which began in July 2021.

Customs

U.S. reinstated 352 product exemptions from China tariffs. The U.S. Trade Representative’s (USTR) office said on Wednesday that it had reinstated 352 expired product exclusions from U.S. “Section 301” tariffs on Chinese imports, falling well short of the 549 exclusions that it had previously considered.  The reintroduced product exclusions will be enforced retroactively from Oct. 12, 2021, and will last through Dec. 31, 2022, according to USTR. They cover a wide spectrum of the $370 billion in Chinese goods that U.S. President Donald Trump imposed with punitive tariffs ranging from 7.5% to 25%. Read the official notice issued by USTR here.

What to expect from incoming Russian imports, according to CBP. During an Automated Commercial Environment (ACE) biweekly call on March 17, Customs and Border Protection (CBP) informed members of the trade that the agency is imposing a hold on all items covered by the recently announced U.S. sanctions against Russia. If goods are held, CBP will release them under the OFAC General License 17 upon receipt of documentation that the shipment was under contract before March 11, 2022, and that the products were received prior to March 25. Importers can avoid the hold by giving such proof to CBP ahead of time, according to CBP Director of Cargo Security and Controls James Swanson. He stated that CBP wants to keep freight flowing, particularly perishable seafood. Beginning March 25, any products subject to the embargo will be denied entry (even if they were under contract in time). This Treasury Department Office of Foreign Assets Control (OFAC) FAQs provides a list of HTS codes covering restricted products (seafood, alcoholic beverages, and non-industrial diamonds). More information regarding GL17 may be found here.

U.S., U.K. reach trade agreement to eliminate tariffs on British steel and aluminum, American whiskey and Levi’s. The U.S. and the U.K. reached a trade deal on Tuesday that would eliminate U.S. tariffs on British steel and aluminum, while the U.K. will eliminate levies on American whiskey, motorbikes, Levi’s jeans, and cigarettes. Officials in the Biden administration stated that the agreement with the U.K. Would allow the United Kingdom to transport “historically-based sustainable volumes” of steel and aluminum goods to the United States without levies enforced by the previous Trump administration.   

Ports

Ocean Shipping Reform Act approved by Senate committee.  A Senate panel in the U.S. passed legislation to improve the flow of freight at the country’s ports. The Ocean Shipping Reform Act was approved by voice vote by the Commerce Committee on March 22. The bill is now being considered by the entire Senate. The bill, sponsored by Senators Amy Klobuchar (D-Minn.) and John Thune (R-S.D.), addresses the Federal Maritime Commission’s function. It would force carriers to provide certain information to the commission each quarter and would allow the commission to launch certain investigations, some of which would be tied to late fees. Among other factors, it would clear the way for the registration of shipping exchanges.

Air

China’s first cargo airport performed air freighter flight test. On Saturday, China’s first cargo airport in Ezhou, Hubei Province, completed its flight test, marking the country’s first trial of a new airport using an air freighter. In 2025, the new airport’s passenger throughput is expected to be one million, with cargo and postal throughput reaching 2.45 million tonnes. The airport is set to open to the public by the end of June this year. The airport will operate as an air cargo hub and will be equipped with two runway and taxiway systems, as well as a freight transfer center spanning about 700,000 square meters and a feeder airport for passenger transit.

Rail

After arbitration agreement, Canadian Pacific to resume operations. Canadian Pacific Railway (CP) announced it will recommence operations after reaching an agreement with the Teamsters Canada Rail Conference (TCRC) to settle their labor dispute through binding arbitration. CP and the Teamsters announced the agreement early Tuesday, a little more than two days after the corporation shut down its rail network to begin a work stoppage. Both the company and the union accused the other of triggering the work stoppage. The agreement seeks to avoid what was about to become yet another supply chain crisis. Shipments have been held up in both Canada and the U.S., and the ports of Vancouver and Montreal are likely to be severely congested.

Union Pacific’s new vegetation sprayer. The new spraying equipment, developed by Union Pacific (UP) personnel, strengthens the railroad’s ability to manage vegetation while also increasing efficiency across its entire 23-state network. UP’s fleet of hyrail vehicles historically sprayed vegetation from the tracks, frequently covering up to 30 miles of track on a good day. Although the trucks were useful, spraying from the rails usually meant the passage was closed to trains. The UP staff collaborated to develop a solution: instead of a hyrail truck, the new design incorporates technology pulling five water cars — and at the tail end, a sprayer vehicle targeting vegetation. The spray equipment works in combination with freight operations to keep the supply chain running smoothly.

China-Europe rail systems become latest source of supply chain contention. More than a million containers scheduled to travel the 6,000-plus miles of railway from Western Europe to Eastern China via Russia must now find alternate routes by sea, increasing prices and threatening to deepen the global supply chain instability. With Moscow’s war in Ukraine continuing, exporters and logistics companies delivering auto parts, vehicles, computers, and smartphones are attempting to avoid land routes that travel through Russia or the war zone.

Trucking

Fuel price increases across the country, along with ongoing congestion, have resulted in trucking companies instituting Emergency Fuel Surcharges. These fees vary by company and are affected by rising costs in local gas prices. In order to better understand these emergency surcharges and prepare for the increase in trucking fees, we recommend you contact a Navegate expert who can use their long-standing trucking expertise to efficiently route your cargo.

Other

Overland constraints disrupted supply chains, Shenzhen-Hong Kong freighter was introduced. The southern Chinese city of Shenzhen has established a freighter service to Hong Kong in response to a shortage of shipping capacity caused by Covid-19 outbreaks. According to Xinhua, the service would be offered six times a week on an SF Airlines B767 freighter. The inaugural flight of the new service, which is scheduled to continue through April, took off on March 19. Despite the fact that the two sites are fewer than 50 miles apart, ground movement between Hong Kong and Shenzhen has been severely hampered by rigorous Covid restrictions.

Alaska Airlines attempting to alleviate labor issues by offering double pay. Alaska Airlines is offering double compensation to flight attendants who pick up extra flights this spring in order to avert staffing shortages ahead of an even bigger increase in travel demand in the coming months. Airlines offered bonuses and up to quadruple pay to pilots and flight attendants late last year to help fill staffing gaps during the busy year-end holidays, but a surge of Covid omicron infections kept crew members from flying, resulting in hundreds of flight cancellations.

Investigators said no survivors of China’s biggest flight tragedy in more than a decade. After the second day of searching, Chinese officials reported late Tuesday that no survivors of a China Eastern Airlines jet accident had been recovered. The Boeing 737-800, carrying 132 passengers, crashed Monday afternoon as it traveled from Kunming to Guangzhou in China’s biggest flying accident since 1994. Communications with the crew could not be established in the last seconds before the airplane crashed, according to Chinese air disaster investigators at a news briefing on Tuesday. Update: Black box from China Eastern Airlines plane crash found.

Recent developments amid Russia-Ukraine crisis:

Sanctions beginning to affect Russia’s oil and gas industry. President Vladimir Putin’s war in Ukraine, and the ensuing wave of Western sanctions, are beginning to wreak havoc on Russia’s economic engine: its colossal oil-and-gas industry. The U.S. has banned the small amount of Russian oil that they buy, and the European Union is considering a ban. However, Western sanctions have so far avoided directly affecting the majority of Russia’s energy exports. Meanwhile, constraints imposed by the U.S. and the European Union have already deprived Russia of funds and advanced technologies needed to develop and sustain its aging fields.

Nestlé to quit selling pet food, coffee, chocolate in Russia. Nestlé SA is to vastly reduce what it sells in Russia, ceasing production of pet food, coffee, and chocolate as the KitKat manufacturer confronts pressure from legislators, employees, and customers. While Russia’s war on Ukraine continues, the Swiss packaged-foods company announced Wednesday that it will focus on delivering vital food. While it does not plan to earn a profit or pay taxes in Russia for the foreseeable future, the company has said that any profits would be donated to humanitarian assistance groups.

Russia sanctions expand, U.S. to raise tariffs, restrict imports and exports. The U.S. and others have announced new import and export restrictions against Russia. President Biden stated that he intends to approve legislation that will withdraw permanent normal trade relations status for products imported from Russia, allowing for considerable tariff increases on such goods. G-7 members Canada, France, Germany, Italy, Japan, and the U.K. are anticipated to follow suit.

Supply Chains in China Hit as Omicron Lockdowns Are Enforced, Import Costs Increased by 10.9%, Biden-Harris Administration and USDOT Announced FLOW

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Ocean  

Shippers canceling cargo shipments as China issues new COVID-19 lockdowns. Shippers in China are canceling cargo bookings and forwarders are moving freight to other ports as COVID-19 outbreaks expand across the country, resulting in extensive lockdowns in major port towns such as Shenzhen and Shanghai. Over the weekend, China recorded more than 5,000 new COVID-19 cases, the biggest amount in two years. While carriers and port owners claim that terminals are operating regularly, the lockdowns imply that factories, warehouses, and distribution centers are shuttered, and trucking capacity is constrained.

Customs

Customs officials restricting Ukrainian and Russian seafarers’ entry at several U.S. ports. Customs and Border Protection agents are denying Ukrainian and Russian seafarers access into several U.S. ports, fearing the sailors would try to stay in the U.S. to avoid returning home. Following Russia’s invasion of Ukraine, Ukrainian and Russian crew members working on mostly commercial ships have been denied entry into the U.S. at a number of ports, including Port Arthur, Texas; New Orleans; Port Canaveral, Fla.; and Morehead City, N.C., according to industry officials familiar with the situation. A government official close to the matter verified the refusals of entry.

Ports

Pacific Coast challenges continue. Maersk said in a customer advisory, transpacific update, that the 46 vessels heading towards Los Angeles and Long Beach have vessel wait periods ranging from 11 to 36 days. The average vessel wait time in the Pacific Northwest ports is 14 days in Prince Rupert and 28 days in Vancouver. Yard usage is at 100%, affecting scheduled sailings, with multiple missed sailings expected for this region. A prospective labor strike at Canadian Pacific Railway might aggravate the situation in Canada.

China’s covid surge, widespread lockdowns affect ports. China is experiencing its biggest Covid outbreak since the pandemic started. Shenzhen, a city of 17.5 million people, went into lockdown on Sunday, shutting down factories. Cases have increased in Shanghai, where additional restrictions have been enforced. Shanghai has the world’s largest port, and Shenzhen has the third largest. The current outbreak’s impact on trans-Pacific container shipping will be determined by whether ports and factories close together, and if so, for how long, according to George Griffiths, managing editor of global container freight at S&P Global Commodity Insights. According to Maersk, all ports in China, including those in Shenzhen, are running normally and “remain business as usual.” If Chinese ports close, prompting ships to drop calls or cancel whole sailings, it will be beneficial to U.S. ports in the near term – but they will pay for it later.

Air

Air freight rates increase due to Russian sanctions and Chinese lockdowns. Air freight rates out of China have soared in the last week, as already-strained capacity has been exacerbated by the spread of COVID-19 lockdowns in China, the restriction of Russian airspace to international airlines, and Moscow’s seizure of foreign planes. Rates to North America are up over 30%, while rates to Europe are up 22%. According to the Baltic Air Index, prices from Shanghai to North America increased 28.7% this week to $9.65 per kilogram (kg).  The pricing from Shanghai to North Europe has risen by 22.5% to $7.20 per kilogram, the highest since early January. Rates to both North America and North Europe have increased by 85%.

Vancouver invests to expand air freight. Vancouver International Airport (YVR) is looking for a partner to invest in, complete construction of, and lease a 300,000 sq ft facility that will improve air cargo operations. YVR has appointed Cushman & Wakefield as its exclusive advisor to find a partner for the Airport Commerce Centre on Sea Island, near the airport’s main terminal. The current facility has a total potential floor space of 300,000 sq ft upon completion, contiguous floor plates of over 60,000 sq ft, significant ceiling heights, and floor-load possibilities. The rebuilt Airport Commerce Centre, located near the U.S. border and close to YVR’s Cargo Village, has multimodal potential and can ease air cargo links with significant prospective developments on Sea Island.

Supply chains in China hit as lockdowns are enforced. Supply chain and logistic companies operating out of China will encounter further strain in the coming weeks as a number of new lockdown measures are implemented in Shanghai and Shenzhen. More than 100 foreign planes have been diverted from Shanghai Pudong Airport, putting pressure on bellyhold operations. According to a statement issued by the Civil Aviation Administration of China (CAAC) on March 15, the measure, which will take effect March 21 until July, would affect 106 flights operated by five airlines: Air China, China Eastern Airlines, Shanghai Airlines, Juneyao Airlines, and Spring Airlines. The changes are not likely to have an impact on freighter operations. The action is intended to relieve strain on Shanghai’s Covid management measures.

Rail

J.B. Hunt to increase intermodal container fleet by 40%. J.B. Hunt Transport Services stated on Wednesday that it intends to increase its intermodal container fleet to 150,000 units during the next three to five years. The new capacity would increase the fleet by more than 40%. J.B. Hunt will also try to put more chassis into service “depending on market demand.” The purchase strategy is part of a collaborative effort with BNSF Railway to “significantly boost capacity in the intermodal industry.” J.B. Hunt stated that the hikes reflect “current and future trends” in the company’s attempts to accommodate growing client demands.

North Dakota senator, trade groups attempting to avoid Canadian Pacific strike. According to a letter sent to Canadian Prime Minister Justin Trudeau on Tuesday, U.S. Senator Kevin Cramer, R-North Dakota, is pushing him to intervene and prevent a strike at Canadian Pacific (CP). A strike by Teamsters Canada Rail Conference (TCRC) members working at CP would have a “significant impact” on Canadian-American freight traffic, notably fertilizer shipments and Gulf Coast-bound Alberta heavy oil, according to Cramer. Members of the Teamsters union have agreed to authorize a strike if discussions between the union and CP fail to yield a new labor deal. Over 3,000 locomotive engineers, conductors, trainpersons, and yardpersons employed by CP would be affected by a prospective strike.

Potential labor lockout at Canadian Pacific (CP). CP has given the Teamsters Canada Rail Conference (TCRC) a 72-hour notice of its intention to lock out employees at 00:01 a.m. ET on Sunday, March 20 if the union leadership and the corporation cannot reach an agreement. TCRC stated that they are dedicated to working with federal mediators to obtain a negotiated solution.

Trucking

Florida company investing in truck parking space across the country. Confronted with the decades-old problem of insufficient truck parking, a Florida business is attempting to increase parking space by owning or leasing properties throughout vast sections of the U.S. Dynamic Group Investments is looking for properties that are now used for truck parking or could be developed for that purpose. The company is interested in areas throughout the U. S., with a focus on the South, Midwest, and Southeast.

Other

Industry leaders support Biden-Harris Administration, USDOT efforts to improve supply chain, increase data exchange. The Biden-Harris Administration and the U.S. Department of Transportation (USDOT) announced the commencement of Freight Logistics Optimization Works (FLOW), a significant supply chain initiative to assist in speeding up delivery times and lowering consumer prices, on Tuesday. FLOW is an information-sharing program designed to test vital freight information exchange throughout areas of the goods moving in the supply chain. It has eighteen founding participants that represent varied viewpoints across the supply chain, including private enterprises, trucking, warehousing, and logistics organizations, ports, and others – with the goal and anticipation that additional partners will join in the future.

Freight programs supported by $1.5 trillion funding bill. President Joe Biden has signed a $1.5 trillion fiscal 2022 bill that secures financing for the federal government, including the U.S. Department of Transportation (USDOT). The law, which was approved by the U.S. Senate on March 10, allocates funds to transportation authorities such as the Federal Motor Carrier Safety Administration (FMCA). The law authorizes $360 million for FMCSA’s safety operations and initiatives and $496 million for the agency’s safety grants section. The legislation specifically forbids funding the enforcement of electronic logging device rules for commercial motor vehicles transporting animals or insects. The bill includes funding for earmarks or congressionally directed spending initiatives. It also authorizes emergency assistance for the continuing federal COVID-19 response and Ukraine defense operations.

Covid-19 lockdowns at major Chinese production and transport hubs. China has just closed down the cities of Shenzhen and Changchun, and companies such as Apple supplier Foxconn Technology Group, Volkswagen, and Toyota have suspended industrial operations. More than 40 Taiwanese semiconductor and electronic component manufacturers announced suspensions in Shenzhen and Dongguan. According to logistics operators, lockdowns in Shenzhen, a crucial export center with the world’s fourth-largest container port, are edging towards possible delays.

Import costs increased by 10.9%, leading to high U.S. inflation. The cost of imported goods like oil, grains, and automobiles increased by 1.4% in February, contributing to the fastest U.S. inflation in four decades. The Wall Street Journal polled economists, who predicted a 1.6% increase. Import costs increased by 1.9% in the previous month as well. The consecutive hikes in import prices are the most in 11 years. Oil prices increased by 8.1% in February, accounting for a large portion of the increase in import costs.

Shanghai cancels hundreds of inbound and departing flights. Hundreds of flights to Shanghai were canceled on Monday due to a surge of Covid-19 infections in the city. Local officials remained tight-lipped about the potential of a complete lockdown of China’s commercial capital. All travelers going through Shanghai’s airports and train stations must produce negative nucleic acid tests within 48 hours of their trips, according to the city’s transport commission deputy director Wang Xiaojie, who also advised locals to avoid “unnecessary” travel.

Amazon and Walmart online orders likely delayed due to China lockdowns. Orders placed with global e-commerce platforms such as Amazon and Walmart may be delayed due to viral lockdowns and restrictions in several of China’s main industrial hubs. On March 13, Shenzhen, which is home to almost half of all online retail exporters in China, was shut down for at least a week to help curb a rising COVID-19 outbreak. Its 17.5 million citizens were instructed to work from home, and all non-essential businesses and public transportation were closed.

Recent developments amid Russia-Ukraine crisis:

Suspension of normal trade relations passed by House. The House readily passed legislation to sever normal trade ties with Russia in response to its invasion of Ukraine, moving fast to adopt the bill after President Biden declared his support last week. The Suspension of Normal Trade Relations with Russia and Belarus Act was approved 424 to 8 under a fast-track procedure that needs at least two-thirds of legislators to endorse the measure. The bill is now sent to the Senate. That chamber has a corresponding measure with bipartisan support, and Majority Leader Chuck Schumer (D., N.Y.) has stated that he will strive to move it fast.

Maersk divesting its holdings in major Russian port operator. In the wake of Moscow’s invasion of Ukraine, Maersk announced Friday that it intends to sell its minority position in a holding firm that has shares in five Russian container terminals, including two of the largest in St. Petersburg’s port. The decision comes as the value of Global Ports Investments (GPI), which trades on the London Stock Exchange, has fallen precipitously since the invasion. Maersk wants to sell its 30.75% stake in GPI, which runs ports in Russia and Finland, according to a statement.

China-Europe rail in jeopardy as shippers skip Russian route. The China-Europe rail network is facing major disruption, with a massive decline in volume projected on the northern corridor — a conduit for more than 90% of commerce — that cannot be absorbed by capacity-constrained routes to the south that bypass Russia and Belarus. In 2021, a total of 1.46 million TEU were transported on the China-Europe rail, an increase of about 30% year on year as shippers driven out of the extremely crowded ocean shipping trades switched to the railroads. The center corridor handled roughly 4% of that total last year, but forwarders are already reporting increased congestion.

Divisions emerge, EU authorizes new Russia sanctions package. According to diplomats, the European Union has approved a fourth set of sanctions against Russia for its invasion of Ukraine, including a broad ban on investment in Russia’s energy sector, a ban on selling high-value luxury goods to the country, and new targeted sanctions against Russian business executives and oligarchs, including Roman Abramovich. The EU will also prohibit the import of steel from Russia, which will result in a loss of approximately €3.3 billion in export revenue, or approximately $3.6 billion, as well as a prohibition on EU credit-rating agencies rating Russia and Russian companies and providing rating services to Russian clients.

India to purchase Russian oil at discount amid war. While the U.S. and its Western allies seek to cut Russian oil imports, India is moving in the opposite direction. According to two Indian government sources, the nation has just agreed to purchase 3 million barrels of crude oil from Russia for delivery in May, and is working to secure further supplies in the coming weeks. The administration is attempting to mitigate the impact of rising oil costs by acquiring extra supply at a discount from Russia. According to one of the officials, the Russian oil is being sold at roughly 20% below global benchmark rates, with the supplier bearing insurance and transportation costs.

Ukraine President pushes global businesses to leave Russia in speech to Congress. Ukrainian President Volodymyr Zelensky is taking aim at international companies that continue to operate in Russia, putting increasing pressure on CEOs grappling with how to respond to Moscow’s invasion of Ukraine. In a speech to Congress on Wednesday, Mr. Zelensky urged legislators to urge companies from their home states to quit doing business in Russia. He also demanded that the U.S. prohibit the importation of all Russian goods.

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