COVID-19 Latest Freight Updates

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Navegate Named a Top 30 Global Trade Management System for 2020

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Global trade management (GTM) systems connect sourcing and logistics to make global trade transparent, efficient, and cost effective. From resource planning and transportation management to analytics, Inbound Logistics has chosen...
Small Package Shipping - Domestic Transportation Management

Webinar: Leveraging Supply Chain Technology to Keep Business Growing

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Leveraging Supply Chain Technology to Keep Business Growing​ Webinar | Thursday June 4, 2020 at 11:00 a.m. CST   The right tools can enable businesses to grow and scale faster, father,...

Navegate Named a Top 100 Logistics IT Provider for 2020

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Every year, Inbound Logistics editors recognize 100 logistics IT companies that support and enable logistics excellence. Drawn from a pool of more than 300 companies, using questionnaires, personal interviews, and...

U.S. Customs Duty Deferral Announced April 20th

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Late last night, the White House issued an executive order allowing importers that have experienced significant financial hardship due to COVID-19 the option to defer duty payments for up to...

Tensions with China Escalate, More Blanked Sailings, and a Promising Outlook for Trucking

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Air 

Demand for urgent medical supplies and personal protection equipment has started to taper off, sending airfreight rates on a steady decline from May’s record highs. The increased capacity from the use of passenger planes for carrying cargo has also helped bring these prices down, and analysts remain optimistic that a continued surge in ecommerce will help prop up rates. 

Tensions between the U.S. and China remain high. Earlier this week, the Trump Administration threatened to block Chinese passenger airlines from flying into or out of the U.S. in response to China continuing to bar international airlines from operating in the country. This morning, however, Chinese officials appear to be moving to quell the dispute, announcing that foreign airlines will be allowed to operate one flight per week in Chinese cities. 

Ocean 

Despite optimism that June would be the start of the rebound for ocean freight, THE Alliance announced this week that its carriers would continue to blank sailings in large numbers through at least September. The carriers—Hapag-Lloyd, HMM, Ocean Network Express and Yang Ming—have announced 75 blanked sailings so far for the third quarter. This is likely just an effort to remain conservative, however, as they can always bring in new sailings if demand requires it. 

Charges have been made in response to the May 24 incident that sent 50 containers tumbling from an APL ship near Australia. The Australian Maritime Safety Authority’s inspection of the ship found “inadequate lashing for cargo and heavily corroded securing points for containers on the deck,” and have deemed the ship unfit to depart from the Port of Brisbane where it currently sits. The charges filed cite significant, preventable damage to the marine environment. 

Ports 

In light of the adaptations the world has been making in an effort to slow the spread of COVID-19, a group of 10 maritime organizations, led by the International Association of Ports and Harbors, is pressing ports to go digital. Paper bills of lading, person-to-person contact, and cybersecurity have all become serious threats to health and safety at ports during the coronavirus pandemic, and have come to highlight the need to modernize port operations. 

Trucking 

After months of steep drops in long haul trucking throughout the U.S., May ended with promising signs. Volume indexes hit some of their lowest points in April, but overall, things are starting to move again.  Since long haul freight is typically replenishment from distribution centers moving to stores, it also signals an anticipated return of overall consumer demand. 

An FAA Ruling on Air Cargo, Continued Trade Tension with China, and Optimism at East Coast Ports

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U.S. Customs 

This week, U.S. Customs granted more exclusions for Section 301 tariffs. See if your imports are on the list. Additionally, recent trends in activity show that Customs seems to be reevaluatinSection 301 tariffs from last summer, in an effort to catch those who may have made mistakes in their duty payment amounts. If you need help making sure you’re covered, reach out to a Navegate Customs expert. 

Additionally, tensions continue over the U.S.-China trade deal. President Trump has continued to express frustration over the implementation of Phase One of the deal, and has hinted at the possibility of taking aggressive action. Adding to the tensions, the U.S. House of Representatives passed legislation on Wednesday, calling for sanctions against the Chinese government for their cruel treatment of the Uighur Muslim minority group. We’ll keep you updated as the situation develops.

 

Air 

The Federal Aviation Administration (FAA) has pushed forward rulings to make it easier to transport cargo on passenger planes. The FAA ruling allows for cargo to be carried on the seats in the cabin in passenger airplanes, so long as there are no passengers on board. This is in addition to April exemptions that have allowed the carriage of cargo in overhead bins, under seats, and in storage closets—all in an effort to facilitate the movement of goods during the coronavirus pandemic. 

While most open air capacity has been dedicated to the movement of personal protective equipment (PPE) and other medical supplies, the staggering numbers of passenger aircraft making cargo-only flights has some questioning what the air freight industry will look like as the world moves into recovery mode. With pricing models for freight in disarray, along with the increased use of ocean-based express services, few can seem to agree on predictions about how future supply chains will look. 

 

Ocean 

In a continuation of the trend we’ve seen for weeks now, container flows stay near record lows. Just this week, Clarkson Research reported that container shipping has seen its most significant drop in teu-miles everSailings continue to be cancelled at high rates, and ocean terminals are feeling the backups.   

Agricultural shippers, in particular, are vocalizing frustrations that the current situation is only exacerbating the issues they already faced at terminals. Many are calling for legal remedies like overhauls to the Uniform Intermodal Interchange Agreement and the Shipping Act of 1984. Some of these desired changes could lead to widespread effects on the overall fluidity of freight.

 

Ports 

After receiving pressure from regulators in Bangladesh, carriers have agreed to waive storage fees accrued in Chittagong between March 26 and May 30 of this year. Bangladesh was largely shut down during this time because of the coronavirus pandemic, making it nearly impossible for cargo owners to pick up containers. While skepticism remains as to whether the waiver will improve port congestion at Chittagong, the move will ease enormous financial burdens for cargo owners.  

Despite the recent trends in ocean shipping, ports along the East Coast are looking at the rest of the year with optimism. The Port Authority of New York and New Jersey reported a steady decrease in announced blank sailings and expect June to be the end of the major declines. 

 

Trucking 

U.S. Domestic trucking continues to rebound, as traffic begins to increase across the country. Main hubs in Los Angeles and the south central U.S. remain congested, but loads are turning at impressive rates, largely due to recent regulation changes for truckers, like Hours of Service restrictions. 

Air Rates Remain High Despite Increased Capacity, a New FMCSA Ruling, and a Rebound for Oil Prices

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U.S. Customs

As a reminder, the deadlines for importers to give comments on Section 301 tariff exclusions are approaching quickly. Public comments are open for List 1 and 2 until June 1, and List 3 comments are open until June 8. In total, these exclusions cover roughly $250 billion worth of goods from China. 

 

Air

As of this week, every state in the U.S. has dialed back stay-at-home restrictions to some extent, and consumers are clearly feeling the shift. U.S. airlines have started to see a glimmer of an uptick in passenger demand, offering hope for airfreight capacity. In spite of this, air freight rates have been largely unaffected, and remain highly volatile. 

 

Ocean 

The major decrease of global economic activity caused by COVID-19 has flooded the bunker market with low-sulfur fuel, meaning ocean carriers may enjoy relatively cheap fuel prices for months to come. As diesel and jet fuel demand has dropped dramatically during the pandemic, the bunker market has been the last resort for refineries looking to sell their surplus oil. This sudden surge in supply has had significant impacts, and as of last week, the price of low-sulfur bunker fuel was roughly 50% of where it stood in March.  

Despite these major drops in fuel costs, ocean rates stay highIn an effort to mitigate shifting demand and recoup major financial losses in Q1, carriers continue to cut capacity. The high rates of blanked sailings and rolled shipments don’t seem to be going down any time soon, and cargo owners may continue to pay the price for the impact the COVID-19 outbreak has had on the ocean freight industry. 

 

Ports 

Feeling the brunt of demand shifts, the Ports of Seattle and Tacoma reported a 23.5% year-over-year drop in volume for the month of April. Placing blame on both the COVID-19 pandemic and the trade dispute with China, the ports expect things to improve slightly, still anticipating high counts of blanked sailings throughout the summer. 

 

Trucking 

Last week, the Federal Motor Carrier Safety Administration (FMCSA) issued a new ruling, relaxing regulations for truck drivers. The ruling offers an increase in flexibility for how drivers manage hours and rest periods, along with certain flexibilities that may make Hours of Service regulations more difficult to enforce. These rule changes may end up putting more power in the hands of shippers, as it’s expected to increase truck capacity.  

As states slowly begin to open and typical late spring surges hit, capacity is starting to pick up. Trucking capacity is tightening in major hubs like Los Angeles, Houston, Atlanta, and Memphis, and overall traffic seems to be increasing throughout most of the U.S. Reflecting this, reports show a slow increase in spot rates as well. 

 

Other News

 A year-to-year comparison of U.S. import distribution shows that, in the first 4 months of 2020, the proportion of American imports from China has fallen nearly 8% from the same time period in 2019. This recent trend of U.S. companies shifting sourcing away from China has been accelerated by the ongoing trade war between the two nations and the COVID-19 pandemic. As more U.S. companies seek to create more stable, resilient supply chains, countries like Vietnam and South Korea have become more popular sourcing options. If you’re currently evaluating your sourcing strategy, don’t hesitate to reach out to the Navegate Imports Team for help. 

Demand for oil in China has rebounded to near pre-pandemic levels in a positive sign for the economy of the country. Experts attribute this resurgence in demand to manufacturers resuming their production and individuals opting to drive cars instead of riding public transit in hopes that they protect themselves from exposure to COVID-19. This news comes only a few weeks after oil prices collapsed due to weak demand amid global economic shutdowns. 

USMCA Adoption Help, Another Airline Bankruptcy, and Warehouse Capacity Continues to Tighten

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Customs 

U.S. Customs & Border Protection (CBP) announced that it is opening a USMCA Center to help private sector stakeholders implement the trade agreement. Despite calls for delays, CBP confirmed that the USMCA will become active on July 1, 2020, leaving affected businesses with just over 6 weeks to prepare for the changes.  

 

Air 

Stringent inspections of PPE being conducted by Chinese Customs have created severe bottlenecks, but the slowed supply of PPE has freed space for non-medical freight on planes. While medical supplies are still receiving priority, the congestion at Chinese airports has forced many planes to take off before they’ve been filled with cargo, and in some cases, this allows cargo that would otherwise be delayed to fill the remainder of the space on the plane. 

This week, Avianca, Latin America’s second-largest airline, filed for Chapter 11 bankruptcyCiting the financial pressure imposed by the shutdown of its passenger network due to COVID-19, the airline is hoping the filing will enable them to protect their business and withstand the global crisis. However, this may serve has a warning for other airlines globally. In a recent interview, Boeing CEO David Calhoun predicted that the collapse of a U.S.-based airline may not be far off. While U.S. airlines have received enormous support from government aid, regional carriers in Europe, Australia, and South Africa have tumbled.  

 

Ocean 

In the continuing trend of ocean capacity cuts, major carriers are continuing to blank sailings globally. Maersk alone cut more than 90 sailings in the first quarter of the year, and estimates that another 140 will be cancelled this quarter. This reduction in capacity, a desperate effort to keep rates high amid falling demand, is resulting in countless rolled shipments. In an effort to mitigate the situation, or perhaps capitalize on it, some carriers are starting to offer what they call “priority booking” rates. If you’re fighting capacity concerns or need to make sense of your options, get in touch with the Navegate Ocean Freight team. 

As many ports take advantage of the current downtime to upgrade operations, it’s also a good time to be vigilant about miscellaneous fees that may slip onto your billing. Navegate’s Ocean Freight team has recently seen modest fees tacked onto bookings, citing upgrades at the Panama Canal. Other ports have started upgrade projects in an effort to be better prepared to take in larger container ships as smaller vessels largely remain parked during the pandemic. As this trend continues, some are beginning to question the future of those smaller TEU vessels. In the meantime, make sure you pay close attention to your billing and explore routing options. 

 

Trucking 

Overall, U.S. domestic trucking traffic has begun to pick up, largely in the southern and western regions of the country. While this uptick is likely just a symptom of typical springtime trends, carriers from across the country are rushing to these higher-volume areas to catch some of the work. With this keeping capacity fairly open, markets are seeing record-low trucking rates. 

 

Ports 

As ports begin to modernize operations, drayage operators and truckers may have cause to celebrate. A newhighly automated gate program has been quietly piloting in Los Angeles, and operational efficiency has soared. Reports from the last two months of the program show that gate lane capacity has more than doubled, and trucker queue times have improved by as much as 84%. While it may take some time for other ports to implement similar programs, LA’s progress may mean a bright future for truckers at ports. 

 

Warehousing 

Warehouses are running short on space as retailer storefronts remain closed and demand stays low. Goods are starting to arrive from Asia as large manufacturing markets in the region are getting back to work, but there has not been a complementary surge in demand by consumers, meaning importers are scrambling to store their goods until the demand returns. Many states have either begun re-opening or plan to in the month of May in hopes of restarting their economies, but only time will tell how consumers behave as the threat of illness persists. 

A Warning for Maritime Operations, Reefer Capacity Tightens, and Ocean Freight May Be Moving Faster Than Air

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Customs 

The deadlines for importers to give comments on Section 301 tariff exclusions are approaching quickly. Public comments are open for List 1 and 2 until June 1, and List 3 comments are open until June 8. In total, these exclusions cover roughly $250 billion worth of goods from China. 

As the virus spreads, COVID-19 outbreaks are reaching U.S. Customs and Border Protection (CBP) offices. CBP reports thorough measures designed to protect employees and prevent the spread of the virus amongst their workforce, and so far, no localized outbreaks have been large enough to affect U.S. Customs processes. In their most recent count, CBP reports that 341 employees have tested positive for COVID-19, and 3 have died. 

 

Air 

In a promising development, air freight capacity and demand are creeping up week by week, and some airlines have started to redeploy parked planes. Experts at Goldman Sachs and Morgan Stanley predict the global economy has “bottomed out”, and the uptick in airfreight backs this claim and indicates that economic activity and consumer demand may increase over the coming months. Although rates for airfreight have remained relatively steady in recent weeks, an increase in monitoring for PPE exports has created bottlenecks at Shanghai’s airport, leading to a significant decline in prices in the last few days.

Ocean 

The International Maritime Organization (IMO) is calling the inability to rotate seafaring crews the biggest challenge for maritime operations during the pandemic. Thousands of sailors around the world are working beyond their contracts, exhausted, as their relief crews are barred from travel to meet them. At the same time, these replacement crews are finding themselves suddenly out of work with no knowledge of when they’ll be able to return. The IMO is urging governments across the globe to recognize seafarers as essential workers, exempting them from travel restrictions. Crew changes have been postponed on most vessels since February, and ocean cargo operations are starting to feel the strain. As crews grow more exhausted, operators warn of the dangerous errors than can be made. 

The Panama Canal is apprehensively looking to the future, noting that May’s container ship traffic through the canal will likely serve as a signal for the future of global trade. The administrator of the canal predicted last week that the fallout of the spread of COVID-19 will accelerate efforts to reduce risk by regionalizing supply chains— moving production out of China and closer to the United States. The Panama Canal Authority is exploring options to keep ship traffic high as global trends shift. Their many predictions anticipate overall reduced traffic from Asia, increased automation in manufacturing, and moves away from single-sourcing as a means to reduce supply chain risk and cost. 

 

Trucking 

As the freight market remains as unpredictable as ever, some are turning to reefer capacity as an indicator of what’s to come. Refrigerated trailer capacity has tightened recently, with tender rejection rates hitting more than 5%. Some of this spike may be explained by the time of year—now’s a big time for some U.S. harvests—but spot rates appear to be on the rise. While the relationship between reefer and dry-van cargo is usually loose, experts are watching refrigerated capacity closely. 

 

Ports 

Despite outperforming estimates for April, container volumes at the Port of Savannah are expected to plunge in May and June. The Georgia Ports Authority expects that volume could be nearly 20% lower in May and June as the overall demand from American consumers remains low during the pandemic. The total of voided sailings over those 2 months currently stands at 60 for Savannah alone.  

As the rest of the world grapples with how to respond to the COVID-19 pandemic, China – the leading exporter of medical supplies – is trying to figure out how to supply the world with the necessary equipment. Shanghai’s Pudong International Airport (PVG) is experiencing an extreme freight overload as exports of PPE, testing kits, and disinfectant products flood in. The bottleneck is so extreme that fast boat ocean freight is, in certain cases, a quicker and more reliable option for North American importers. If you want to explore your freight options, don’t hesitate to reach out to the Navegate imports team.

A Promising Turn in the China Trade Deal, a Surge in Short Hauls, and Drayage Carriers Wage Legal Battle

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Customs 

Top negotiators from the U.S. and China are planning to meet as early as next week to discuss the implementation of Phase One of the trade deal between the two countries. This promising development suggests that – nearly 4 months after the deal was signed – concrete steps are being taken to normalize trade between the two countries. 

China also experienced an increase in export totals in April despite experts projecting a significant drop. While import volumes dropped by roughly 14%, the country achieved a significant rebound in their year-to-year comparison of exports from nearly –20% in March to +3.5% in April. 

 

Air 

The air freight market doesn’t appear to be leveling out anytime soon. While rates are overall still at major highs, rate guarantees barely last more than a day, as opposed to usual weeks. For many, now is the time to determine whether price or speed is priority, making decisions to get creative to get cargo moving affordably. If you or your team need help with your air cargo planning, don’t hesitate to reach out to our team for help, or request a quote with Navegate.

 

Ocean 

As fuel prices stay low, more and more shippers question bunker adjustment factor (BAF) fees and low-sulfur fuel surcharges (LSS). Some major carriers, like CMA CGM and Maersk have lifted their surcharges, acknowledging that they’re likely to return at some point. Other carries like Hapag-Lloyd, however, have kept them in place. Many are calling for surcharges and adjustment fees to reflect actual prices, rather than feeling like a free-for-all that muddies pricing clarity. 

Trucking 

Uncertainty has caused a surge in short-haul trucking, as the percentage of hauls under 100 miles has more than doubled during the pandemic. Citing both the need to find loads amid a dramatically slowed economy and concerns about traveling far from home amid a pandemic, truckers are looking to the local freight market more often. While this is likely a temporary situation that shippers must adapt to, the likelihood of a quick recovery in the freight market is low as the national and global shutdowns persist.  

 

Ports 

A legal battle is brewing between ocean carriers and drayage truckers over chassis prices. A May 4th letter from the Intermodal Motor Carriers Conference (IMCC) to the Ocean Carrier Equipment Management Association (OCEMA)  a group representing 80% of the U.S. container market – warned that a formal complaint would be filed unless OCEMA changed their container leasing practices. As truckers across the country fight against low rates during the pandemic, this move is an attempt by intermodal providers to lower costs. 

Threats to the China Trade Deal, Concerns Over Container Shortages, and Truckers Protest Low Rates

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Customs

Upset by the size of China’s commitment in the deal, President Trump is threatening to terminate Phase One of the trade deal with China unless the Chinese government promises to buy an additional $200 billion of U.S. goods. This move has potential to restart the trade war between the U.S. and China, except now the costly war would be waged amid the COVID-19 pandemic.  

This announcement comes amid questions of whether the administration is planning to take retaliatory measures against China over the COVID-19 pandemic. The U.S. is producing a report on China’s handling of the virus, and sources expect that it will place significant blame on the Chinese government for the spread and overall toll.

Even as tension grow over the trade deal with ChinaUnited States Trade Representative Robert Lighthizer notified congress that the administration plans to proceed with negotiations with Japan, the United Kingdom, and the European Union. The United Kingdom is exercising its right to independently negotiate trade agreements as a result of Brexit, but any agreement will not be official until the end of the transition period on December 31, 2020. 

 

Air

As PPE and medically-necessary supplies continue to take priority over other goods, and as airlines continue to shift offerings to accommodate for surges in airfreight demand, pricing remains increasingly volatile. Rates change near-daily, and many operations are simply accepting the costs as a symptom of business during a pandemic. However,  airfreight can still be a viable and cost-effective method of transport with the right team. If you or your company is struggling to find space or keep up with fluctuating rates, schedule a meeting with one of our logistics experts and we’ll help find a solution that fits your needs. 

 

Ocean

Effective yesterday, the Panama Canal is temporarily relaxing its requirements for booking guarantees and reservation fees. The efforts, meant to provide relief for customers during the pandemic, will be in place until September 1, 2020. All operations at the canal will otherwise operate as usual, with some heightened safety procedures. 

 

Ports

The measures taken by importers and carriers to accommodate for slowing consumer demand are starting to worry ports. As many retail outlets remain closedessential goods maintain shipping priority, and carriers offer “delay in transit” and “suspension of transit” options, nonessential products are beginning to pile up. Many major importers have been forced to get creative to make space for product it can’t sell, and ports have taken major steps to offer additional storage options. However, the massive pileups of loaded containers run the risk of creating major equipment shortages and backups as demand and capacity remain volatile. 

As cargo volumes continue to plunge, ports and terminals are asking for federal help to stay afloat and protect workers. Marine terminals have reported that these steep drops are making it difficult to afford meeting lease requirements, much less spend extra cash on PPE and extra sanitization measures to protect employees. Due to the size of most marine terminal operations, they rarely qualify for Small Business Loans, so employers are asking for grants to help pay for protective measures for workers. 

 

Trucking

With domestic trucking rates remaining low for weeks, truck drivers are starting to push back. Last week, protests cropped up across the country fighting rates that drivers say are now so low that they can’t make a living. These struggles come as states report steep drops in trucking traffic, with states like Michigan facing declines of as much as 37%. With overall product demand at rock bottom sending drivers chasing hauls, small-business truckers have received little help to protect wages from sharp drops in rates. 

Meanwhile, Southern California seems to be witnessing an increase in traffic, with Los Angeles, Laredo, and Houston struggling to track down equipment to haul a surge in loads. Whether this is the start of a trend, or simply a blip as Chinese freight reaches U.S. shores is still unclear. 

China Increases Quality Measures for PPE, a New Ruling on Demurrage, and a Halt to Mexican Production

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Customs 

Following reports of shoddy medical exports from the country, Chinese authorities have increased the export certification measures required for PPE and testing kits. The extra procedures and paperwork, designed to ensure the quality of products, have also contributed to increased costs and congestion because only certain airports have the resources to properly process these exports. Already inflated airfreight costs have gotten higher in the wake of these measures, and reports from the country indicate that customs brokers are raising rates due to the extra burden. 

If your business is having trouble sourcing PPE or other medical equipment from China, reach out to us. Navegate’s team of customs brokers and international freight forwarders can help to minimize costs and speed up delivery.

 

Air 

Rates in Hong Kong are rising quickly as shippers look to avoid congestion at Chinese airports and diversify their supply chains. Just last week, rates for routes from Hong Kong to North America were up 26.8%, and they’re not likely to fall as North America battles an increasing daily case count. Additionally, factories in Germany are beginning to re-open, which will likely bring a heightened demand for non-medical goods and materials from the region. 

 

Project Airbridge – FEMA’s airfreight relief program – is expanding to include smaller airports as destinations for cargo. The shift is aimed at alleviating congestion at major airports, as airfreight has been the preferred method to quickly import PPE and other medically-necessary equipment. The project has successfully transported over 750,000 N-95 masks, nearly 750 million gloves, and just recently, a shipment of over 4 million 3M respirators. Flights are continuing consistently, with 21 scheduled or in transit as of April 27. 

 

Ocean 

While blank sailings have been necessary to adjust for falling consumer demand during the COVID-19 pandemic, carriers are also employing these cancellations to prop up pricing. Specifically, spot rates between Asia and North Europe have seen an increase as the withdrawn capacity reaches unprecedented levels. Industry experts have predicted that between 30% and 40% of capacity will be cut out of Asia-Europe routes as carriers fight to keep prices up, but there is no guarantee these measures will fully succeed as the pandemic persists. 

 

Ports 

The FMC has finally made its long-awaited decision on detention and demurrageThe ruling, expected to go into effect in the next couple weeks, evaluates the effectiveness of detention and demurrage charges in incentivizing the movement of cargo at ports. The new interpretive rule, which is more than 90 pages long, largely serves to provide a list of circumstances under which detention and demurrage practices may be unreasonableIn the coming weeks before its official publication in the Federal Register, the more than 90page docket will take time to be reviewed and assessed for impacts on shippers. 

 

Trucking 

Shippers are putting contract negotiations on the back burner as COVID-19 continues to disrupt supply chains across the country. While some shippers are extending current contracts for the time being, others are exploring shorter-term contracts (e.g. 90 days). This is partially due to market uncertainty, but social distancing and work from home orders have required negotiations to take place virtually, slowing the entire process 

 

North American Trade

As countries around the world formulate different approaches to fighting the pandemic, the United States’ dependency on Mexican inputs is creating massive problems for numerous American supply chains. President Andrés Manuel López Obrador has shut down the operation of the majority of its manufacturing, only allowing operation at companies involved directly in essential industries like health care and food production. The companies that supply materials which are exported and may later be turned into essential goods are largely prohibited from operating.  

If your supply chain is experiencing delays coming out of Mexico, a little visibility could go a long way. Set up a call with Navegate to learn how we may be able to help you keep things moving.

USMCA Moves Forward, the FMC Announces Contract Leniency, and the Outlook for Intermodal

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North American Trade

The Trump administration announced that the U.S.-Mexico-Canada Agreement (USMCA) will go into effect on July 1, 2020. The decision was made despite objections from various North American business leaders including private sector committee convened by Congress and the Senate Finance Committee itself. If you’d like to explore the impacts of the USMCA on your business and your supply chain, contact a customs expert at Navegate.

 

Air

Despite the Federal Aviation Administration (FAA) imposing hour cuts at about 100 air traffic control towers this month, operational capacity is not expected to be impacted. With obvious increases in flights carrying goods from online retailers and essential medical cargo, overall air volumes still have fallen dramatically with passenger flight volumes nosediving. The FAA stated that these hour cuts are meant to ensure the safety and health of workers, and the proactive cuts could end up preventing a large-scale shutdown if a control tower becomes heavily contaminated with COVID-19. 

 

Ocean

While the IMO 2020 regulations on sulfur emissions have been in effect for a full four months now, it hasn’t affected supply chains in quite the way we had expected. With rock-bottom fuel prices, many carriers are scrapping their plans to install scrubbers, or Exhaust Gas Cleaning Systems (EGCS), and taking advantage of the now very affordable low sulfur fuel. The ways that carriers are handling these changes in regard to customers, though, varies greatly. CMA CGM recently announced that it would scrap low-sulfur surcharges for customers, while many box carriers are simply ignoring calls from customers to do the same. 

In a recently published rule, the Federal Maritime Commission (FMC) announced that it will allow service contracts to be filed up to 30 days after they take effect until December 31, 2020.  The FMC announced this change, effective as of the 27th of April, citing the need for flexibility amid the COVID-19 pandemic.

 

Ports

U.S. Ports and freight forwarders predict that blank sailings will reduce capacity to the west coast by 25% and to the east coast by 20% in the mid-May and June period. These volume cuts – largely due to the absence of the back-to-school surge – remedy concerns about capacity bottlenecks as ports and forwarders try to adapt to working guidelines that maintain social distancing and worker safety.  

 

Intermodal

North American intermodal volumes are experiencing their worst April since the 2008 recession, and forecasts anticipate May being even more grim. With overall freight demand decreasing, the goods that are moving are more often put on airfreight, whether it’s PPE or CPG. In an effort to mitigate the costs associated with running half-empty routes, intermodal operators are slashing the number of trains in use and reducing days of service. For shippers, that may mean slight delays in service for now.

 

Looking Up

While the pandemic persists globally, some nations are beginning to turn the tide in the battle against COVID-19. Namely, South Korea and New Zealand have begun to relax social distancing policies with new case totals dropping daily in both places. Meanwhile, states across the U.S. are coordinating plans to slowly reopen their economies while still keeping citizens healthy. 

Another Chance to Defer Duty, a Last Hurrah for Container Imports, and Shippers Turning to Tech

By | COVID-19 Latest Updates | No Comments

Customs

The White House issued an executive order on Sunday evening allowing qualifying importers to defer April duty payments for up to 90 days. Although monthly statements were due at midnight on Monday, eligible importers can still defer duties for the remainder of April. If you believe you qualify for a deferral, contact your customs broker as soon as possible. 

 

Air

The Federal Aviation Administration (FAA) issued a safety statement providing airlines attempting to convert passenger planes into cargo-carrying flights guidelines to minimize hazards. Since passenger plane cabins are not designed to carry cargo, the FAA issued tips so carriers avoid running into issues like uneven weight distribution, fires, and unsafe transportation of hazardous materials. The number of cargo-carrying flights offered by passenger airlines has continued to increase—just this week, United announced its expansion of its all-cargo network to more than 150 flights per week.

 

Ocean

recent spike in container imports being unloaded in California ports is likely the “last hurrah” before volumes drop off significantly. Since it typically takes 2-3 weeks for a container to ship from China to the west coast, the spike seen at the end of March and early April is likely due to a rush of imports after factories re-opened from Chinese New Year closures. Industry leaders expect May import levels to be 15%-20% lower than last year.

 

Trucking

The Federal Motor Carrier Safety Administration (FMCSA) released a notice that it will not penalize state driver licensing agencies (SDLAs) if they are unable to notify the federal government of driver violations, disqualifications, and convictions within the normal 10-day window. This grace period, designed to provide relief to SDLAs that are either partially operational or fully shut down due to COVID-19, will last until June 30. 

 

Managing Supply Chains

In addition to the ongoing pandemic, severe thunderstorms and tornadoes are expected to hit southern states over the remainder of the week. Major transportation hubs likely to be impacted include Houston, New Orleans, Atlanta, Savannah and Charleston. If you’re worried about cargo you may have inbound or at one of these ports, or you’re looking for more control over your supply chain in the chaos, reach out to a logistics expert at Navegate

A survey from JOC found that many businesses plan to make major changes to their supply chains in response to COVID-19. Many shippers are struggling to react to disruptions in their supplier networks, volatile rates and transit options, and a constant fight to balance inventory against changing demand. Most of these shippers reported that they’re turning to supply chain technology to give them control and visibility, as the impacts of the pandemic exacerbate supply chain inefficiencies that may have seemed minor before. If you find yourself exploring the ways technology may be able to help your supply chain, reach out to a Navegate platform expert, and we’ll help you determine what tools to prioritize for your business.

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