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.
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 bankruptcy. Citing 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.
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.
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.
As ports begin to modernize operations, drayage operators and truckers may have cause to celebrate. A new, highly 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.
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.