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

By May 5, 2020 No Comments

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.