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August 2023 – Market Update
AIR
OCEAN
Trans-Pacific East Bound: Capacity Cuts Brings Rise in Trans-Pacific Shipping Rates
In July, spot rates between Asia and the U.S. have been increasing by double digits, reaching levels similar to early 2023 and late 2022. This is a direct result of carriers’ discipline in managing vessel capacity by voiding several sailings, removing around 35% of capacity from the market. Other factors contributing to spot rates stem are labor disruption in British Columbia and a more positive outlook for cargo demand in North America. This trend is expected to continue through September.
ILWU Canada Update
On August 4, International Longshore and Warehouse Union (ILWU) Canada members ratified a four-year negotiated tentative agreement with the British Columbia Maritime Employers Association (BCME).
Initially, the BCMEA ratified the tentative agreement on July 13, but the ILWU Canada caucus rejected it, leading to a brief strike before it was ruled illegal by the federal labor board. This was followed by the union issuing — then retracting — a strike notice for last weekend.
The July 1-13 strike by ILWU Canada resulted in vessel backlogs and inland supply chain disruptions.
Panama Canal Lowers Number of Ship Transits
The Panama Canal Authority (ACP) has announced that they will lower daily vessel transits due to an ongoing drought.
From July 30, 2023, the daily transit capacity of the Panama Canal has been adjusted to an average of 32 ocean-going vessels per day, with ten vessels in the neo-Panamax locks and 22 vessels in the Panamax locks.
There are reports of over 150 vessels waiting to transit the canal. Shippers should plan an additional 20 days of transit time to account for delays.
The Panama Canal Authority reported that the draft restrictions are primarily impacting laden containerships. According to a report by CNBC, forty percent of all U.S. container traffic travels through the Panama Canal every year. There have been reports of containerships offloading containers for shipment by rail as the canal increased the draft restrictions this year.
Trade with Canada is Booming, New Crossing Point Available in 2024
Here's great news for shippers and importers doing business with Canada. More capacity is coming to the cross-border point between Detroit, Michigan, USA, and Windsor, Ontario, Canada, for commercial trucks in late 2024.
In June 2023, Canada ranked as the number one export partner and number two import partner (following Mexico) with the US. Detroit was the busiest northern border port for loaded trucks, with over 103k crossings (Source: Department of Transportation). That's roughly 3,433 trucks per day!
Currently, most of this truck traffic transits alongside non-commercial traffic on the 90-year-old, 4-lane Ambassador Bridge connecting Detroit to Windsor. The average wait time is 30 minutes but can be much longer at peak times. It's not unusual for trucks to be bumper-to-bumper.
Just south of the Ambassador Bridge is the construction of a new crossing point, the Gordie Howe International Bridge, expected to open in late 2024.
The new bridge will add six lanes of capacity and will shift all commercial traffic from the Ambassador Bridge. It will connect to Interstate 75 (I-75), providing quick highway access to major US cities down to Miami.
US Customs in Detroit will increase its workforce to facilitate trade. Truck congestion will decrease due to more lanes and better-designed ramps onto I-75 that will minimize the impact of international traffic on roads near the port of entry. Other benefits include minimized truck idle time and reduced fuel consumption.
At completion, the Gordie Howe International Bridge will have the longest main span of any cable-stayed bridge in North America. Pedestrians and cyclists will also have the opportunity to cross the Detroit River using a multi-use lane, which was not previously an option.
Separating commercial traffic from non-commercial traffic should improve transit times for all, giving importers and exporters more control over their supply chain.
July 2023 – Market Update
AIR
OCEAN
U.S. West Coast:
Canadian West Coast Strike: ILWU Canada members have been on strike at the Ports of Vancouver and Prince Rupert over labor contract negotiations with the British Columbia Maritime Employers Association.
Candian West Coast Strike Update: The strike at Canada's West Coast ports has come to an end today. The labor union and port ownership accepted a deal by federal mediators.
Panama Canal: Low water levels persist in the canal. On the positive side, the canal authority has postponed further draft reductions for the time.
2023 Third Quarter Section 232 Steel Bulletins Released
U.S. Customs and Border Protection posted guidance to 2023 Third Quarter Steel Bulletins.
From CSMS #56760966 - GUIDANCE: 2023 Third Quarter Steel Bulletins:
Please refer to the Quota Bulletins Webpage at: nnrusa.com%7Ca720ae60b9684762006008db76709e1b%7Cdcf64f95eb8a4863a6d921e39d2c7d3b%7C0%7C0%7C638233998295418426%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=lyk0FNMraqKu1AVDdR0FNppm3WhSNwiq9uEBNsjl8Tk%3D&reserved=0">https://www.cbp.gov/trade/quota/bulletins for the documents listed below addressing quantity thresholds for July 1, 2023 through September 30, 2023.
Bulletins for Section 232 Steel third quarter programs are available at these linked pages:
Trade can track quota status by viewing the weekly quota commodity status report found at nnrusa.com%7Ca720ae60b9684762006008db76709e1b%7Cdcf64f95eb8a4863a6d921e39d2c7d3b%7C0%7C0%7C638233998295418426%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=ZsHXvHaXJaCGCznJV88cggzC43i2l5XAf8Fni%2FHPAWA%3D&reserved=0">https://www.cbp.gov/document/report/commodity-status-report
Potential Supply Chain Challenges
We have two major supply chain issues that could impact Asia to US trade, labor disruptions due to a lagging union contract with the International Longshore and Warehouse Union (ILWU) and the ongoing restrictions in the Panama Canal.
We remain committed to mitigating the impact on our customers and recognizing the importance of open communication, collaboration, and adaptability.
The ongoing labor contract negotiations between the ILWU, ocean carriers, and terminal operators have escalated to a critical point. ILWU Local 13, representing approximately 12,000 longshore workers in Southern California, has expressed deep disappointment with the current contract negotiations regarding safety, wages, and automation.
During the first week of June, several terminals across the US West Coast (USWC) faced disruptions due to the labor expressing their displeasure with the current contract negotiations specifically related to wage increases and automation. Many terminals from Los Angeles, Long Beach, Hueneme, Oakland, and Seattle have been shut down intermittently since June 2nd, with shifts being canceled due to a lack of labor or red-tagging equipment for safety inspections.
The labor may continue to target certain terminals to display their frustrations with the current contract negotiations. The ILWU has stated that despite playing a vital role in sustaining the nation's supply of goods throughout the pandemic, the workers feel their health risks and lives have been treated as expendable for the sake of maximizing profits by the shipping lines.
In response to the ILWU's dissatisfaction, the Pacific Maritime Association (PMA) has accused the ILWU of engaging in disruptive work actions at key marine terminals along the West Coast, including major ports such as Los Angeles, Long Beach, Oakland, and Seattle. These actions involve tactics like worker dispatch refusal, operational slowdowns, and baseless health and safety claims. The consequences extend beyond dockworkers, affecting truck drivers, warehouse workers, and others who rely on port operations for employment. The Pacific Maritime Association emphasizes the need to halt this harmful disruption and restore confidence in West Coast ports, as the stakes are exceedingly high.
The ILWU in Canada is on the verge of deciding whether to initiate a 72-hour walk-out at Vancouver and Prince Rupert ports. This decision has sparked worry among shippers who fear the subsequent surge in pressure and congestion on the east coast. The potential disruption looms large, considering that a considerable volume of cargo from Canada's west coast relies on rail transportation to traverse the continent.
The outcome of this vote carries significant implications not only for the shipping industry but also for the broader economy, as the prolonged disruption to the vital supply chain could lead to increased delays and logistical complexities. Stakeholders across the maritime and transportation sectors closely monitor the situation, emphasizing the need for constructive dialogue and exploring alternative measures to mitigate the expected consequences on Canada's trade and commerce. The impending vote will determine whether an amicable resolution can be reached or if the walk-out will proceed, which could have far-reaching consequences for the shipping landscape of Canada and the interconnected global trade network.
Retail and manufacturing groups are urging the White House to intervene in labor negotiations at West Coast ports to prevent shipping disruptions during critical holiday shopping seasons. These groups emphasize the importance of the ports in the supply chain and express concerns about potential consequences such as product shortages and delays, increased costs, and dissatisfied customers. By prioritizing this issue, the White House has an opportunity to protect the interests of businesses and consumers and maintain the economic vitality of the retail sector.
The other issue facing transpacific business is an exceptionally severe drought season. The Panama Canal Authority (PCA) has announced its decision to decrease further the maximum draft allowance for vessels navigating through the Panama Canal into June. This measure will require ocean carriers operating on Asia – US east coast Panama and Pendulum loops to reduce loads of their ships. Consequently, transpacific carriers have informed us that effective from June 1st, substantial surcharges will be implemented for shipments on Asia – US east coast of all water services.
Additionally, some carriers plan to redirect certain loops through the Suez Canal. The prolonged drought conditions in Panama have caused draft complications within the canal, resulting in a reduced capacity for the Panama string. Furthermore, carriers have stated their intent to apply Panama Canal Charges to all cargo loaded on their Asia to US east coast sailings via the canal. These measures are necessary due to the significant draft restrictions imposed by the unusually low water levels as vessels transit through the Panama Canal.
As a logistics company, nnr will continue to monitor the situation and provide updates to our clients. We understand these disruptions impact operations. We hope that the ILWU and PMA can reach a fair and mutually beneficial agreement soon so that operations can resume without any further disruptions.
June 2023 – Market Update
AIR
Airfreight is stable with no major disruptions.
Rates are trending downward. Fuel surcharges remain stable. Capacity is available on most shipping lanes.
OCEAN
Less-than-container-load (LCL) shipments are on the rise despite the downturn in container export volumes from Asia. With abundant space available, shippers review their product needs and ship smaller quantities at competitive rates to mitigate excess inventories. These factors lower overall demand due to economic insecurity by necessitating smaller and less frequent orders to meet market demands. The increased reliability of ocean schedules is another incentive for less urgent shipments to be transported via ocean.
Market experts are not anticipating a strong peak season this year and will likely see some spike in volumes around September or October. Carriers are still struggling to balance capacity with low demand by slow steaming and voiding sailings. While vessel schedules have been improving month over month, it is due mainly to the congestion improvement at ports, terminals, and container yards.
Ocean freight rates are at pre-pandemic levels despite carriers’ efforts to implement general rate increases (GRIs), as space exceeds demand. A spot rate increase comes despite the worsening supply and demand balance.
During the last four years, the overall container fleet has grown 16.9% in size to 26.2 million twenty- foot equivalent unit (TEU), coming to 3.8 million TEUs larger than in April 2019. Meanwhile, Far East export volumes were only 2.1% higher than during the first quarter of 2019.
U.S. DOMESTIC TRUCKING
As we enter the summer season, there is significant uncertainty surrounding the labor situation in the U.S. port and domestic transportation markets.
One key factor impacting this is the ongoing labor unrest in the Ports of Los Angeles and Long Beach. Due to walkouts that have occurred over the past 60 days, many shippers are diverting their cargo to East Coast ports. While these walkouts have been relatively short, lasting no more than 24 hours each, they have prevented importers from returning inbound shipments to pre-Covid volumes.
If this situation persists without resolution, the ports risk permanently losing some of their volume. Negotiations are ongoing, but there appears to be a significant gap between the parties involved.
A development to note is that the national less-than-truckload (LTL) carrier ABF Freight System is facing the possibility of a strike. The union representing ABF's 8,000 members has authorized a strike if a new contract is not reached by June 30th. The union's demands include wage and pension benefits improvements, protection against contract carriers, cab cameras and internal monitoring, and automated vehicles. The Teamsters, who represent ABF employees, are also considering job actions against Yellow and TForce Freight, as their labor contracts will expire next year.
UPS, one of the largest employers of International Brotherhood of Teamsters union members, is also facing labor uncertainty. Unionized UPS employees began voting on June 6th to authorize a strike, with the results to be announced on June 16th. If the vote is in favor of a strike, the countdown will begin until the contract expires on August 1st. The Teamsters represent approximately 340,000 UPS employees, accounting for 50% of the workforce. In 1997, a Teamsters strike against UPS lasted 15 days, resulting in significant financial losses for the company and disruptions for shippers that lasted for months. Key negotiation points for the UPS contract include wage and pension benefits, in-vehicle monitoring, the use of contract employees, weekend drivers, overtime, and driver safety.
Given these developments, it is crucial to engage in discussions about the labor market with your vendors. If you have any additional questions or require further information, please reach out to your nnr Account Executive.
Powering The Automotive Future: A Supply Chain Success Story
The Challenge:
For nearly a decade, nnr-global-logistics/">nnr Global Logistics has been entrusted with the critical task of overseeing the production of magnets for a world-leading EV manufacturer. Our team at nnr Netherlands expertly manages the transportation of these magnets from Japan to the Netherlands, utilising nnrglobal.com/services-overview/air-cargo-services/">air or nnrglobal.com/services-overview/ocean-cargo-services/">ocean freight. However, in compliance with the stringent Dangerous Goods Regulations (DGR), the magnets are shipped in an unmagnetised state, presenting a unique challenge. Our team at nnr Netherlands meticulously ensures that the magnetisation process is executed efficiently upon arrival at our nnr Netherlands facility, where they are subsequently stored and transported to the customer.
The Strategy and the Solution:
1. Efficiency:
To optimise our supply chain management system, we implemented several measures to streamline our processes. Our Warehouse Management System (WMS) allows us to efficiently manufacture unmagnetised to magnetised items per lot number. By using a cloud-based stock list, we can easily track all movements in the production room and share this information with our customers.
2. Risk Management:
To minimise the risk of faulty products, we implemented quality control measures to ensure that the magnets are properly magnetised, stored, and shipped. We use a preparing machine that magnetises one holder at a time and check the process using a detailed report that includes the lot number, type, date, and the team member involved. The magnetic values are checked and recorded and we use a repack machine to fill the holders with magnets, which are then verified by cameras to ensure they are in the correct position. Finally, we create invoices and T1 documents for the shipment to meet all legal requirements. By implementing these measures, we are able to reduce the risk of faulty products and ensure a high level of customer satisfaction.
3. Cost Management:
To ensure cost-effectiveness, we calculate the number of holders that can be created per lot number, ensuring that the repack machine runs efficiently. We also use a program from the automotive company to produce shipment papers and labels and arrange and approve pickups through their B2B program. This not only reduces the cost but also streamlines the shipping process, making it more efficient.
The Result:
As part of our commitment to ensuring the highest standards of quality and reliability, we have implemented a system that ensures proper magnetisation and storage of the products while maintaining accurate records of the manufacturing process. This has enabled us to efficiently manage the supply chain system, with the cloud-based WMS offering real-time monitoring of the movements of the magnets, thereby enhancing transparency and trust.
The implementation of this system has resulted in significant improvements in the efficiency and accuracy of the supply chain management system. The time required to magnetise the products and fill the holders has been reduced, while the risk of errors occurring during these processes has also been minimised. Our clients have expressed high levels of satisfaction with the quality of the magnets and the transparency of the manufacturing process. The final products are shipped to Germany, ensuring prompt delivery to our esteemed customer.
As a result of these efforts, nnr has been able to increase its productivity and profitability, while maintaining a strong reputation for quality and reliability in the industry.
77 COVID-Related Section 301 Exclusions Extended Through Sept 30
The United States Trade Representative (USTR) announced the extension of 77 COVID-related medical-care product exclusions to Section 301 tariffs.
The new scheduled expiration date is September 30, 2023. USTR assigned a new additional tariff number, 9903.88.68, to the extended exclusions.
The USTR extended all 81 COVID-related exclusions to allow for a transition period through May 31, 2023. The exclusions were previously scheduled to expire on May 15, 2023.
Four exclusions were not extended, and will expire on May 31, 2023.
For a complete list of product exclusions available to importers, please consult the nnruk2dev.wpengine.com/301-china-action/#faq" target="_blank" rel="noreferrer noopener">FAQs on our nnruk2dev.wpengine.com/301-china-action/" target="_blank" rel="noreferrer noopener">301 China Action page.
May 2023 – Market Update
AIR
We forecast a relatively stable May. Most air carriers continue to have a few intermittent operational issues, including delays at specific intermediate airports due to capacity constraints.
Fuel surcharges (FSC) continue to fluctuate on a short-term basis, with recent long-term trend lines showing slow, modest FSC rate declines.
The World Health Organization officially ended the global emergency status for Covid-19 on May 5th, 2023.
What does that mean for you?
Discuss with your nnr contact your shipment ‘need by’ date. Our team will help you find shipping options specific to your needs. If you have more flexibility, it could mean a more competitive rate too!
OCEAN
Many Business Cargo Owners (BCO) and Non-Vessel Operators (NVO) wrapped up their Trans-Pacific East Bound (TPEB) contracts negotiations by signing the new contracts after the carrier’s success of general rate increase (GRI) implementation on April 15.
This year, contract negotiations took longer than usual as spot rates were declining for months, making many BCOs and NVOs hold on to sign and seek lower rates for long-term agreements. That strategy did not work much as indications of rate increases are surging with carrier’s blank sailings and bringing space availability down by almost 30%. That being said, rates are still lower than levels reached during the last two and half years.
Please continue to book despite the space availability. Carriers are still voiding sailings which can disrupt normal schedules and vessel rotations.
TRANSPACIFIC - U.S. EAST COAST
The Panama Canal, one of the world's most important maritime trade routes, is experiencing another drought.
The canal handles approximately 6% of global maritime trade, connecting the Atlantic and Pacific Oceans. Any disruption in operations can have significant impacts.
In 2019, when the canal faced a severe drought, the shipping industry faced many delays as the canal's water levels were too low for larger vessels to pass through. The drought lasted several months, causing significant economic issues for the shipping industry and affecting global trade. At that time, the Panama Canal Authority (PCA) implemented measures to reduce the draft limit, which is the maximum depth of a ship that can pass through the canal. The draft limit was reduced from 50 to 44 feet. Many ships had to wait for days, even weeks, to pass through the canal, causing a backlog in shipping schedules and increasing the cost for shippers. The delays caused ripple effects on global supply chains, with goods being delayed or rerouted to alternative routes resulting in additional fees and inefficiencies.
The PCA recently announced draft reductions for vessels transiting the Neopanamax locks. Effective May 24, 2023, the maximum draft will be 44.5 feet Tropical Fresh Water (TFW), and effective May 30, 2023, the maximum will be 44.0 feet TFW.
It is important to follow the ongoing drought developments to prevent any delays or additional costs to your supply chain.
Don't hesitate to get in touch with nnr for a thorough review of your current ocean business. We can provide solutions and mitigate risk to your business.
Click on the link below for more information on ocean!
Driving Logistics Industry towards a Sustainable Future
As Earth Week 2023 is observed around the world, the global logistics industry is stepping up its efforts to reduce its environmental impact and promote sustainability throughout the supply chain.
Ban Lifted on Mexican CITES Imports
On April 14, 2023, U.S. Fish and Wildlife Service announced the CITES trade suspension with Mexico is withdrawn. The United States will resume normal trade operations with Mexico related to CITES species, effective immediately.
The notice follows the CITES Secretariat notification withdrawing the trade suspension for all commercial trade with Mexico.
Hedging CO2 Emissions with Hybrid Air Export Solution from Osaka Japan
During the pandemic, the number of international flights departing from Osaka's Kansai International Airport (KIX) significantly declined and has yet to return to pre-pandemic levels.
Meanwhile, flights departing from Tokyo's two international airports, Narita (NRT) and Haneda (HND), maintain a relatively large number of international flight options.
Traditionally, freight moves on long-haul trucks from Osaka to Tokyo. Trucks are high in CO2 emission and require a driver.
On April 1, 2024, Japan will implement new trucking regulations limiting overtime. Analysts anticipate a potential long-distance truck driver shortage.
As businesses search for ways to curb their carbon emissions, the transportation of goods remains a primary area of focus.
As a result of the need for efficient, low-emission transportation from Osaka to international destinations, nnr is providing a hybrid rail-air routing using Tokyo's two international airports. Currently, we have weekly rail departures from Osaka to Tokyo.
How it Works
Cargo is delivered to the nnr Rinku Logistics Center in Izumisano City, Osaka, where customs clearance occurs. Next, the shipment moves by truck to the rail and is transported 577 km (359 miles) to Tokyo. Upon arrival, the shipment is trucked 80 km (50 miles) to the Narita International Airport or 10 km (6 miles) to the Haneda International Airport. All freight movement occurs 'in-bond' and adds minimal transit time.
The new route allows for 1.) additional international options, 2.) will reduce CO2 emissions by approximately 60% compared to using a 10-ton truck, and 3.) will alleviate delays resulting from a truck driver shortage.
This service is ideal for those who want to hedge emissions and can allow for an extra day of transport time but still require international air export service speed.
Low-carbon emissions contribute to the realization of a green society. Rail transportation emits less CO2 than long-distance trucking.
This valuable solution is through a collaboration between three industry leaders: nnr Global Logistics for our knowledge of air and bonded cargo, Senko’s expertise in container transport as a rail carrier, and JR Freight’s rail transport services with their environmental and labor productivity advantages.
April 2023 – Market Update
Click on the link below for more information on ocean!
Know Who You Are Doing Business With
Tensions with Russia, China, North Korea, and other countries are placing a keen government focus on corporate compliance programs. There are increased risks in this type of work, where we would have considered it business as usual.
It is vitally important to know who your shippers are, who their consignees are, and the types of commodities you are shipping.
Do we know our shippers? Do we know who are the owners and board members? Does the company participate in or understand the various security programs and organizations such as:
Do we know who are the overseas consignees? Do we know who are their principals? Do we know who they are doing business with? Are they participating in security programs in their own countries?
Have all management, employees, contractors, and temporary employees been vetted through national security programs and deemed safe?
Are we ensuring that sensitive information is not being exposed to non-U.S. citizens or other personnel who do not live under the jurisdiction of U.S. Federal Law?
What commodities are being shipped, and could they be used for nefarious reasons?
Please consider whether or not the commodities could be used to threaten U.S. interests.
There are many ways we can unknowingly violate the various laws and rules, which seem to change daily, so we all need to be vigilant in knowing who we do business with.
A recent Department of Justice article advises that an additional 25 new prosecutors are being hired to investigate export control violations and economic crimes and will be working with the Bureau of Industry and Security to identify possible violations.
nnr participates in several programs, including restricted party screening, CTPAT, and TSA, to assist in protecting our supply chain. However, we also need to ensure that our shippers and consignees understand their rights and responsibilities in keeping the nation safe, as they know their commodities and trading partners better than we do.
West Coast Port Negotiations Resume, Dockworkers Trigger Delays
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Over the past year, negotiations between the Pacific Maritime Association (PMA) and International Longshore and Warehouse Union (ILWU) regarding contracts have been difficult, causing delays and uncertainty in freight operations.
The disagreements between the PMA and ILWU center around various topics, such as jurisdiction and the use of automated handling equipment on the docks.
It's important to note that the ILWU labor force works all the West Coast ports of the United States and Canada.
Recently, the PMA announced that dockworkers at the Ports of Los Angeles and Long Beach have ceased staggering work shifts during mealtimes, causing terminals to shut down for an hour in the afternoon and another hour at night during the lunch break. These interruptions have triggered significant delays in cargo operations and long backups of trucks at terminal gates.
While there have been some disruptions at the West Coast ports during the negotiations, the lunch break implementation at Los Angeles and Long Beach is the first instance where such action has impacted numerous cargo-handling operations. The PMA argued that the previous agreement allowed employers to assign staggered shifts during mealtimes. However, since the contract has expired, there are no means of arbitration to resolve the dispute and ensure that dockworkers continue with uninterrupted operations.
In previous negotiations, supply chain disruptions have occurred, such as the 11-day lockout of dockworkers by the PMA in 2002 until President Bush invoked the Taft-Hartley Act, which halted the right to collective bargaining and forced the start of port operations. In the 2014 negotiations, PMA similarly ended night and weekend work shifts.
One sticking point in negotiations could be terminal operators seeking to expand their use of automated technology, which union officials have opposed over job loss concerns and a negative economic impact to the local communities.
Shipping companies have also tried to limit the jurisdiction of the ILWU by reducing the categories of work performed by union workers. This disruption is reminiscent of contract issues in the past.
It is important to monitor this situation closely and be aware of potential Occupational Safety and Health Administration (OSHA) interventions at the Ports of Los Angeles and Long Beach.
If there is a significant slowdown claim by the employers, OSHA will likely get involved and speed up negotiations if labor safety compliance is warranted.
These are not good signs on the negotiation front. There is a risk to cargo shipping with regular carriers.
As a logistics company, we must prepare for potential disruptions and consider alternative shipping options to mitigate any negative impacts on our business.
At nnr, we have solutions and contingency plans in place to reduce any significant disruptions. Don't hesitate to get in touch with your local rep for more details. We are happy to assist with a thorough review of your supply chain to help provide a solution ahead of potential disruptions.
New Reporting Requirement for Aluminum and Aluminum Derivative Products
Updated: April 04, 2023
This notice applies to certain aluminum articles and aluminum derivative articles from all countries of origin imported into the United States.
Effective May 10, 2023, additional information is required to be reported to U.S. Customs for certain aluminum articles and aluminum derivative articles (see products covered list below), originating from all countries of origins.
On the customs entry summary, regardless of whether Section 232 duties, quotas, exclusions, or general approved exclusions (GAE) apply, the following information is required:
Primary Country of Smelt
Report the country where the largest volume of new aluminum metal is produced from alumina (or aluminum oxide) by the electrolytic Hall-Héroult process.
Secondary Country of Smelt
Report the country where the second largest volume of new aluminum metal is produced from alumina (or aluminum oxide) by the electrolytic Hall-Héroult process.
If Russia is not the country reported for the primary country of smelt, and any primary aluminum used in the manufacture of the product was smelted in Russia, report the ISO code for Russia as the secondary country of smelt.
Products of the U.S. are not covered by the countries of smelt and cast reporting requirements. Until further notice, for products of the U.S., filers may report “N/A” for the countries of smelt, and U.S. for country of cast.
Country of Cast
Report the country where the aluminum (with or without alloying elements) was last liquified by heat and cast into a solid state. The final solid state can take the form of either a semi-finished product (slab, billets or ingots) or a finished aluminum product.
Products of the U.S. are not covered by the countries of smelt and cast reporting requirements. Until further notice, for products of the U.S., filers may report “N/A” for the countries of smelt, and U.S. for country of cast.
Importers can provide the primary and secondary country of smelt and country of cast on the commercial invoice, or as a separate statement on the importers' company letterhead.
This new data requirement is a result of the increase of Section 232 nnruk2dev.wpengine.com/2023/03/200-duty-on-russian-aluminum-and-certain-articles-thereof/" target="_blank" rel="noreferrer noopener">tariffs on Russian aluminum. If the primary or secondary aluminum is smelted in Russia, or cast in Russia, then additional tariffs of 200% will apply unless the country of origin has implemented similar tariffs on Russian aluminum.
PRODUCTS COVERED
Per Proclamations 9704 and 9980, and Chapter 99 of the Harmonized Tariff Schedule of the United States, the following aluminum articles and derivative aluminum articles are subject to Section 232 measures, and are covered by the smelt and cast reporting requirements:
Aluminum Articles
i) unwrought aluminum provided for in heading 7601:
(ii) bars, rods and profiles provided for in heading 7604; wire provided for in heading 7605;
(iii) plates, sheets and strip provided for in heading 7606; foil provided for in heading 7607;
(iv) tubes, pipes and tube or pipe fittings provided for in heading 7608 and 7609;
(v) castings and forgings of aluminum provided for in subheading 7616.99.51.
Aluminum Derivatives Articles
(A) stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and with steel core, not electrically insulated; the foregoing fitted with fittings or made up into articles (described in subheading 7614.10.50);
(B) stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and not with steel core, not electrically insulated; the foregoing comprising electrical conductors, not fitted with fittings or made up into articles (described in subheading 7614.90.20);
(C) stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and not with steel core, not electrically insulated; the foregoing not comprising electrical conductors, not fitted with fittings or made up into articles (described in subheading 7614.90.40);
(D) stranded wire, cables, plaited bands and the like, including slings and similar articles, of aluminum and not with steel core, not electrically insulated; the foregoing fitted with fittings or made up into articles (described in subheading 7614.90.50);
(E) bumper stampings of aluminum, the foregoing comprising parts and accessories of the motor vehicles of heading 8701 to 8705 (described in subheading 8708.10.30); and
(F) body stampings of aluminum, for tractors suitable for agricultural use (described in subheading 8708.29.21).
Trends in Product Packaging
Packaging plays an important role in today's supply chain.
Using the right packaging, you can market your brand, protect your product, and leave a lasting impression on the consumer.
Five Points to Consider when Selecting Packaging
1. Sustainability
Reduce your environmental impact by adopting sustainable packaging solutions. You can use recyclable materials, reduce waste, and minimize carbon emissions.
2. Automation
Automated packaging systems are becoming increasingly popular in warehouses. System types can include automated palletizers, case sealers, and stretch wrappers, increasing efficiency and reducing labor costs.
3. Smaller Packages
As e-commerce grows, there is a trend towards smaller and lighter packages that can be shipped more efficiently. This requires new packaging solutions that can protect products while using less material.
4. Customization
Many companies now offer customized packaging solutions to meet the specific needs of their customers. This can include personalized branding, unique shapes and sizes, and custom printing.
5. Verifiable
As e-commerce increases, many consumers buy counterfeit products. As reported in 2020, Amazon blocked 10 billion attempts in counterfeit listings and destroyed 2 million products. More companies are transitioning to tamper-resistant packaging and adding QR codes to their labels to protect their customers from these attempts.
5 Tips for Selecting a 3PL Warehouse
Many companies want to take advantage of the flexible offerings available in today's 3rd party logistics (3PL) warehouse market.
Companies seek partners for various reasons ranging from flexible cost, location, or specialized services.
Choosing a partner can be a daunting task.
Here's a list of the top five criteria that our customers use when reviewing warehouse partners.
Top 5 Tips for Selecting a 3PL Warehouse
March 2023 – Market Update
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The overall tone of the international air and ocean freight markets is a mixture of uncertainty and shipper hesitancy. Capacity has improved on both modes of transport while pricing stabilizes.
Due to the continuous downfall of demand for ocean freight, carriers are still facing challenges in balancing the market's current capacity with demand.
UFLPA: The acronym that has importers on alert
Do you import anything wholly or in part made in China's Xinjiang Uyghur Autonomous Region (XUAR)?
It's been nearly eight months since the Uyghur Forced Labor Prevention Act (UFLPA) was enacted. In FY 2022, U.S. Customs (CBP) stopped 1,592 entries valued at nearly $500 million under the new law.
A new U.S. forced labor law implemented on June 21, 2022.
The law establishes a rebuttable presumption that all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang region of the People's Republic of China or by entities identified by the U.S. on the UFLPA entities list, are prohibited from entry in the U.S.
We expect enforcement to accelerate in 2023 with the implementation of Chinese postal code reporting and as CBP hones its ability to identify goods originating in the XUAR.
Recently, CBP demonstrated collaboration using reports from external sources, among others, to identify jujubes [red dates] harvested in XUAR, but shipped from other areas, essentially masking the true origin. In this case, a logo on the box of jujubes was the giveaway to XUAR roots.
It's clear that forced labor is a priority focus for U.S. Customs.
In January 2023, CBP hosted two forced labor webinars and has announced a 'Save the Date' for a Forced Labor Technical Expo on March 14-15, 2023.
The postal code nnruk2dev.wpengine.com/2022/11/postal-code-for-chinese-origin-goods-requirement/">requirement start date is scheduled for March 18. Importers will need to ensure a valid postal code is notated on their commercial documents for manufacturers and suppliers located in China. If the postal code is located in the XUAR, Customs will pre-notify the filer with a warning message, indicating the goods will be detained upon arrival.
Our best recommendation is to evaluate your supply chain down to the raw materials to verify no forced labor was used to produce the goods. CBP expects importers to provide detailed documentation to support claims of no forced labor and will require this information to release goods detained under UFLPA.
Today, many resources and references are available on the CBP and DHS websites:
UFLPA Entity List | Homeland Security (dhs.gov) Today, the list contains 31 entities found to use forced labor related to XUAR.
UFLPA Operational Guidance for Importers Overview of the enforcement process, how to request an exception, resources for supply chain due diligence, tracing, and management, and type of information that may be required by CBP.
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