Ocean and air freight rates and trends; trucking and customs news for the week of May 1, 2019
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Weight Restrictions on Panama Canal Shipments
The Panama Canal restricts the draft (how deep the hull goes into the water) of vessels based on the amount of water available in Gatun Lake, which varies based on rainfall, amount of vessels and other factors. The current draft restriction is for no more than 44’ from a maximum of 49’. Ships must be lighter to meet the draft requirement, so they need to carry less cargo/ballast/fuel or offload cargo to the Panama Canal Railway.
CMA CGM Launches Digital Solutions
CMA CGM is the latest carrier to make the move toward technology implementations. The French carrier announced late last week that they were launching a suite of digital applications, which includes instant quotes on spot rates, electronic bookings, digital bills of lading, cargo geo-tracking and online payments.
*Port of Rotterdam Completes Digital Operations Trial *
The Port of Rotterdam has successfully completed its trial of Pronto, a digital operations platform that is the “single point of truth” for port-related data. The platform decreases the chance for miscommunication, and allows for more reliable vessel unloading time predictions, reducing costly quayside and ship downtime. The port is considering rolling out the platform across terminals and potentially other North European ports.
Carriers Form Digital Container Shipping Association
Maersk, Hapag-Lloyd, MSC and Ocean Network Express (ONE) have received regulatory approval from the Federal Maritime Commission (FMC) to form the Digital Container Association. The association plans to create “open source tools to speed up digitization in the industry,” to increase shipment visibility and the ability to track freight across carriers.
Impact of New IMO ECA Regulations
The International Maritime Organization (IMO) has mandated under new Emission Control Area regulations that by 2020, all merchant vessels must reduce their sulfur emissions from 3.5% to 0.5%.
Whether they install scrubbers, build new vessels, or use higher-quality fuel, carriers will need to make significant changes to comply with the new regulations, and those changes will come at a cost to shippers. Freight rates may climb between now and 2020 as a result.
For an in-depth look at the regulation and how to prepare, read our blog post: IMO 2020: What Shippers Need to Know Now
Airlines Introducing Dynamic Pricing
Fluid pricing in air freight may become more prevalent in the future as seasonality and day-to-day variability of air demand invites a pricing system that reacts in real time. Spot rates have always been available in the industry, but the introduction of fluctuating base rates may shake business stability and prediction accuracy.
Air Freight Experts Weigh In On 2019 Second Half
Despite increasing usage of ocean freight and lack of digital standardization, industry experts are feeling positive about the air market for the rest of 2019. Outstanding factors like Brexit and U.S. - China trade relations may alter this outlook, but “in general, the mood [in the industry] is worse than the real situation.”
Jet Airways Suspends Operations
Jet Airways operations were completely grounded two weeks ago after emergency cash was not made immediately available. The airline was operating 600 flights a day a few months ago until funding fell through. Rivals are being temporarily given its landing slots and aircraft while Jet Airways hopes for a new buyer soon.
U.S.-Mexico Border Congestion Eases
At the time of the border’s worst congestion, trucks were experiencing seven to eight-hour delays, but these have now been reduced to three to four hours. Full recovery to normal wait times are not expected for another four to six weeks.
*New Lithium-Ion Battery Packaging Allows for Safer Transport *
Lithium-ion batteries will soon be able to be transported over road and rail in a safer, more sustainable way with the development of new reusable packaging. The packaging will hold the batteries in place while in transit to prevent fires, and will be made of a heat/fire-suppressive material as a precaution. The packaging is not conducive to air transit, unfortunately, because it’s designed to carry large quantities of batteries.
*EU Parliament Approves New Emission Standards *
Manufacturers based in the EU will need to cut CO₂ emissions for new trucks and lorries by 15% by 2025 and by 30% by 2030. This new legislation will reduce emissions by 30% and will apply to the UK, even if/when it exits the European Union.
Customs May Change Opinion on 50/50 Textile Garments
Customs recently proposed to change the way importers apply HTS to men’s shorts, sweaters and shirts, and tunic-type garments and dust skirts. The principle of the change would be to redefine General Rule of Interpretation (GRI) 3, which refers to sets and goods with mixed materials. Instead of using the HTS that occurs last in tariff numerical order, Customs is proposing that for textile garments, a different term of “last in tariff” be used for those that occur last in chapters 50-55 where they are in raw form. This will make most linen/man-made fiber 50/50 blends go from linen (other) to man-made fiber HTS with a higher duty rate.
USITC Continues Investigation into Wooden Cabinets and Vanities
The U.S. International Trade Commission (USITC) stated in a press release that “there is a reasonable indication that a U.S. industry is materially injured by reason of imports of wooden cabinets and vanities that are allegedly subsidized and sold in the United States at less than fair value.” The Commerce Department will make preliminary determinations and may assess antidumping/countervailing duty cash deposits.
Annual Special 301 Report on Intellectual Property Released
The USTR released a Special 301 Report on April 25th, covering countries with intellectual property concerns and aiming to improve and eliminate these unfair trade practices. Among the country-specific updates is Saudi Arabia, which has been added to the priority watch list for “failing to address long-standing IP concerns and further deteriorating IP protection and enforcement within its borders.” The report also highlighted free trade zones playing a role in enabling pirated and counterfeit goods, and reviewed streaming and portals that cause damage to the digital marketplace for music, movies and TV shows.
For a roundup of tariff-related news, read our Tariff Insider.