by A1 WorldWide Logistics | Sep 19, 2024 | East Coast Protests, Shipping Logistics, Supply Chain
As a potential ILA protest approaches on October 1st, a recent impact is the strike lowering spot rates. The International Longshore Association (ILA) Is planning to halt operations next month when their six-year contract terminates on September 30th. Along with higher wages and pensions, the ILA is protesting for better labor conditions and opposing port automation. Ongoing talks between the ILA and the United States Maritime Association (USMX) stopped weeks ago without a contract resolution. A strike could affect international and domestic shipping in various ways, including pausing cargo movement and causing congestion. A potential port stoppage has already impacted shipping with a significant decline in East Coast spot rates.
How Is A potential Strike Lowering Container Rates?
Spot rates for containers going towards East Coast ports have declined due to the potential ILA strike. The Drewry’s World Container Index (WCI) noted a 21% decrease in rates from Shanghai to New York. During the week of September 9-13, the WCI decreased 13% to $4168 per 40ft container. The recent decline is resulting in shippers rerouting to West Coast ports to avoid the strike. As a result, demand for shipping to East Coast ports is decreasing, resulting in lower rates. While this has been the third consecutive week of decline, it is 282% higher than the pre-covid average. The Drewry index expects rates to fall faller in the next few weeks.
Containers going to West Coast ports had the opposite effect, with a one percent increase for 40ft containers. Along with increasing and decreasing rates, rerouting can have other effects, such as congestion due to higher volumes. The Los Angeles and Long Beach Ports are already the busiest in the U.S. regarding volume. An increase in traffic could lead to delays in supply chains for importers and exporters to the U.S. Another way shippers mitigate the impact of a potential strike is by shipping earlier than usual. Some even look for other conveyance methods like air and land to avoid delays.
The White House Will Not Block Potential Strike.
On September 17th, the National Retailers Federation (NRF) sent a letter to the Biden administration regarding stopping the potential strike. The message says, “A strike at this point in time would have a devastating impact on the economy, especially as inflation is on the downward trend.” NRF is a group of 177 trade associates that rely on East and Gulf Coast ports for importing and exporting. Despite the letter from the NRF, the White House replied that it was not intervening in the protest. U.S. presidents may invoke the Taft-Hartley If necessary. This act forces dockworkers back to work for an 80-day cooling-off period if the disputes potentially threaten national security.
Despite not being involved, a White House representative said, “We encourage all parties to remain at the bargaining table and negotiate in good faith.” While lower rates may be attractive to shippers, it is due to a potential protest that can affect international shipping. A way to protect your goods is by using the help of a freight forwarder. A forwarder is the middleman who coordinates cargo movement on behalf of the shipper. They find solutions for navigating situations like port closures. Contact A1 Worldwide Logistics at info@a1wwl.com to speak to a forwarding regarding transporting your shipment internationally.
by A1 WorldWide Logistics | Sep 17, 2024 | Economic trends, Importing, Shipping Logistics
The Biden Administration has finalized a tariff increase on imports from China starting September 27th. On May 14th, the USTR (United States Trade Representative) announced adjustments to Section 301 tariffs after a four-year review. These tariffs fall under the Trade Act of 1974, a law promoting fair international trade. In particular, section 301 allows the president permission to adjust tariffs to retaliate against foreign trade barriers. The finalized increase will see a hike in tariffs for electric vehicles, batteries, solar panels, semiconductors, and more imports. While the U.S. will phase out the tariffs in the next three years, some will take effect in 2024.
Why Is There A Tariff Increase On Imports?
The tariff increase on Chinese imports is being implemented by the U.S. government to counter China’s unfair trade practices. Over the past few years, China has come under fire for practices such as intellectual property theft. Chinese companies that the government backs have been accused by the U.S. of stealing foreign technology and trade secrets. The companies then use the technology and trade secrets to reverse engineer products, cyber espionage, and force technology transfers. Another practice that has raised concern has been using state subsidies to give them an unfair advantage. These subsidies include the Chinese government providing financial support to domestic industries and lowering production costs.
Other unfair trade practices that the U.S. has accused China of include currency manipulation and dumping. Dumping is the exportation of products that is lower than the production costs, which companies can do to undercut foreign competitors. China responded by firmly opposing the new tariffs, believing it goes against the U.S. president’s commitment to not “suppress and contain China’s development.” China’s Ministry of Commerce noted, “China will take resolute measures to defend its rights and interests.” The tariffs will cover $18 billion of imports in the clean energy and technology sectors.
The Categories That Will Increase Tariffs Include:
Steel and Aluminum – From 0 to 7.5% to 25% in 2024.
Semiconductors – from 25% to 50% by 2025.
Electric Vehicles (EVs) – from 25% to 100% in 2024.
Batteries, Battery Components and Parts, and Critical Minerals – from 7.5%% to 25% in 2024
Solar Cells – from 25% to 50% in 2024.
Ship-to-Shore Cranes – from 0% to 25% in 2024.
Medical Products – from 0% to 50% in 2024.
There has been a notable increase in Chinese-produced EVs (electric vehicles) from 25% to 100%. This is to protect the U.S. from the surge in Chinese EV imports. From 2022 to 2023, EV imports from China rose nearly 70%.
A1 Worldwide Logistics
When shipping cargo internationally, situations may arise, such as a tariff increase that can affect your shipment. Being informed and well-prepared for these circumstances is essential in preventing significant backlogs in your supply chain. Using the assistance of a 3PL (third-party logistics) provider is ideal when starting. 3PLs handle numerous parts of a shipper’s supply chain, including international and domestic shipping, warehousing, customs brokering, etc. They also educate you on the best course of action when shipping. To speak to a 3PL company regarding broker importing into the U.S., reach A1 Worldwide Logistics at 305-425-9456 or info@a1wwl.com. We have freight forwarders and customs brokers that can ensure that you meet your goals.
by A1 WorldWide Logistics | Sep 12, 2024 | East Coast Protests, Economic trends, Shipping Logistics
Threats of an ILA walkout are causing the shipping industry to be concerned with the potential impact of a strike. The International Longshoreman’s Association (ILA) will stop working on October 1st when their six-year contract ends. Along with higher wages, other issues include benefits and automation. Talks with the United States Maritime Alliance (USMX) regarding a new contract addressing these concerns have remained unsuccessful. Despite the ILA’s demands, USMX remains unchanged on their current offer. The ILA’s president, Harold Daggett, recently said in an ILA-released video, “Mark my words, well shut them down.” A strike will impact many supply chains that rely on shipping freight internationally.
What Is The Potential Impact Of A Strike?
Due to the ILA’s size, a potential strike can significantly impact the shipping industry differently. The ILA is a union of 45,000 workers in three dozen ports across the East and West Coast. These ports are responsible for approximately 43% of all imports that come into the U.S. The main effect of a strike will be a halt of cargo movement through the ports. As imports and exports stop moving, containers will begin piling, leading to port congestion. Due to congestion, supply chains transporting cargo internationally could experience massive delays in loading and unloading times. A week-long strike may take over five weeks to clear and may even last until 2025.
The disruption from the strike may also impact shipping costs for importers and exporters. When port closures happen, shipping companies raise freight rates due to limited capacity. As vessels pile up in the ports for unloading, it leads to demurrage and detention fees that goes the shipper. To mitigate the delay, more shippers are rerouting their shipments to West Coast ports. Rerouting may become an issue for West Coast ports since it can cause congestion, leading to delays. Similarly, importers could switch to other conveyance methods like land and air. However, this may lead to other expenditures.
Different Sectors Are Urging the ILA And USMX To Come To An Agreement
Different sectors, like the retail and manufacturing industries, have been mainly concerned with the effect of a strike. These industries are pushing the parties to agree to alleviate a potential multibillion-dollar disruption. With the holiday season quickly approaching, companies have already started taking action. The National Retail Federation (NRF) vice president notes, “Many have taken steps to mitigate the potential impact by bringing in products earlier and frontloading the peak shipping season or by shifting products back to the West Coast.” A fear is that retailers will not be able to stock shelves on time for the holidays. Manufacturers’ assembly lines may also shut down if they do not receive the necessary materials on time.
Other industries, like construction, automotive, and farming, will also feel the impact of a strike. Ports with ILA dockworkers like Houston and Savannah import tons of materials for these industries yearly. On a large scale, the economy will feel the effect, and supply chains globally will also feel the effect. While a potential strike can seem daunting if you are a shipper, it should not stop your cargo’s transport. Reach A1 Worldwide Logistics at info@a1wwl.com or 305-425-9513 for any concerns regarding your shipment. Along with educating you on what to expect, we provide transparency and real-time updates on your cargo’s status.
by A1 WorldWide Logistics | Sep 11, 2024 | East Coast Protests, Economic trends, Shipping Logistics
An unsolved resolution is resulting in ILA doubling down on threats to strike on October 1st. Conflict between the ILA and USMX for a new contract agreement has escalated over the last few weeks. In particular, the ILA is fighting for a new contract with a 32% wage hike and higher pensions. Automation in ports is also an issue that resulted in a pause in negotiations in early June. Terminals at the Port of Mobile began using an Auto Gate system that autonomously processes trucks. After ILA released a video with its president, Harold Daggett, discussing the current situation last week, the USMX posted an update.
The main point of the update was to announce an unchanging current contract offer. Some of the offerings of the existing contract noted in the update include:
- The continuation of the current health care coverage.
- An increase to employment retirement fund contributions.
- Higher starting wages and industry-leading wage increases.
Another offer is to retain the existing technology language in the current contract agreement. The agreement formalizes that there will be no fully automated port terminals or use of semi-automated equipment. This is unless agreed upon by both USMX and ILA. Despite the disagreement, the update notes USMX’s willingness to reach a new deal by September 30th.
ILA Doubling Down on Threats Despite The USMX’s Update.
In response to USMX’s update, the ILA wrote a letter of opposition, calling the statement misleading. The ILA believes that the claim of leading wages is false due to inflation. Compared to six years ago, living prices significantly increased when they entered the contract. Another response in the letter was due to USMX’s use of automation. Despite the contract requiring that the USMX does not use automation unless both parties agree, the ILA never agreed. ILA replies, “They continue to sneak in automated programs and eliminate our clerical functions behind our backs.” The letter then goes on to oppose USMX’s current healthcare coverage.
The new contract states that the ILA’s healthcare coverage will remain unchanged despite their desire for better coverage. Along with enhanced benefits, they want a hardship provision for severe cases for members who risk losing their benefits. ILA’s current pension plan has also been an area of concern that the letter addresses. They have constantly talked with USMX about increasing the current benefit amount. The belief is that their man-hour assessment is insufficient to cover the current funds. MILA (Managed Health Care Trust) also collects the first five dollars of the assessment, decreasing the amount. Cameras in the ports that monitor workers are another concern since they reportedly create a hostile work environment.
The Shipping Industry’s Response To The Situation.
As the strike date closely approaches, the shipping industry has responded in various ways. Shippers have already started rerouting their shipments to ports on the West Coast to avoid delays. They also are moving their cargo at earlier times and switching methods of conveyance if possible. With the situation potentially affecting supply chains internationally, it is essential to be informed of the latest updates. Contact A1 Worldwide Logistics at 305-440-5156 or info@a1wwl.com to protect your shipment during this period. We find the best action to take while keeping you informed through the process.
by A1 WorldWide Logistics | Sep 3, 2024 | Customs Broker, Customs Clearance, Shipping Logistics
Un mensaje que indica que tu envío está retenido en la aduana es la última respuesta que un remitente quiere recibir. Esto es especialmente cierto para cargas que son urgentes, como productos perecederos o mercancías destinadas a la venta. La Oficina de Aduanas y Protección Fronteriza de Estados Unidos (CBP) es responsable de proteger el país contra la importación de bienes peligrosos. Su objetivo principal es facilitar el comercio internacional legal y prevenir que terroristas y sus armas entren al país. CBP debe revisar cuidadosamente la carga al ingresar al país y, a veces, puede poner el envío en pausa. Aunque hay muchas razones por las cuales la aduana puede detener tus bienes, existen maneras de prevenir que esto ocurra.
Razones por las cuales tu envío está retenido en la aduana
Como se mencionó anteriormente, CBP debe prevenir la importación de bienes que Estados Unidos prohíbe. Debido a esto, una razón común por la cual los bienes pueden estar atascados en la aduana es porque son ilegales. Ejemplos incluyen la absenta (alcohol), carne de caza, juguetes peligrosos, pieles de perro/gato, etc. La aduana también puede retener otros artículos como armas de fuego debido a las restricciones que el país impone sobre ellas. Los importadores de armas y municiones requieren una licencia federal de armas de fuego (FFL) antes de enviarlas a Estados Unidos. Otra razón por la cual la aduana puede retener tu carga es por un precio incorrecto. El valor aduanero es el monto total monetario del envío traído a un país.
La aduana se encarga de valorar los bienes que el importador trae al Estados Unidos desde otros países. Si la carga que el remitente importa no tiene el valor correcto, la aduana la retendrá para su aclaración. Esto puede incluir una reevaluación de los impuestos basados en su precio. Otra causa común de que la aduana retenga tu carga es un código HTS incorrecto. El sistema armonizado de tarifas (HTS) es un sistema utilizado para determinar las tasas de derechos para las importaciones a EE. UU. Cada artículo tiene un código específico para clasificarlo, y un número incorrecto puede complicar la documentación.
Ejemplos de documentos comerciales
Otra razón por la cual la aduana podría retener tus bienes es la falta o error en la documentación. Algunos de los documentos que un remitente requiere al importar a EE. UU. incluyen:
- Conocimiento de Embarque
- Notificación de llegada
- Factura comercial
- Certificado de Origen
- Lista de empaque
Los documentos enumerados son algunos de los pocos que un remitente requiere para la importación; sin embargo, el tipo de carga determina los formularios adicionales. Por ejemplo, un vehículo puede tener documentación diferente a los materiales de construcción. Por lo tanto, es esencial que no haya errores en la documentación y que el remitente complete todo correctamente.
Habla con un agente aduanal
Aunque este artículo explica por qué la aduana puede retener tu carga, existen otras razones. La cantidad de regulaciones para la entrada puede confundir a los principiantes e incluso a los remitentes habituales. La mejor manera de evitar que tus bienes se queden retenidos en la aduana es tener un agente de aduanas que maneje el proceso de liberación. Los agentes de aduanas guían a los remitentes a través del proceso de importación y aseguran que el importador cumpla con todos los requisitos. También presentan toda la documentación en nombre del remitente. Contacta a A1 Worldwide Logistics al 305-425-9513 para hablar con nuestros agentes experimentados. También ofrecemos otras soluciones logísticas, como servicios de transporte de carga, para mover tus bienes al destino final una vez lleguen.
by A1 WorldWide Logistics | Aug 30, 2024 | Economic trends, Shipping Logistics, Supply Chain
Union contracts for East and Gulf Coast port dockworkers are ending, potentially resulting in ILA workers going on strike. On September 30th, the current six-year contract between the International Longshoreman Association (ILA) and United States Maritime Alliance (USMX) expires. ILA is a union of 85,000 longshore workers spread out amongst 56 ports in the U.S., including Puerto Rico. The ILA president recently noted that its members are fully onboard with going on strike on October 1st if the USMX does not meet their demands. In the last strike that happened in 1977, workers walked off for almost seven weeks.
Over the last year, East and Gulf Coast port workers of the ILA have pushed for a new master contract when their current one finishes. In particular, one with a wage increase above the 32% hike West Coast ILWU dockworkers received in 2022. They are also pushing for higher pensions, with the ILWU having a higher single coast-wide pension. Negotiations paused in early June because of a dispute regarding automation at the Port of Mobile. Terminals at the port used an Auto Gate system that autonomously processes trucks, replacing ILA jobs. The ILA’s Wage Scale Committee will meet on September 4th and 5th to review contract demands when negotiations do return.
What Do ILA Workers Going On Strike Mean For International Shipping?
A strike by ILA dockworkers may significantly impact shippers who must move cargo internationally. Especially with more than half of the U.S. imports going through East and Gulf Coast ports. Market research company Sea-Intelligence reported that a strike lasting one day could take approximately three days to clear. They also note that a strike of two weeks could result in slowdowns to 2025. Despite the two largest ports by TEU being on the West Coast, the East Coast has the following five busiest. Companies are already diverting shipments from East Coast ports or shipping early to avoid potential delays. Along with congestion and delays, a strike can affect shippers in other ways.
For supply chains, this can lead to inventory disruptions, which can be unfavorable if the shipper has customers. Closed ports also may cause traffic for domestic shipping, with carriers having to reroute to other locations. Another concern is that supply chain issues from protests will contribute to the current inflation crisis. With rising prices already being an area of concern in the U.S., a strike will also grow shipping costs. Container rates have increased since the beginning of the year, which may add to the rise. Situations like the Panama Canal drought and the Red Sea crisis have already contributed to surging rates.
A1 Worldwide Logistics
Although situations like a potential port strike can be stressful, it should not stop you from shipping internationally. A shipper should, however, take steps to protect their supply chain. They must prepare for delays and disruptions in their shipping schedule and stay current with news reports and updates. You can also get help from a 3PL (third-party logistics) provider like A1 Worldwide Logistics. 3PLs offer various transportation services while determining your cargo’s best course of action. Reach A1 Worldwide Logistics at 305-425-9456 or info@a1wwl.com for assistance with your shipping journey. We help your global supply chain by providing transparency and solutions regardless of the situation.
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