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The Biden Administration on the US-China Trade War

The Biden Administration on the US-China Trade War

U.S. Trade Representative on the Trade War

US-China Trade War Biden Administration

 

All eyes are on President Joe Biden’s administration, and specifically newly elected U.S. trade representative, Katherine Tai, in anticipation of the United States’ next steps in the US-China trade war. Tai, confirmed at the end of February, made it clear that the administration is determined to achieve structural changes in China’s economy by “exploring all our options”. She intends to accomplish this through intentional systematic processes and a regulatory-driven approach. Tai exemplified these qualities during her confirmation hearing when she answered senators’ questions with control and displayed her understanding of what needs to be accomplished.

 

What has the Biden Administration Accomplished?

 

Thus far, the Biden administration has made no changes to tariff structures. However, Biden did sign an executive order in February to examine global supply chains in four key industries that were greatly affected by the COVID-19 pandemic and simultaneously the U.S.-China trade war. The industries include computer chips, large-capacity electric vehicle batteries, pharmaceuticals, and critical minerals in electronics. 

 

This marks Biden’s first and formative action surrounding his administrations’ supply chain strategy. The 100-day government review is clearly intended to understand the past and avoid repeat mistakes in the future. Mistakes including but not limited to shortages of personal protective gear, shipping containers, and other essentials. The equally critical goal of the review is to discern to what degree industries are at risk and, eventually, how to move suppliers out of potentially vulnerable situations.

 

Biden is seeking to hold himself to the campaign pledge of investing in America while also attempting to secure goods from friendly nations. One of the ways the administration has supported domestic production in their first few months has been to award a $30 million contract to Australia’s Lynas Rare Earths for the construction of a processing facility in Texas. Additionally, Biden said he would seek more diverse domestic production, maintain a reserve of goods and materials, and positive partnership with allies.

 

How does the Review Reflect the Biden Administration?

 

While the comprehensive review does not promise imminent resolution of the trade war, it has set the precedent that the current administration has a definite sense of urgency to face the supply chain challenges that have been exacerbated due to the COVID-19 pandemic. Undoubtedly, there is no short-term solution for these struggling industries but the Biden administration believes the first step to recovery is through internal reflection and securing supply chains to reduce dependence on China. 

 


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Congestion Clear Could Start Spring for Los Angeles-Long Beach

With Near-Record Container Volume Reached LA-LB Ports Could See a Clear as Soon as April

 

Even with improved productivity last month, the ports of Los Angeles and Long Beach are facing backlogs and extreme terminal congestion that they believe will continue well into spring. This congestion has been ongoing for the last 6 months. 

The near-record container volumes they are experiencing are expected to go into the spring but terminal operators are hopeful that the vessel backlogs will return to near normal rates between April and June. 

COVID-19 Effects Linger

To be able for these ports to begin fluidly functioning again, there must be a focus on widespread COVID-19 vaccine distribution among longshoremen. Due to the spreading of the virus within this port, they have been suffering from labor shortages. Resulting in the congesting of these ports. Terminals have seen a large drop in container volumes in the past month, hopefully allowing a move of the current backlog of containers. 

“Terminals are full. There’s nowhere to put the containers. We’re 35 percent below what we normally do on deliveries (on trucks)” Ed DeNike, president of SSA Containers stated. 

shipping delays

January average truck time visits dropped roughly by 5 minutes from the December average of 93 minutes, as shown in the graph. In June, before the import spike, truck times were at an all-time low of only 58 minutes according to Harbor Trucking Association. 

The backlogs in Los Angeles- Long Beach are responsible for ships being forced to anchor while they await berths to be unloaded. In the first week of February, there was a total of 34 ships anchored waiting to be unloaded while all berths were occupied. 

“The longer containers stay at a terminal, the more congestion they create. Congestion creates the need for extra and unproductive moves when containers pile up more than they should,” said Jessica Alvarenga, PMSA’s manager of government affairs.

Employee Shortage and Increased Shipping Demands

Much of this congestion comes back to the main cause, the COVID 19 pandemic. The labor force has been hit hard in the Los Angeles-Long Beach area. According to the Pacific Maritime Association (PMA), there have been around 600 known cases documented since December. This combined with increased shipping demands has decreased timely productivity extensively.

The employees who are responsible for unloading and loading the containers from the ships have been hard to keep fully staffed. This position is essential to the timely flow in and out of terminals. The daily assignment of workers throughout the ports has had to be decreased. Finding employees for these positions is difficult since they require a certain skill set. 

“It comes down to a labor issue at the terminals,” said Scott Weiss, vice president of business development at Port Logistics Group. “There are still bottlenecks in getting containers into and out of the terminals,” stated Weiss. 

Recovery Expected for Spring

Many well-established companies within the shipping industry believe hope is on the horizon. 

Scott Schoenfeld, general manager of Fenix Marine Services in Los Angeles believes “there could be congestion relief as early as April.”

With thoughts of a spring recovery on the mind, it is very plausible things could begin moving at an even more efficient pace than what has ever been seen before. Understaffed and highly congested these ports are still able to move ships in and out. Once staffing and import demand returns to normal, the system could move with ease.

“Drayage capacity is tight and worker availability is challenged at both ends of truckers’ routes, the marine terminals, and the distribution warehouses. However, workers will return in larger numbers when they feel it is safe to do so,” said Weston LaBar, CEO of the Harbor Trucking Association.  

“The single biggest thing we can do is vaccinate,” LaBar said.

How SiShips Can Help

We know the freight forwarding industry is consistently changing right now. We’re here to help you stay on top of new rates, deadlines, and more, so you can be confident you’re always receiving the best option available for your business.

To learn more about SiShips, or to view a demo of our software, contact us today.

 

 

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How Imports Have Been Impacted by COVID-19 in 2020

Understanding How the Pandemic Has Affected Freight Forwarding This Year and Anticipating Future Changes

It’s no surprise that the COVID-19 pandemic has significantly impacted the global supply chain. From transportation to manufacturing to distribution and retail, all industries have experienced new challenges this year – challenges that will likely continue through at least Chinese New Year. To help you understand the factors that may impact your shipment, we’ve broken down how COVID-19 has affected shipping logistics this year so far.

Changes to Production and Demand

As COVID-19 spread around the world, international lockdowns halted production and slowed global economies in an unprecedented way. From April through June, global volumes came to a standstill. The limited products available for shipping experienced slowed journeys as cargo was stopped at origin or destination ports for various quarantining procedures.

By July, however, China had returned to full production, boosting availability and, subsequently, demand. This demand has not slowed: w=While September and October always see large order volumes from China as retailers prepare for the holidays, American imports from the Asia Pacific were 23.7% higher in October of this year than last year, and 10% higher than the month prior.

Globally, output increased in 22 of 26 subsectors in October, with automobiles and parts, banks, chemicals, and machinery and equipment representing the top performers.

Impacts of COVID-19 on Transportation

COVID-19 Impact on Shipping

Sluggish demand in the spring forced ocean carriers to blank sailings to cut losses, while reduced air traffic significantly reduced capacity in the skies as well. However, as sales picked up exponentially, carriers found themselves faced with the opposite problem: A surge of demand outweighing available cargo space.

Workforce shortages and various quarantine regulations slowed the devanning process, lengthening container churn from 1-2 days to 5-7 days. Despite carriers shortening container free time and increasing demurrage and detention charges, this reduced pace still created a build-up on the supply chain. Further fueling the imbalance, carriers struggled to get their equipment back to the origin ports where it was needed.

At the ports, the trucking industry was also impacted by surging volumes. Long lines and road congestion significantly lengthened the time needed to get containers out of and back to ports, generating a chassis shortage and slowing transport times. Able to move fewer containers than normal, trucking companies struggled to cover their costs.

Adjustments to Rates

Motivated by high export rates from Asia, carriers reduced the number of full containers available on the back-haul voyage to China, forcing customers to book more LCL in place of FCL shipments. This has further impacted the capacity shortage, driving up the cost of additional space. Likewise, lack of space on vessels forced cargo owners to pay a premium in spite of FCL contracts.

With all of these factors, shipping rates around the world have significantly increased. From Asia Pacific ports to Los Angeles, many rates doubled. From China to Europe, they tripled, with some containers moving at a rate of more than $8,500 per 40’. Even the typically stable Intra-Asia lanes experienced heavy rate increases.

How SiShips Can Help

We know there are a lot of changes impacting the freight forwarding industry right now. We’re here to help you stay on top of new rates, deadlines, and more, so you can be confident you’re always receiving the best option available for your business.

To learn more about SiShips, or to view a demo of our software, contact us today.

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Ocean Cargo Rates Peak as Demand Surges

Covid-19, Limited Capacity, and More Factors Have Driven Freight Rates to Set New Records

Although back-to-school season and holiday preparations consistently make August a peak season for ocean freight, this year is seeing a uniquely high increase – in both rates and capacity. The blanking of sailings earlier in the summer in response to the Covid-19 pandemic, combined with concerns over tariffs as the first trade agreement with China nears expiration, has generated a boom in demand that outpaces capacity. As a result, Asia-US West Coast spot rates have set new records, with Shanghai to US West Coast routes seeing a 167 percent increase from 2019.

Further, analysts are predicting another General Rate Increase (GRI) for trans-Pacific ocean cargo routes this month, marking the fifth since June 1. While earlier in the summer, increased rates were driven by significant numbers of blank sailings (a response to reduced exports from Asia due to Covid-19), these new GRIs are built on a surge of demand as inbound volume sees a year-over-year increase. We explored the factors at play in this increase, as well as potential future events that may impact rates further.

Spot Rates Increase Ocean Cargo

Capacity Versus Demand

Since the start of the year, capacity and demand have been drastically fluctuating. The onset of Covid-19 meant a sudden halt of economies, starting in China and Asia. With fewer imports – and lower consumer demand – carriers cut capacity radically, with 19 percent of total sailings blanked in May and 15 percent in June.

This summer, economies began to move again and US imports from Asia rose by more than 20 percent between June and July. In particular, a significant consumer demand for items like fitness equipment, at-home activities, and furniture, as well as the consistent demand for PPE, drove retailers to increase their imports to satisfy demand. Now, with only 3 West Coast sailings blanked for August and September, capacity is nearly back to normal – yet need for space is outpacing it. To combat this, carriers have added additional sailings from Asia, or “extra-loaders,” with 10 scheduled for August and an extra 5 for September; however, these additional sailings haven’t been enough to eliminate the capacity crunch, maintaining increased spot rates.

External Factors at Play

Beyond Covid-19, additional factors are also at play. Uncertainty surrounding the US-China trade deal has driven importers to bring their goods over from China earlier than normal, hoping to avoid the potential of a large tariff increase. Likewise, as the American election looms, importers and carriers alike are doing their best to anticipate potential shifts in the market.

Seasonal trends have also shifted – consumers are prioritizing furnishings and other goods for at-home use outside of their typical peak seasons and forgoing traditional purchases for this time of year like back-to-school gear or Halloween items.

 

We understand that tracking rates can be difficult. With years of experience in freight forwarding, we build our software SiShips. With this program, you can ensure your business is always receiving the best rate available – and get access to seamless cargo tracking, instant quotes, and more.

Contact us today to learn more about how SiShips can help streamline your import and export experience.

 

 

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COVID-19 Pandemic Continues to Affect Ocean Cargo Capacity

Blank Sailings and Fluctuating Demand Complicate Ocean Freight Forwarding

Lack of demand for ocean freight due to the COVID-19 pandemic has resulted in an increase in blank, or canceled, sailings of cargo ships. Though the number of cancellations peaked in February, major shipping companies are still reducing market capacity in an attempt to maintain freight rates. As carriers and shippers aim to strike a balance between fluctuating demand and capacity, it is more important than ever to be aware of the shifts in ocean freight availability and the impact it might have on your business.

blank sailings covid-19

Blank Sailings Increase in Q2

According to data from Drewry, May saw a total of 85 blank sailings out of 457 scheduled sailings, or a cancellation rate of 18.6 percent. For June, this rate decreases to 13 percent, with 58 of a planned 461 sailings have been canceled. Transpacific trade routes have experienced the greatest capacity reduction, with 47 percent sailings blanked.

Positively, cancellations have decreased month/month and the trend is expected to continue into July. However, Danish shipping company Maersk, part of the 2M Alliance, has still announced that it anticipates blanking more than 100 sailings within the upcoming third quarter. Its shares decreased by 6 percent mid-May as a reaction. 2M saw the second-highest number of suspended sailings in June at 34 percent, closely following THE Alliance’s 40 percent.

An Increase in Ocean Freight Demand

Frustrations with lack of airfreight capacity and high rates have been driving shippers to turn to the ocean, at least for a portion of their freight’s journey. “When rates go up, sea-air becomes a viable alternative for cargo that cannot pay high airfreight rates, nor accept all-ocean transit times,” Morten Bach, global chief commercial officer for Shipco, told FreightWaves.

As shippers adapt to account for available capacity, ocean freight demand is increasing. The American Journal of Transportation attributes this surge to the growth of eCommerce, as well as moves to distribute PPE via ocean to relieve shortages. Combined with a greater number of blank sailings, this has generated an uptick in freight rates. The last week of May saw prices jump by 12 percent.

Managing Ocean Freight with SiShips

Supported by a downward cancellation trend, predictions for July show that container-ship carriers are likely to offer more sailings in July. However, despite signs that industry may be starting to resume, industry experts are remaining realistic about the likelihood of a peak season in 2020. The upcoming back-to-school months should bring about a surge of demand, but most think this is unlikely. “There is concern for the ocean shipping industry that a peak season may not materialize at all this year,” Rachel Shames, director of pricing and procurement at CV International, said in an interview with Furniture/Today.

Without an increase in demand spurred on by a peak season, carriers will need to be cautious about continuing to maintain their rates. As a result, it’s likely that blanking will continue well into Q3.

With many factors influencing ocean freight, importing can quickly grow confusing. SiShips, designed with our years of customs and freight forwarding expertise, can help manage variable rates and shipping options. Plus, you can track your shipment every step of the way, offering transparency and peace of mind.

To learn more about how SiShips can save you time and streamline your shipping experience, contact us today.

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COVID-19 Reduces Passenger Flights, Air Cargo Space

Airlines Adapt to Maintain Supply Chains Despite Decreased Airfreight Capacity

As the COVID-19 pandemic and subsequent quarantine orders reduce the number of passenger flights, air cargo space has been severely limited. Decrease in airfreight volume and supply has also generated a significant rise in rates, further complicating the importation of goods. This situation, along with the continued demand for PPE, medical supplies, and other essential goods, has required airlines to adapt, reconfiguring passenger planes for the transportation of cargo in an attempt to maintain supply chains.

A Sharp Decrease in Air Traffic

air cargo covid-19

While passenger planes typically carry cargo strictly in their cargo holds, the reduction in flights has limited transportable volumes. Even though some planes are still flying – often with just a handful of passengers – the drastic decrease in demand has forced a cut in flight offerings. In the final week of March, commercial air traffic was 55 percent lower than in 2019. Total air traffic has seen a 60 percent global reduction. Though planes are still in the air, they are primarily flying domestic routes, not international ones. In the United States, there were 72 percent fewer scheduled international flights in the first week of April as compared to 2019.

The Effects on Airfreight

As a result, airfreight traffic has fallen; the volume decreased by 10 percent in February and is predicted to fall by a total of 15-20 percent for the year, according to the International Air Transport Association. This was heavily influenced by the grounding of flights to China and the country’s shut down of factories earlier in 2020.

However, despite a 1.9 percent decrease in airfreight volume in February, freight capacity likewise fell by 4.4 percent, forcing a shortage of space. With a lack of available capacity, freight rates are increasing. These rates are particularly volatile between North America and Europe, given the previous reliance on passenger planes for these routes specifically. Industry experts suggest costs have increased by 4 or 5 times.

Passenger Planes Reconfigured for Cargo

Increased demand for personal protective equipment has forced airlines to find creative solutions to maintain the supply chain. In an attempt to provide more space, passenger planes are being converted to cargo planes. Air-safety regulators have reduced restrictions, allowing the cargo to be held in the cabin as well as in the belly of the aircraft for more efficient flights. Air Canada has scheduled 20 all-cargo flights per week using reconfigured Boeing 777s. Delta and United Airlines, among others, are also operating freight-only charters, often with added routes. These flights will prioritize medical supplies, food and other time-sensitive items.

“Operating regularly scheduled cargo flights means suppliers in China can get these supplies to hospitals and healthcare facilities across the US within hours, no the days or weeks it would take via cargo ship,” said Shawn Cole, Vice President of Delta Cargo. Delta’s flights are striving to maintain the supply line between the US and China, where a majority of PPE is currently manufactured.

With these adjustments, transporting goods is more unpredictable than ever. With years of expertise in the freight industry, Sheltered International is available to help importers streamline their air cargo experience and get their products up in the air quickly.

Contact us today to learn more about how we can help minimize shipping complications.

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How Importers Are Navigating Regulations to Reduce the US PPE Shortage

Sheltered International Donates 3,000 Face Masks to Nassau County First Responders

As medical-grade masks become increasingly rare in the United States, many importers are turning to the PPE category in an attempt to reduce the shortage. However, businesses unfamiliar with the process of importing medical equipment may encounter obstacles with FDA registration and licensing, delaying the much-needed shipments further. With years of expertise in the freight industry, Sheltered International can help facilitate this importing process to ensure medical personnel and first responders can access this necessary equipment as soon as possible.

With this knowledge, Sheltered International has imported 3,000 surgical masks and 100 face shields, to be donated to local Nassau County first responders. Chief Hurley of the Fernandina Beach Police Department, Sheriff Leeper of the Nassau County Sheriff’s Office, and Kaleigh Simmons of the Fernandina Beach Fire Department will each receive 1,000 masks.

The Availability of Personal Protective Equipment

Though personal protective equipment is available, it is in limited quantities. Many importers new to the medical supply industry are looking to place large orders of surgical masks in numbers of five million or more. With only several factories in China producing medical-grade masks, this order can be difficult to fulfill. Instead, Sheltered International suggests placing smaller orders weekly, particularly for those new to the industry. An order of 50,000 masks a week is both more manageable and more likely to be filled.

Managing FDA Registration

To expedite the import of PPE, the FDA has reduced the amount of information required to register products for nonmedical use; however, for medical use both the factory and importer of record must register with the FDA. For the importer, this license costs $5,238. Sheltered International is available to help importers navigate the registration process, saving them valuable time and ensuring their shipment doesn’t get caught in customs.

Importers must also remember that both they and the shipper need FDA registrations. Though many factories, including toy factories and clothing companies, have converted their facilities to make surgical masks, these factories are often not FDA registered. As such, they cannot ship or market their masks for medical purposes. If looking to import as a medical supplier, importers can ask Sheltered International to confirm FDA registration of the factory.

Chinese Restrictions on Medical Exports

On April 10, China issued additional restrictions on exports, including a mandatory customs inspection. These policies affect any medical supplies, including medical masks, protective gowns, thermometers, ventilators, surgical caps, goggles, gloves, shoe covers, ICU monitors, disinfectant tissue, and disinfectant.

New restrictions require the shipper to provide an 18-digit Code of Customs Clearance Form of Export Commodity for customs clearance, attained after the product receives its export commodity inspection, or CIQ. If the shipper’s name is not the same as the factory’s, a contract must be established between the shipper and producer. These codes are required per shipment and can take at minimum two to three working days; however, with a significant uptick in applications anticipated after these new restrictions were established, this timeline may extend to five to seven days, though the application can be done during production. Though they are likely to slow production and importing of PPE, advocates of the restrictions say these regulations have been established to prevent counterfeit goods from entering the market.

Facilitating Imports of PPE

For importers unfamiliar with the medical supply industry, registering with the FDA and securing the necessary documentation can be overwhelming. With years of experience in customs and freight shipments, Sheltered International can offer valuable insight into facilitating this process and guaranteeing these much-needed supplies can be delivered to those who need them.

Contact us today to learn more about how we can ease your import experience.

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COVID-19 Creates Shipping Disruption

COVID-19 freight shippingThe shipping supply chain is facing unmatched disruption as a result of the COVID-19 global pandemic. In over 60-years of global shipping history, the industry has never faced an interruption of this size. While China is finally showing progress in human and economic health, the damage on the supply chains is already done. There is no guarantee that factories will return to full capacity soon. China travel restrictions and quarantine efforts have prevented factories from receiving crucial components from their suppliers. The backlog of factory orders and limited travel options have stressed exporters, container lines and importers. What does this mean for the shipping industry, and how long is the road ahead to return to normal operations?

Cargo vs. Travel Restrictions for COVID-19

The Presidential coronavirus travel ban, proclaimed on March 11th and expanded on March 14th, bans travel to 26 European countries. This ban pertains specifically to travelers, not cargo. The CBP confirms cargo movement is not viewed as a viable form of transmission of the virus at this time. Crew members are also exempt from the travel ban. The Coast Guard issued a guidance in February stating that so long as a crew member does not display symptoms of COVID-19, they can assist in cargo shipment as usual. However, the crew may be subject to additional air screenings upon arrival. In the case of air freight, cargo flights may continue as usual with crew-only flights.

If CBP receives a different guidance from the medical community regarding cargo shipment and transmission of the virus, they will relay the information immediately and adjust practices accordingly.

A Shortage of Shipping Containers Leads to Jump in Spot Rates

Shippers are finding container equipment hard to come by in Europe due to an increase in blank sailings, leaving carriers unable to re position boxes. A blank or void sailing a sailing that has been canceled by the carrier. A blank sailing could mean a vessel is skipping one port, or that the entire string is canceled. While blank sailings can occur for multiple reasons, they commonly happen when demand for vessels is low.

Decreased Chinese manufacturing production due to COVID-19, paired with tariff pressures, decreased US imports from China in February to a near four-year low. This caused empty containers to stack up in Chinese yards while waiting for demand to return.

Now, after extensive preventative measures to slow the spread of the virus, Chinese factories are back up to 60% capacity. This increase in China imports, combined with capacity management by carriers and uneven equipment distribution, has led to an 18 percent increase in container spot rates this week from Asia to the US West Coast, and a 9 percent bump to the East Coast.

While US imports from China are increasing, short term demand from Europe is looking increasingly uncertain. Companies in Europe are experience a sharp drop in sales and will most likely refrain from ordering goods overseas to prioritize cash flow preservation. Uneven equipment distribution and uncertain demand could lead to delays re-positioning shipping containers once these special conditions pass.

Domestic Carriers Facing Interruptions

While Chinese imports are recovering, the shipping disruption is moving closer to home. The rapid spread of COVID-19 raises concerns regarding shipping and delivering goods domestically as businesses are urged to shut down.

On Monday, New Jersey became the first state to declare a curfew for non-emergency travel between 8:00pm and 5:00am. This curfew could raise issues for companies that receive trucks and shipments outside of normal working hours. In turn, this will raise demand for more precise delivery times during the day.

With the widespread closure of stores, warehouses, factories and distribution centers across the country and a surge of imports from China finally on its way, the process of shipping and receiving goods faces a problematic future.

Looking Ahead

The shipping industry faces an unbalanced and unpredictable near future due to COVID-19. However, analysts predict a strong rebound starting in fall 2020 or early 2021, driven by consumers beginning to spend money again and the resulting increased demand in goods and inventory.


The shipping industry can be unpredictable. Keep track of any delays or disruptions that might affect your business with SiShips.

Learn more about SiShips can simplify your freight experience.

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