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Post Chinese New Year Shipping Outlook

Post Chinese New Year Shipping Outlook

The Sun Rises in the East

As 2021 drew to a close, America faced a tough road ahead due to a historic rise in inflation and European growth slowed due to rising energy costs. The, as for now temporary, delay of the Nord 2 Pipeline has contributed to the high price of energy, as well. Russia’s incursions into Ukraine have made the outlook in Europe even foggier. As we examine the Chinese shipping outlook, it is clear economies from every continent are more intertwined than ever.

Following the Regional Comprehensive Economic Partnership (RCEP) entering into effect on January 1, 2022, the Asia-Pacific region looks to lead economic growth through the remainder of the year. This year’s Lunar New Year celebrations were slightly milder than usual with many Chinese citizens staying home due to pandemic restrictions. Now that the Lunar New Year festivities are winding down alongside the decrease in Omicron cases, Chinese enterprise is poised to explode. 

shipping lines freight forwarding q1 outlook lunar new year pacific atlantic

Renewed Hope for Sino-American Relations

Despite a diplomatic boycott of the Beijing-hosted Olympics, the economic relationship between China and the United States looks to improve in 2022. A leading reason for this rosy outlook is the power of the RCEP, as the world’s largest free trade agreement. In fact, US companies’ investments in 2021 increased 30.9% year-on-year and look to continue on the same trajectory. The global economy as a whole is projected to rebound this year, creating more investment opportunities for multinational corporations in America, China, and other countries.

Another benefit of the RCEP is creating elasticity in regional supply chains. One of the important provisions in the historic agreement is improving the division of labor among the 15 member states. Moving on from Covid-19, everyone is looking for ways to protect the supply chain and this agreement will be effective for years to come.

Impact of Covid-19

Compared to the early years of the Covid-19 pandemic, countries and corporations appear to be more in control of proper responses to outbreaks. The Omicron variant created a series of difficulties, but the spike combined with the Lunar New Year could have resulted in catastrophic backlogs at Chinese and American ports. While there are still delays and tightened capacity at ports around the world, a combination of ever-increasing access to vaccines and preparedness by private companies has mitigated worst-case scenarios. For example, Maersk is one of several companies to secure extra storage and transportation to ride out the Lunar New Year downtime.

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Shipping Rates Remain High

2021 was a banner year for shipping companies and 2022 looks to be much the same. Q1 began with high costs as everyone prepped for the Lunar New Year holiday. As we enter Q2, stores needing to restock depleted inventories will keep those rates at the same price or push them even higher. Deutsche Bank is predicting Maersk and Hapag-Lloyd rates will be up 30% or higher compared to 2021—a previous record. 

Even less excitable forecasts have to contend with the potential outbreak of another Covid variant, continued labor negotiations and the possibility of a global military conflict, all of which would escalate shipping costs for every route.

How SiShips Gives You the Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

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

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Border Protests at the US-Canada Border Torpedo Supply Chain

Auto Industry Losing Millions of Dollars Weekly

With new cases of the Omicron variant beginning to lessen, there were hopes by many life might slowly return back to a pre-pandemic state. February is a month that traditionally feels the brunt of a tightened supply chain due to Lunar New Year celebrations, but this year the strain on the supply chain is coming from border protests on the North American continent.

Three border crossings have been closed or affected by a group of Canadian truckers who are protesting Covid mitigation measures. Thousands of truckers have joined forces to fight a mandate that all Canadian truckers must be fully vaccinated or quarantine in their homes for two weeks after crossing the US-Canada border. The protests have been declared unlawful by police, but for the majority of the protests practically zero arrests have been made.

border crossing us canada trucker protest vaccine exemption mandate

What Caused the Border Protests?

The so-called “Freedom Convoy” began in the western Canadian provinces with the goal of driving to the Canadian legislative capital, Ottawa, and remaining there until the mandate was lifted. Previously, truckers had been exempt from any form of vaccine mandate in an effort to keep the supply chain operational during the height of the pandemic. Since arriving in Ottawa, the truckers and other like-minded protesters have effectively shut down the city. There were rumors that similar protests might occur in Los Angeles, who hosted Super Bowl LVI on Sunday, February 13th.

The protest has spread from the capital to border crossings in multiple Canadian provinces, crippling the trade of goods between the United States and Canada. The Ambassador Bridge, which carries over one quarter of all trade between the two countries has attracted the most attention from protesters and media, alike.

Who Is Most Affected?

For the moment, the people feeling the brunt force of the protests are autoworkers at factories in Michigan, Kentucky and Ontario, Canada. Due to a lack of materials, employees’ hours have been cut back. Economists estimate that workers in Michigan, alone, lost $51 million dollars during the week of February 7th to February 13th. Factories typically keep two weeks worth of supplies on hand, but if the bridges remain closed much longer, “then you’re looking at layoffs,” says Carla Bailo, the president of the Center for Automotive Research in Ann Arbor, Michigan. This loss of wages extends throughout the entire community, with people spending less money on food and entertainment while their hours are curtailed. It is a stark reminder of how precarious the global supply chain can be.

Additionally, the communities of Detroit and Windsor, Canada, where the Ambassador Bridge is located, are acutely feeling the pressure of the protests. The required police presence at the border protests, while leading to few arrests, has led to an increase in 911 response times for the rest of the cities. Additionally, in Ottawa, the epicenter of vaccine protests, the downtown area has been in a state of deadlock for several weeks. Businesses are closed simply because it is impossible to get to their doors due to the immense crowds.

The recent lack of steel and aluminum from Canada compounds upon the shortage of semi-conductors to drive up the value of both new and used vehicles. After announcing their earnings report for Q4 2021, Ford stocks fell 6%. However, Ford reported profits of over $10 billion dollars in 2021 and remains “bullish” on 2022.

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When Will the Border Protests End?

On Sunday morning, February 13th, following an injunction from a Canadian judge that entered in to effect on Friday evening, police began to arrest the truckers blockading the border crossings. While tow trucks removed vehicles, hundreds of pedestrian protesters remained. The road from Detroit into Windsor was partially re-opened, but it will take some time for auto plants on both sides of the border to rev back up to full production.

It is difficult to say when the borders will become fully operational, but goods are making their way, slowly, across the border. Prime Minister Trudeau, for the first time, invoked the Emergencies Act on Monday, February 14th, which gives the government more power to suspend citizens’ right to free movement and prevent financial support of the protests. However, the vaccine mandate was not repealed and after seeing the success of their initial protest it is likely there will be subsequent blockades in the coming days.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you quality domestic and international shipping solutions. SiShips puts the shipper in control, offering efficient and cost effective ways to ship your product.

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

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Power Crunch Races Through China

Perfect Storm of Circumstances Decimates China’s Energy Grid

Extreme weather, an increased demand for energy and strict limits imposed by the government on coal usage are leading to rolling blackouts throughout Northeast China and the rest of the country.

The timing is inauspicious for a global supply chain already stretched dangerously thin, especially as we enter the peak shipping season and year-end holidays for European and American markets.

china power crunch outage blackout delay shipping global supply chain

Why Is There A Power Crunch?

Over the summer, factories in ten Chinese provinces have cut output or closed temporarily, following government-imposed power cuts to curb carbon emissions. Those provinces affected include Jiangsu, Guangdong and Zheijang, which are home to plants that produce steel, plastics, chemicals and textiles. These provinces are also the location of the busiest ports in the world, such as Ningbo and Guangzhou, which had already suffered backlogs related to Covid-19 within the past few months.

Also, due to the efforts to curb carbon emissions, mines have been instructed to harvest less coal, which as led to a nearly doubling in the price of coal since this time only one year ago. Coal accounts for 60% of China’s total energy output, but even efforts to utilize green energy have been thwarted by nature. Droughts have crippled the potential to offset the high coal prices with hydropower.

china global supply chain ningbo province power crunch outage rolling blackout coal hyrdopower

What Does This Mean for China and the World?

The most immediate issue faced by the power shortage is in the homes of the billions of Chinese citizens. Traffic lights, failure of heating systems and the shutdown of elevators in high-rise buildings have brought many people to seek medical care; in the Liaoning province, 23 workers where sent to the hospital with carbon monoxide poisoning when ventilators unexpectedly and suddenly shut off.

American companies Apple and Tesla have been warned th

at production lines have been and will continue to be negatively affected. Some economists are projecting China’s GDP to decrease by nearly 1.5% in the fourth quarter of this year. Industrial output growth In September decreased 4.5% adding to the short-term global concern of rising ocean freight rates.

How Long Will the Power Crunch Last?

Unfortunately, there is little hope that the energy crunch and intermittent power outages will vanish overnight. Nationwide safety checks in coal mines that have recently seen a concerning uptick in deadly incidents have resulted in massive suspensions of operations across all of China, leading to a further rise in the price of coal. Forecasts are predicting the situation will continue until at least the end of the year, possibly even into the spring of 2022 as a demand for heat during the winter months will continue to stretch the power grid.

Business owners are frustrated with the power crunch, which has been exacerbated by President Xi Jinping’s goal of a carbon neutral China by 2060. China, as it currently stands, is massively dependent on coal power and it will take time to fully transition to a grid supported by hydro, wind and other sustainable forms of energy generation.


How SiShips Gives You The Advantage

Sheltered International is here to help guide you through unprecedented upheavals in the global shipping market. With our unique combination of technology and shipping expertise, Sheltered International is dedicated to transparency and designed to put control in the hands of the shipper. We will always find the most efficient way to transport your product, saving you time and money.

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

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Why Your Company Should Use Periodic Monthly Statements

How Sheltered International Makes Filing Duty Payments Easier for Your Business

From saving you time to improving your cash flow, using the Periodic Monthly Statement (PMS) process can offer significant benefits to your business. PMS has no additional cost and allows your business to pay duties monthly in a single payment, instead of for each individual transaction. Combined with our tracking and reporting software SiShips, your business can enjoy simplified reporting and accounting and a greater sense of control when it comes to duty payments.

 

How Do Periodic Monthly Statements Work?

Periodic Monthly Statements track entry activities throughout the month to provide a single monthly statement. This structure also extends the payment window. While when paying per shipment, the importer must pay duties within 10 business days, PMS offers the importer 15 business days after the end of each cycle to pay. For example, the duties on goods imported between July 1 and July 31 will be summed at the end of the month. The monthly payment is then not due until the fifteenth business day of the following month – in this example, August 21.

With this additional time, your business can extend cash flow by up to 54 days. The single payment not only makes it much easier to track your finances, but also offers significantly more control over your working capital.

How Can My Business Use PMS for Duty Payments?

Get started with PMS by filling out an application and sending it Sheltered International to review and submit to Customs. In a few weeks you will receive a Payer Unit Number (PUNS) from Custom’s ACH team. Once received, you must forward your PUNS number to Sheltered to complete the activation.

How Can SiShips Help?

To streamline the process even further, our software SiShips generates a duty summary (7501) for each entry throughout the month for accounting and record-keeping. Once the month has closed, a final statement will be provided to review before Customs pulls the duty on the 15th business day the following month. These reports can all be easily accessed through our software. That’s less time that you have to spend on accounting and more time you can devote to supporting your customers and growing your business.

With greater control over your cash flow and a simplified payment process, it’s clear that PMS can be valuable for you and your business.

To learn more about how Sheltered International can help finesse your freight forwarding experience, contact us today.

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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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