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Dispatch from MJBizCon 2022

Dispatch from MJBizCon 2022

SiShips was on the Ground for MJBizCon 2022, the Biggest Professional Cannabis Event of the Year

Cannabis is moving fast, and SiShips is helping it move even faster. As domestic and international laws evolve, hemp and cannabis is quickly becoming one of the quickest growing sectors in the agricultural industry. 

SiShips has been working with growers to import supplies like grow lights and processing machines over the last few years. Then, following the Agriculture Improvement Act of 2018 we were able to begin shipping hemp and its derivatives. 

Much of our business at SiShips comes from interacting virtually with our clients, so it’s always a pleasure to meet the people using our services in person. With tens of thousands of attendees and dozens of speakers spread across four days in Las Vegas, MJBizCon 2022 provided the perfect opportunity to expand relationships in the hemp community.

mjbizcon 2022 las vegas hemp cannabis marijuana legalize recreation legalization international thcChanging Hemp Regulations

The legality of cannabis is a major political issue being debated in the United States and the rest of the world. You’ve probably seen discussion of legalizing hemp or maurijuana on the news. As of writing, recreational use of cannabis has been legalized in 21 states and Washington, D.C.; 16 states have legalized medical use of cannabis. Internationally, it is legal to use cannabis recreationally in Canada, Georgia, Malta, Mexico, South Africa, Thailand, and Uruguay.

At the moment, it is legal to ship hemp products that contain no more than .03% THC internationally. Lobbyists hope this limit will be raised in the near future. As more states work to legalize maurijuana domestically, in addition to hemp, it is certain the international regulations will follow.

What Happened at MJBizCon 2022

MJBizCon 2022 sounds like a dream for cannabis enthusiasts—320,000 square feet of exposition space, more than 1,400 exhibitors, and sessions with celebrities like comedian Jim Belushi and football stars Ricky Williams and Calvin Johnson, Jr.—but, it’s more than fun and games. This event is exclusively for cannabis professionals. 

We were able to walk the floor of the Las Vegas Convention Center and get up close and personal industry insiders. Just like Gen Con 2022, MJBizCon 2022 let us connect with current and future clients. Also, we got to see in person some of the advanced equipment we can help our clients ship. Getting a feel for the size and heft of the machines enables us to assist our clients even better. 

All in all, it was a great week to do business in Las Vegas and have a little fun while we were at it.  cannabis mjbizcon 2022 las vegas professional experiences networking greenhouse grow lights equipment

Looking at the Future of Cannabis

Just this month, November 2022, five states voted on amendments to legalize marijuana in all forms. While the amendments only passed in Maryland and Missouri, the future is bright for the cannabis industry. There has been a massive groundswell for legalization over the last decade, since Colorado became the first state for recreational maurijuana in 2012. Legalization has led to big profit returns for vendors who were able to capitalize early.

Next year, lawmakers look to improve the hemp industry with a new 2023 farm bill. The incredible demand for CBD-based products will drive these changes. The United States Department of Agriculture estimated the hemp industry to be worth over $800 million. (And that’s with the current restrictions!) 

SiShips will continue to pay close attention to the hemp industry and other major growth sectors. We make sure we are up to date with the latest shipping regulations so we can provide the best service to our clients, giving them an advantage over their competitors.


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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SiShips Launches New Mobile App

Exciting New Way to Manage Freight Forwarding Available on Google Play Store Now

Freight forwarding is officially at your fingertips. Sheltered International is excited to announce that, as of June 27th 2022, our SiShips mobile app is now available on the Google Play store for Android devices. UPDATE (11.01.22) The SiShips mobile tracking and quote tool app is now available on the Apple App Store for iOS devices! Specifically optimized for the iPad, our clients are now able to quote, book and track shipments on all of their mobile devices. At Sheltered International, we are constantly on the lookout for new ways to blend cutting edge technology with personalized shipping expertise. Our new mobile app is just another way that we are putting control back in the hands of you, the shipper.

Mobile App to Combine Information and Efficiency

Our new app is truly the best of both worlds. Sheltered International will maintain our hands-on approach to freight forwarding and combine our personal experience with real-time data tracking—now just a touch away, thanks to the SiShips app. Our team is fully accessible and responsive, but without the clunky delay of a barrage of emails and endless phone calls.

Whether your cargo is traveling through the air, across the ocean, by rail or by truck, you will be able to survey its location with near instantaneous updates. You can now manually check these updates on the app, or turn on Push Notifications for even more convenience.

Current clients will be able to use their login credentials to get started immediately; new clients looking to get started can get in touch with us to begin using our new services as soon as possible.

siships sheltered international mobile app download google apple ios android shipping tracking

Part of Tradition of Embracing Technology at Sheltered International

Our new mobile app is the next step in the evolution of freight forwarding and Sheltered International remains enthusiastic about our role shepherding the industry towards the modern era. Within the last twelve months, Sheltered International has added around the clock rail tracking and managed transportation to our extensive portfolio of freight forwarding services. All of our services, including rail tracking and managed transportation, will be accessible on the app. 

The mobile app will exist alongside our desktop software with continual updates. All new services that Sheltered International will roll out to clients in the future will also be available on the app.


How SiShips Gives You the Advantage

Sheltered International combines expertise with state of the art desktop and mobile software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, 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 and new mobile app, contact us today.

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Weakening Markets Lead to Trans-Pacific Rate Drops

Trans-Pacific Rate Drops Expected to Last Through End of Year

After generating record-breaking profits during the pandemic, shipping companies are feeling the squeeze of recent inflation. Container carriers are planning on blanking nearly 700,000 TEU in the month of October. Carriers are looking to entice customers back with lower rates. This appears to be one of the best times in recent memory for those looking to transport products internationally, especially between China and the United States.

These trans-Pacific rate drops are not entirely unexpected. The rates that began rising to unimaginable heights during the pandemic stemmed from mostly situational factors. China’s aggressive zero-Covid policy led to shutdowns of their largest ports in Shanghai. This created backlogs which shifted to the ports of Long Beach and Los Angeles, among others. Protests from truckers over vaccine mandates and union regulations led to more delays. However, as the impact of coronavirus has lessened, the economy has been able to work through those issues. Even last month when it appeared a railroad strike could cripple the supply chain again, President Biden stepped in to keep the wheels moving. 

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Decrease Imports Lead to Trans-Pacific Rate Drops

The biggest factor in the trans-Pacific rate drops is a decreased number of imports. Inflation has led many Americans to tighten their belts and reduce spending on physical goods. Experts forecast growth as little as 7% in the retail sector, and only 1% when adjusted for inflation. This is the smallest year-over-year growth in the last decade and stands in stark contrast to last year’s growth of nearly 15%. 

Retail is not the only area where imports are shrinking. The U.S. Energy Information Association reported that U.S. crude oil imports were down 500,000 barrels per day from the previous week. Exports, however, continued to rise. Russia’s continued aggression in Ukraine, worsening the energy crisis in Europe, has exacerbated global inflation, as well. 

Increased Space in Domestic Ports

A side effect of diminished imports is the backlog of ships in the ports of Los Angeles and Long Beach has been almost completely eradicated. “Container ships have basically returned to normal,” said Kip Louttit, Executive Director of the Marine Exchange of Southern California. “The remainder of the nine in the backup are 50 to 150 miles offshore.” The ability to manage the congestion is a combination of strict management of arriving ships and support from other ports. 

trans-pacific rate drop rates ocean pacific freight shipping The increased capacity of west coast ports has helped to lower rates. Container ship dwell times and truck turn times have both decreased. While blank sailings compared to this time last year have increased, “This does not necessarily indicate a major trend change,” Adam Szabo, a shipping analyst for Sea Intelligence, told JOC.com. “It may just very well be that carriers do not announce or indicate many blank sailings so far ahead.” Either way, the current drop in rates provides an interesting opportunity for international business.

Railroad Rates also Down

Once goods have reached the United States, they are finding even cheaper rates for domestic transportation at the moment. Union Pacific Railroad is reducing their rates from Southern California and J.B. Hunt Transport is forgoing their peak season surcharges. This is not a decision transporters take lightly, as surcharges were as high as $5,000 per container this time last year.

The decrease in railroad rates can be attributed to several factors. First, the weakening consumer market is creating less demand. This works in conjunction with the slowing of imports from China and other countries. Second, the lower rates appear to be a step for railroads to become more competitive with trucking rates. 


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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New Updates to Merchandise Processing Fees

Why You May Notice Different Fees on Your Invoice

Just in time for the upcoming holiday season, U.S. Customs and Borders Protection is modifying their fee structure on cargo. The new Merchandise Processing Fees, first announced on August 1st, 2022, will enter into effect on October 1st, 2022. Keep in mind that duty-free imports are not exempt from paying these fees.

As part of the Fixing America’s Surface Transportation (FAST) Act of 2015, the Secretary of the Treasury was given the power to adjust Consolidated Omnibus Budget Reconciliation Act (COBRA) fees in accordance with inflation. This decision is made by comparing the average Consumer Price Index from the previous year. If there is an increase of more than one percent, the COBRA fees must be changed, accordingly. These fee increases represent a small percentage of the whole, however, it is important to factor them in while budgeting and preparing calculations for shipments.

ocean cargo shipping freight forwarding u.s. customs inspection fees rates inflation

Notable Fee Changes

The full list of COBRA related fees is available at the Federal Register. For ease of use, we’ve highlighted a few of the fees you are most likely to encounter.

Important to note is the Merchandise Processing Fee rate will not change; it remains at 0.3464% of the cargo value. However, both the minimum and maximum have increased slightly. From the U.S. Customs and Border Protection notice, “The minimum will change from $27.75 to $29.66; and the maximum will change from $538.40 to $575.35.”

  • The Surcharge for Manual Entry/Release (class code 500) will change to $3.56
  • The Dutiable Mail fee (class code 496) will change to $6.52
  • The Commercial Vessel or Commercial Aircraft Passenger Arrival customs fee will change to $6.52 per passenger. Also, the Commercial Vessel Passenger Arrival (from exempt areas) customs fee will change to $2.29 per passenger.
  • The Commercial Truck Arrival fee will change to $6.50. The total single crossing fee will be $14.05, as the Commercial Truck Arrival Fee does not include inspection service fees (which are currently $7.55).

 

international freight forwarding fee structure increase shipping news

Are Any Imports Exempt from Merchandise Processing Fees?

While we mentioned that just because an import is duty-free that does not mean it is exempt from Merchandise Processing Fees (MPF), there are certain Free Trade Agreements that will waive the MPF. For example, the current Free Trade Agreement with Israel provides an exemption. Sheltered International will be able to help you work through and understand whether MPF will apply to your shipment.


How SiShips Gives You the Advantage

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

To learn more about Merchandise Processing Fees and possible exemptions, or to view a demo of our software, contact us today.

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Chinese Shipping Rates Decrease

Multiple Factors Lead to Lower than Expected Shipping Costs

The anticipated rush of cargo following the recent reopening of Shanghai has failed to materialize. The Chinese city had been subjected to a months-long lockdown, the likes of which the west had not seen since the initial days of the Covid-19 pandemic. With business leaders like Elon Musk championing the economic and industrial might of Shanghai, a flurry of activity was expected to return the city to its full capacity. However, current economic hurdles have subdued demand. A positive side effect is a shipping rates decrease.

Shipping rates from China have decreased dramatically in the last few weeks. The dual threat of inflation and high gas prices leaves retailers expecting lower consumer demand and cutting back orders. Industry insiders are not expecting a pick up in demand until Q4 2022. The summer of 2022 is one of the best opportunities in the last several years for those looking to ship freight to and from China.

shipping port container containerships freight forwarding

High Gas Prices Lead to Conservative Spending

The historically high gas prices being faced by the United States and the rest of the world are the result of many different aspects, despite the desire of political commentators on both sides of the aisle to point a finger at singular issues.

While the United States received less than 10% of oil imports from Russia, the percentage was significantly higher in Europe. The economic blockade of Russia for their invasion of Ukraine is leading to an energy squeeze filtering from Europe to the entire world. As of the writing of this article, Saudi Arabia has been capping their oil production (although, a new report optimistically suggests OPEC+ might hike supply soon).

While there is the capability of digging new domestic and international oil wells, gas executives are hesitant to invest in long term projects with the expected rise of electric cars in the next decade and the recent memory of negative trading prices during the height of the pandemic. However, even experts are not prepared for the sky high trajectory of average gas prices. On June 14th, the New York Times reported the expected average price for the month of June 2022 was $4.59; less than a week later the average price was $4.98.

The demand for gas in America has only increased, following workers return to offices and the arrival of the summer driving season. Many Americans are opting for experiential vacations instead of physical goods having been cooped up inside. Consumers looking to tighten their belts have suspended home renovations and canceled subscription services. 

united states port shipping containers cargo rates gas prices energy

Bear Market Helps Shipping Rates Decrease

The other major factor driving down demand is the arrival of a bear market. Defined as a decline of 20% or more across the entire stock market, nearly every sector is suffering (with the exception of energy stocks). The drop is acutely felt by brands like Wal-Mart and Target in the retail sector. With pressure from shareholders to find cost cutting measures and consumer demand down, these retail giants are not placing the same level of orders from Chinese factories.

Ships looking to make up the gap are enticing other clients with lower rates through Q2 and Q3 2022. Any proactive companies will be able to take advantage of this unique situation after a fraught two years of lockdowns, port backlogs, and supply chain disruptions.  

How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, 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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Shanghai Reopens; Work to Lessen Backlog Begins

Resuming Full Production Not as Easy as Flipping Switch

Shanghai is lifting their extreme lockdown and not a moment too soon. While originally intended to be a two-phase lockdown lasting one week, the near total lockdown of Shanghai stretched to two months before being lifted on June 1st. Chinese citizens are relieved after a frightening and confusing time.

shanghai port china freight forwarding global supply chain biden putin ukraine lockdown China has enforced the most stringent restrictions worldwide since March 2020. The goal of reaching community zero-COVID has frustrated Shanghai, especially. Citizens who had been separated from family and basic needs were trapped by muddled messaging from the government. Amid positive trends in cases, “some Shanghai districts tightened restrictions on movement, and even in neighborhoods that met criteria for people to be allowed to leave their homes officials were ordering them to stay put,” as recently as Friday, April 22nd according to Reuters.

Signs of life returning to normal are evident across China, with even Hong Kong Disneyland reopening after an extended closure. However, the work to bring the world’s second largest economy back to full power is just beginning.

Truckers Hit Hard by Covid Restrictions

While the port of Shanghai officially remained open during the lockdown, it was far from operating at regular volume. The daily cargo volume hovered around 100,000 containers per day, down roughly 30% from the norm of 140,000 containers. Even the containers that made it through the port have piled up as truckers inside China face roadblocks and quarantines.

Some truck drivers were forced to remain for multiple days in the cab of their trucks due to the tight restrictions around Shanghai. After hearing horror stories from fellow truck drivers, some refused to travel. The lack of available truck drivers increased the amount of containers at the port and nearly doubled the cost of domestic transportation involving Shanghai.

Prognosticators say it could take weeks, or even months, for international shipping to return to normal.

shanghai china lockdown coronavirus zero covid government coronavirus cases breakout pandemic endemic shipping supply chainReopening Logistics Present Difficult Hurdle

The Chinese government is doing all they can to ease the stress of the present situation. This includes providing 80,000 Shanghai businesses based in government-owned buildings with six months free rent. Despite this and other incentives, it will take time for the city to ramp up to full capacity. Goods and materials being delivered to Shanghai were nearly stopped completely during the strict lockdown.

“Shanghai is coming back with a vengeance,” predicted Tesla CEO Elon Musk during an earnings call on April 20th. The Tesla plant in Shanghai, known as Gigafactory, restarted production after a 3 week long disruption the day before. Gigafactory workers are taking multiple Covid tests each day while living and working entirely within the factory premises. Tesla was one of the first factories to resume full production during the shutdown.

Tesla remains susceptible, like every other automotive company, to the semiconductor shortage that has plagued the globe for the last two years. Most factories in Shanghai, while no longer lacking workers, do not have enough materials to operate. They are waiting for the trucking apparatus to fully restart and remove the backlog from ports. 

The dominoes of the global supply chain have been knocked down, but with the help of easing restrictions in China they are slowly being set back up.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, 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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Labor Negotiations Underway with Dockworkers Union

Labor and Management Meet in San Francisco

The International Longshore and Warehouse Union (ILWU) entered contract talks this week with the Pacific Maritime Association (PMA). These labor negotiations come ahead of the July 1 expiration of the current contract and amid backlogs and delays in west coast ports like Los Angeles and Long Beach. Jim McKenna, PMA President and CEO, remains hopeful about the negotiations. “At this point in time,” says McKenna, “you have to be cautiously optimistic that we’re not gonna get into a strike scenario, but it’s early in the game.” Both sides have acknowledged the likelihood of talks continuing past the July 1 deadline, but that outcome does not necessarily mean a strike from the ILWU will take place. 

The biggest focus of negotiations is the right to automate ports. The ILWU stands in firm opposition to automation, something PMA has warmed up to following the pandemic. PMA feels that automation is the only viable solution to prevent future backlogs. The ILWU claims any automation of west coast ports will be the end of thousands of jobs for union workers. 

automation port terminal shipping united states domestic international imports exports

Photo courtesy of Chuttersnap via Unsplash

Labor Negotiations Testing an Already Fragile Supply Chain

The backdrop for these negotiations is, of course, the precarious state of the global supply chain. Shanghai, home to the largest port in the world, has been in a strict Covid-19 lockdown for over a month. Russia’s invasion of Ukraine has destabilized Eastern Europe and is leading to an increase in energy prices worldwide. Meanwhile, the ports of Los Angeles and Long Beach are still working through the backlog faced by Covid restrictions and transportation strikes in the United States.

The dockworkers have been a key part of the record profits for shipping companies during the pandemic. The 22,000 members of ILWU could be looking to flex some of their leverage. Past strikes have been crippling for the domestic supply chain, with 44% of global imports entering the United States from the 29 ports on the west coast.

Port Densification as a Sticking Point in Labor Negotiations

The core of management’s argument is automation is unavoidable. Major ports, like Los Angeles, are in urban centers without room to expand. Automation enables ports to grow up, instead of out. As the global population grows alongside disposable income, imports continue to rise and ports need a place to store containers before they are sent out on trucks and trains. Additionally, studies show the output of automated facilities is 44% higher than that of non-automated facilities.

The ILWU counters these claims by saying the rise in productivity at automated facilities has come at the cost of work in other locations. Based on the east coast, the International Longshoremen’s Association (ILA) support their west coast counterparts. The ILA has successfully limited terminal’s right to automate in their contracts. The U.S. Secretary of Labor, Marty Walsh, is monitoring the negotiations carefully and has stated he is willing to intervene if the supply chain is threatened by any potential outcomes. However, Walsh added he is not personally concerned there will be issues come July.

port shipping freight container ship boat international freight forwarding terminal west coast longshoremen dockworkers union negotiations

Photo courtesy of William William via Unsplash

Common Negotiating Ground on Growth

Both sides remain committed to the negotiating table and believe they will find a solution that works for both parties. The ports are at, and have been at, 100% capacity during the recent past. Terminals need to grow to accept more goods, which means more profit for management and more hours for labor unions. There are versions of a new contract where both sides benefit, it simply is a matter of finding that compromise.


How SiShips Gives You the Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, 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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Shanghai Lockdown Squeezes Supply Chain

China’s Stringent Zero Covid Policy Strikes a Barely Recovered Supply Chain

The supply chain continues to limp along on its Sisyphean struggle back to normal. An outbreak of Covid-19 cases tied to the Omicron variant have caused China to take drastic measures and issue a near total shutdown of Shanghai, one of the world’s most populous cities.

The Shanghai lockdown is notable for several reasons, not the least of which it is the largest lockdown in China since Wuhan, widely believed to be the origin of the Covid-19 pandemic. As of Sunday, March 27th, there were roughly 6,000 cases reported in all of China, with about half of the confirmed cases in Shanghai. This number may seem infinitesimally low compared to other countries, but China has adopted a “Zero Covid” policy for the majority of the pandemic and an outbreak, even of this size, is a major cause for concern for the government.

shanghai ningbo hong kong beijing port lockdown supply chain bottleneck freight forwarding international shipping

Photo courtesy of Pat Whelen.

Effects on Freight Forwarding

Numerous financial services headquartered in the city and the Shanghai Stock Exchange have shifted as many services as possible online. Local restaurants (such as international chains: McDonald’s, Pizza Hut and KFC) have shuttered their doors. Factories and shopping malls are closing for the time being, as well, with any workers who can work remotely being encouraged to do so. Unfortunately, Shanghai’s port, the largest port in the world, does not have that option. Even still, the plan is to maintain operations under the “essential services” label.

While the Shanghai port will still be open, freight forwarders are being encouraged to use alternate ports due to trucking issues and other restrictions in the city. The Shanghai airport is still operating at a normal level, but that could change if more cases are found and the lockdown is extended past April 5th. It is advisable at this moment to prepare for worst case scenarios. 

The capital city of Beijing is experiencing trucking delays due to its own set of restrictions; elsewhere, the Hong Kong border provides a different set of issues. The Ningbo terminal, which has previously experienced pandemic-related disruptions in service, is a recommended alternative until the lockdown in Shanghai is lifted.

Details of the Shanghai Lockdown

China is taking extraordinary steps with the Shanghai lockdown. The current plan is to shutdown the city in two halves; east of the Huangpu River will completely shut down except for essential services for four days, then the side west of the river will do the same. The east side of the city is mostly the business district and the west is more residential. Certain financial institutions called employees to their offices before the lockdown went into effect so they could sleep at the office for the duration of the lockdown. The hope is this split lockdown will isolate any cases of Covid-19 without completely disrupting the local, national and international economy.

shanghai port tesla plant huangpu shutdown lockdown residents coronavirus omicron automotive computer shenzenDuring this time, Shanghai is taking on the extensive task of testing every single person who calls Shanghai home—for those of you doing quick math, that’s over 3 million tests per day for the 25 million people who call the city home.

Continued Impacts on the Automotive Industry

The automotive industry continues to be one of the hardest hit by the coronavirus pandemic. Tesla has announced a pause in production in their Shanghai plant until at least Thursday, March 31st. Incidentally, CEO Elon Musk announced he had tested positive for Covid-19. All of this comes at a time when Tesla stock prices are, against all odds, skyrocketing amongst rumors of a potential stock split.

Despite delays in the supply chain and rises in gas prices, forecasters remain bullish. However, these new lockdowns in China and the war in Ukraine are squeezing the supply chain about as thin as it can possibly go. US auto sales are slumping, with finger pointing at chip shortages, inventory size and other possible culprits. The reality is less affluent buyers are being kept out of the automotive market. Car sales are expected to fall 24% in March and 16% in the first quarter. Until the lockdowns are lifted and bottlenecks clear, inventories will continue to shrink and prices will continue to rise.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, 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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Inflation Rising from All Corners of the Globe

Covid Outbreaks in China, War in Russia

As the two year mark since the first coronavirus lockdowns approaches, life in the United States is close to resembling a pre-pandemic world—at least on the surface. While mask mandates are being lifted and the rate of new cases is the lowest since March 2020, the supply chain is still struggling under the pressure of inflation and gas prices at all-time highs. The Federal Reserve has indicated they intend to raise interest rates to curb inflation, but factors from international partners have massive complications.

The global economy is bracing for a two-front fight between Russia’s assault on the Ukraine and new lockdown measures in China. How much these events will affect cargo movement around the world is dependent on high-stakes diplomacy and the efficacy of medical care.

china shenzhen lockdown coronavirus omicon spike essential employees shipping logistics

Photo courtesy of Lysander Yuen via Unsplash.

Inflation from Chinese Lockdowns

Currently, China is dealing with its largest outbreak of coronavirus cases since the initial explosion in Wuhan. Mainly driven by the Omicron variant, infections have increased from a few dozen per day to over 5,000 on Tuesday, March 15th. These numbers may seem small compared to other countries, but the speed at which rates are rising and China’s strict zero-Covid policy is causing alarm.

In response to the new cases, over 37 million people in China are under lockdown. All non-essential workers are required to stay home in certain cities. This is leading to a complete shuttering of factories that produce semiconductor chips, computers and more. It is unclear how long the lockdowns will last, but it will be one week, at least. SEKO Logistics, a shipping company based in Shenzhen, revealed in a press release they “have not yet been advised of any official restrictions to Yantian Port [in Shenzhen],” but “no cargo will be able to load in Yantian from next week and vessels most likely will omit the port.” 

With demand still high for all types of consumer goods, any delays lead to negative long term effects; as was evident last summer with the shutdown of the Meidong Terminal in Ningbo.

Inflation from Russian Sanctions

For many Americans, the most acute economic pain over the last month has been felt at the gas pump. The sharp rise in fuel prices stems from the powerful sanctions levied at Russia over their incursion into Ukraine. 

russian ukraine opec ocean gas crisis diesel inflation

Photo courtesy of Emmaus Studio via Unsplash.

Although only a small percentage of American oil comes from Russia, the sanctions have had a far-reaching effect in a global market. The average price of crude has jumped, due to Europe looking for fuel sources other than Russia. This comes at a time when oil production was significantly down—barrels of oil traded at a negative price point during the worst of the coronavirus stay at home orders. It will take time for supply and demand to stabilize after several rocky years.

“Everything that you have touches a truck,” said Cherri Harris, the CEO of Swint Logistics Group. With prices of diesel fuel over $5 per gallon, a single truck can spend more than $500 per day solely on fuel. The price increase is eating into profits and that cost is eventually passed onto the consumer. 

Looking Ahead

This is an incredibly complex time for the global economy. Budgets and plans that have been in place for months have to shift at a moment’s notice. Even the Fed is reconsidering its timing to raise interest rates.

In China, the hope is an incredibly stringent lockdown will minimize the economic fallout for a new spike in cases. Optimistic predictions from the Chinese government give the impression they expect the lockdown to be lifted before the end of the month. 

On the other hand, sanctions on Russian oil will likely last until they withdraw from Ukraine. There is only one person who can call Russian troops home and they seem impervious to international pressure, at least for the moment. Meanwhile, oil companies look elsewhere to make up the difference from the lack of Russian oil. Chevron, for example, has made it clear they are willing to work with Venezuela instead of Russia, if the Biden Administration lifts sanctions on the South American nation. Republicans highly critical of Venezuela put Biden in a precarious place politically as he attempts to work down gas prices creating a stalemate for the foreseeable future.


How SiShips Gives You The Advantage

Sheltered International combines expertise with state of the art software to bring you the highest quality domestic and international shipping solutions. With the world constantly changing, 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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Shipping Delays Reverberate from Russia Sanctions

Russia Cut Out of Global Shipping

Russia sanctions rock the global economy following the unprecedented invasion of Ukraine in February. Now, as the dust begins to settle from Russia’s first salvo and ensuing sanctions from the rest of the world, the picture of how the global supply chain and shipping industry will be affected is becoming clearer.

In line with sanctions, Maersk, MSC and CMA CGM have suspended most deliveries to Russia, the world’s 11th largest economy. The refusal to deliver “non-essential” goods is in line with numerous other companies that have suspended sales in Russia such as Apple, Google, Ford and Harley-Davidson.

odessa ukraine kiev kharkiv belarus russia mediterranean black sea invasion war

Photo courtesy of Obv Design via Unsplash.

Full Extent of Impact Remains to Be Seen

While foodstuffs and medical supplies are still being allowed into Russia, ports and customs are seeing significant delays due to the need to screen all shipments. Maersk, in particular, is advising shippers to be aware of the risks of transporting perishable goods and can make no promises of when they might be delivered. 

As we saw last year with the blockage in the Suez canal, seemingly isolated incidents can have large ripple effects across the globe. A supply chain that is already stretched thin is not helped by extended delivery times on the European and Asian continents. Not just limited to the sea, Maersk has canceled rail transport between Europe and Asia until further notice. 

Also being hit hard by sanctions is Russian ally-Belarus. The EU has banned over 70% of Belarusian exports for its supporting role in the Russian invasion of Ukraine. The major sectors that could see repercussions are wood, timber, steel, and iron, along with cement, rubber and fuels.

Difficulty Processing Payments from Russia

maersk mcs cma switzerland belarus russia ukraine invasion putin shipping delays global supply chain

Photo courtesy of Jacob Meissner via Unsplash.

Perhaps the strongest sanction to hit Russia is the removal of seven major Russian banks from SWIFT. The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a secure financial messaging service based in Belgium that enables international companies to complete transactions with each other. While Russians will feel this more acutely in their daily lives than other citizens, it does affect the global economy and will not help with the current rate of inflation.

Banning any country from SWIFT effectively freezes all of their assets and makes it impossible for them to perform international business transactions. For example, Maersk, a Danish company, is currently unable to accept payments from any Russian company. No matter what happens as the conflict develops, there is literally no international business or shipping Russian operators can participate in until SWIFT lifts its ban. 

Some analysts speculate that aid might come from the East. In 2015, China established the Cross-Border Interbank Payment System (CIPS) in an effort to increase the power of the yuan and lessen the traditionally isolationist country’s reliance on western banks. Experts caution that this is unlikely, however, as only direct participants can use CIPS. Of the 76 direct participants, almost all are Chinese banks or closely-related overseas subsidiaries of those banks.

Complications for Humanitarian Aid

One of the strongest negotiation points where NATO, Ukraine and Russia have managed to agree in principle is the need for humanitarian corridors during the invasion. Though the U.S. has banned trade with the two Ukrainian regions recognized as independent by the Kremlin, the Treasury Department’s Office of Foreigh Assets Control has issued six licenses to ensure humanitarian efforts are not negatively impacted. Those licenses include a short-term wind down of trade activities, imports of food, medicine and medical devices, and continued operation of telecommunications, mail and Internet.


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