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Coronavirus (COVID-19) Impact on Your Supply Chain Operations

We continue to offer information regarding the COVID-19 virus situation. The following will address operational status and market conditions. 

In order to curtail the spread of COVID-19, governments around the world and most US States have issued stay-at-home orders for residents with the exception those working in essential service categories. As a logistics provider, Vantec Hitachi Transport meets this exception and will continue to process shipments for any customers who are operating and require our services. We have previously communicated our business continuity plan and the specific steps we are taking to maintain the safety of our employees and follow recommended CDC guidelines during this difficult time. As always, we will closely monitor this fluid situation and keep you updated. 

Check out the "Wheels in Motion" podcast by our sister company, Carter Logistics. Our colleague, Mike Barry offers his expert insight regarding how supply chains have been affected by COVID-19.

Listen to the “Wheels in Motion” podcast.

On April 16th, President Trump announced a three-phase plan for America to return to normal working status. Many states have signaled their intention to begin easing stay-at-home restrictions as early as May 1st. 

We offer the following information updated July 10, 2020:

Operations Update:

  • Overseas Operations General Guidelines: Many countries implemented quarantine restrictions, which impacted logistics operations. Some countries have begun to ease these restrictions. We strongly encourage our clients to keep close communications with suppliers and our staff to ensure mutual understanding of shipment details.
  • Air Cargo Impact on Global Capacity: Widespread cancellation of commercial passenger flights across multiple lanes due to travel bans have decreased available cargo capacity and negatively impacted available space and pricing. The results of this were extreme spikes in air freight costs and backlogs in cargo. While air freight rates continue to fluctuate daily, there are signs that air rates are reflecting a more logical market pattern. Air carriers are working on alternatives to increase lift capability for cargo. Many commercial air carriers have begun utilizing passenger equipment to move freight. The FAA issued a ruling which allowed removal of passenger seating to expand carriers capability to use commercial aircraft for cargo. It is important to note that actual in-flight transit times have not increased. The main delays have occurred at the pre-flight while cargo is staged with airline agents, in air freight terminals and at gateway warehouses. It is hard to predict how long this backlog of cargo will last. There are indications that US domestic space is improving, however international air freight cargo space, particularly from Asia to the US will continue to be affected as long as commercial airlines operate on severely reduced schedules. We will continue to monitor the situation and update as information becomes available. 
  • India Operations: The Indian Government has extended the national lock down until July 31, 2020. The extension will however see some relaxations which will be regulated based on the spread of the virus in the districts, identified as red (hotspot), green and orange zones. At this time, India ports are operational however vessel delays should be expected. The Indian Government is taking steps to reduce port congestion. Air freight shipments are operational with severe capacity constraints and sharp increases in market rates. Currently there are no restrictions imposed on inter-state and intra-state movement of goods. Some domestic and international flights are permitted with limitations. International rail and other air travel will remain shut until July 31st.
  • US / Canada border: President Trump announced the US/Canada border is closed to nonessential travel. The movement of cargo, trade and healthcare workers will continue to be able to traverse the US/Canada border. 
  • US Mexico border: The US/Mexico border remains closed to nonessential travel. President Trump has said "These new rules and procedures will not impede lawful trade and commerce.". 
  • JFK Air Cargo Operations: Our New York operations report JFK air cargo terminals are experiencing some delays due to staff shortages attributed to COVID-19. We have received reports that truckers are experiencing longer wait times to pick up or drop off cargo which could result in airline or warehouse storage fees or other related charges.
  • Chicago O'Hare Air Cargo Operations: Our operations in Chicago are reporting congestion at air cargo terminals. Average wait time to pick up import cargo is two hours and wait time to drop export cargo is five hours. Longer wait times to pick up or drop off cargo could result in airline or warehouse storage fees or other related charges.
  • China Operations: Cargo volumes continue to move toward pre-outbreak levels at Chinese ports as production and service levels begin to normalize, however air freight remains tight due to passenger flight cancellations.  
  • Ocean Carriers: Carriers report a return to normal operations in all areas within China.
  • US/EU Travel Ban: President Trump issued a proclamation declaring travel ban between Europe and the U.S. effective March 13, 2020. The White House has also stated the travel ban does not apply to logistics activity involving the movement of goods.
    • All passenger flights have been cancelled and air cargo is only available via air freighter. This will significantly restrict available air cargo capacity between the US and Europe.
    • Rates are currently double or triple normal levels. Due to fluctuations, shipments are quoted with spot rates.
    • Departures from EU origin airports may be delayed from time of booking.  
  • Italy Operations: The Italian Ministry of Transport has stated the limitation of free movement would not apply to any logistics activity or good transportation action as these activities are considered necessary.
    • Rates are similar to US/Europe and the situation is described as very fluid. Allow longer lead times and expect spot rates for shipments.
  • US/Brazil Travel Ban: President Trump issued a proclamation stating his intent to “restrict and suspend the entry into the United States, as immigrants or non-immigrants, of all aliens who were physically present within the Federative Republic of Brazil during the 14-day period preceding their entry or attempted entry into the United States. The free flow of commerce between the United States and the Federative Republic of Brazil remains." On May 22, Brazil decreed that foreigners are banned from entering the country for 30 days through June 21st.
  • Carrier Blank Sailings: In spite of the trend toward normal operations in China, carriers continue to announce blank sailings. This is in response to the sharp decline in demand for cargo space as the COVID-19 virus continues to spread globally.

 

U. S. Market Impact:

  • US Port Operations: US Ports, including The Port of Los Angeles are experiencing an increasing backlog of empty containers. Carriers are requiring customers to hold on to equipment until further notice. In addition, importers may not be able to collect some cargo deemed non-essential.This will result in increased costs related to chassis, off-dock storage or other fees that will be the responsibility of the importer. Port congestion caused by interruption to normal cargo flow is expected to continue for the next 2-4 weeks.  
  • Reduction in Operating Hours at Ports and Container Freight Stations: Container Freight Stations have announced a reduction in hours due to a decline in volumes.
    • The NW Port Alliance (Seattle and Tacoma ports) has announced they will temporarily suspend Terminal 18 operations on Fridays beginning March 6, 2020. This action is a direct result of the drop in TEU volume resulting from COVID-19.  
    • An increasing number of Container Freight Stations in inland areas have announced reductions in operating hours.
  • Air Cargo: Air freight rates in general have spiked. At this time, rates of double or more the normal levels are being reported as well as extended transit times in several key markets.
  • Ocean Carriers: Space constrictions must be anticipated.  This is due to the significant number of ocean carrier blank sailings. Carriers have implemented a general rate increase for March 15th. We anticipate freight rates will increase due to capacity and equipment shortages. 

US Customs:

  • UPDATE 4/20/20 CBP has issued two notices CSMS #42421561 and CSMS #42423171- COVID-19 – Payment Instructions for 90-Day Postponement of Payment for the Deposit of Certain Estimated Duties, Taxes, and Fees. The following is an excerpt of CSMS #42421561.  "On April 20, 2020, the Secretary of the Treasury and U.S. Customs and Border Protection (CBP) will be postponing for 90 calendar days the deadline for payment for the deposit of certain estimated duties, taxes, and fees for importers experiencing a significant financial hardship due to the coronavirus disease (COVID-19). This temporary postponement applies to formal entries of merchandise entered, or withdrawn from warehouse, for consumption (including entries for consumption from a Foreign Trade Zone) in March or April 2020. CBP will not return deposits of estimated duties, taxes, and fees that have already been paid.
    In addition to the instructions provided in CSMS #42423171, the following payment instructions are provided for entries that qualify for the temporary 90-day postponement period."
  • UPDATE 4/14/20 Regarding the import of medical supplies.  On April 14, 2020 the CBP issued CSMS #42364745 - Information on New COVID-19 Relief Imports Web Portal. "Due to the high volume of inquiries received in the COVID-19 Relief Imports email inbox, CBP is migrating to the COVID-19 Relief Imports Web Portal. The web portal has been established to replace the email address for all cargo inquiries related to the importation of medical supplies to fight the spread of the COVID-19 virus. It provides an interactive experience for the user to review pertinent information and allows for the submission of a direct inquiry to the COVID-19 Cargo Resolution Team (CCRT).

    While monitoring the inbox, the CCRT has been responding to many similar questions regarding the importation of various PPE and critical medical supplies. To alleviate some of the common questions, the web portal will have basic guidance uploaded to a FAQ section and valuable information in other areas of the site. CBP will continue to update the portal and upload important information on a daily basis. The web portal can be found at https://imports.cbp.gov/."

  • UPDATE 3/26/20 CBP has revised this temporary option and has issued a statement which only allows additional days for a narrow scope of circumstances, including a physical inability to file entry or payments, due to technology outages or port closures: Customs and Border Protection: Additional Days for Payments due to COVID-19 On March 20th, CBP announced via CSMS, U.S. Customs and Border Protection (CBP) will approve on a case by case basis additional days for payment of estimated duties, taxes and fees due to the severity of the COVID-19 outbreak.  CBP has confirmed that the March 20, 2020 debit authorizations for the Periodic Monthly Statements and the daily statements have been transmitted to the Department of Treasury. CBP asks that you work directly with your financial institution if you wish to prevent these funds from being withdrawn. Requests should be directed to the Office of Trade, Trade Policy and Programs at OTentrysummary@cbp.dhs.gov or interested parties may send requests to Director Randy Mitchell at randy.mitchell@cbp.dhs.gov.

 

Recommended Actions:

  • US Importers and exporters are strongly recommended to communicate closely with their suppliers to forecast  production capability. This will provide you with the most realistic timeline to fill orders.
  • Make your bookings well in advance to secure space and rates. The fluid nature of this situation makes it difficult to give refined predictions regarding space and costs.
  • Air export shippers should first communicate with their consignees and confirm their ability to receive any upcoming shipments.
  • In addition to close communication with your suppliers, we encourage that you keep your sales or customer service representative up-to-date on your supply chain needs. This will allow us to engage with carriers and overseas offices to better assist you during this unprecedented event.  

 

As always, we will maintain close communication with our origin offices to ensure the continued movement of your goods. If you have concerns regarding shipments originating from a specific region, please contact our customer service representatives. 

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