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December 2018 Newsletter

A monthly roundup of our Industry Updates, Blogs and Market Information and some familiar issues that will continue to challenge in 2019

Check out our new Resources Page

We have expanded our online Resources to include an IncoTerms Guide, conversion factors and formulas and a handy dimensional freight calculator. 

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Section 301 Tariff Update 

In a statement issued December 1, 2018 President Trump announced a Trade Truce with China which will be effective for 90-days. President Trump and Chinese President Xi agreed to the temporary trade cease-fire to allow time for on-going negotiations. This means that U.S. tariffs on goods from List 3, currently set at 10 percent will not rise to 25 percent on January 1, 2019.

We would like to emphasize the agreement not to impose the additional tariff amount is temporary and dependent on successful negotiations between the US and China. White House press secretary Sarah Huckabee Sanders said in a statement. "If at the end of this period of time, the parties are unable to reach an agreement, the 10 percent tariffs will be raised to 25 percent." 

The USTR issued a notice stating the tariff on the third tranche list will remain at 10% until March 2, 2019. As a reminder, we have compiled the following Section 232 and 301 tariff FAQ's to help you better understand the situation and stay informed. 

Our FAQ provides answers to the following questions:

What is Section 232? Why did President Trump take this action?

What is Section 301? Why did President Trump take this action?

Explain to me about Section 301 - List 1 and List 2 and List 3

What is the process for requesting a product exclusion from Section 301 tariffs? 

Where do I find a copy of all of the the USTR statements?

Click HERE to view our Section 301 FAQ

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Market Trends and Developments we are Watching

Ocean The fourth quarter of 2018 posted strong container volumes at most US Ports. In some cases, record breaking volumes. Several factors, including strong US consumer confidence and importers pushing to beat anticipated Jan. 1 tariff increases contributed to high import volumes in the third quarter of 2018. There are signs that this trend could change going into 2019 as continued uncertainty regarding trade issues will influence spot market rates. Ocean carriers have signaled their plans to swap vessels for lower capacity ships; an indication that ocean capacity could constrict in the first quarter of 2019. 

Air According to Alexandre de Juniac, International Air Transport Association (IATA) Director General and CEO, "Cargo is a touch business, but we can be cautiously optimistic as we approach the end of 2018. Slow but steady growth continues despite trade tensions. The growth of e-commerce is more than making up for sluggishness in more traditional markets, and yields are strengthening in the traditionally busy fourth quarter. We must be conscious of the economic headwinds, but the industry looks set to bring the year to a close on a positive note."

Inland Trucking We have discussed the ongoing issues related to truck capacity in previous Industry Updates and 2018 has been a year plagued by tight capacity for all US inland transport modes. In 2019 expect to continue to see higher inland trucking market rates and capacity issues. Exactly how much remains to be seen as some markets may remain tighter than others. On a positive note, new orders for Class 8 trucks in 2018 were a ten year high and shippers could see some improvements in capacity as this new inventory comes into service.

BAF / Low sulfur fuel Charges - What's on the horizon? Ocean carriers must comply with new International Maritime Organization (IMO) regulations regarding low-sulfur fuel by January 1, 2020. This means that carriers must either retrofit vessels with expensive fuel scrubbers, use fuel with a sulfur content of 0.5 or less or use liquefied natural gas as fuel. All of these options represent significant cost to the carriers. In an attempt to offset thee costs, several carriers have introduced new mechanisms for calculating bunker fuel charges as of January 1, 2019.

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UPDATE: The ELD Mandate in 2019 

As we move into 2019, the impact of the ELD Mandate will likely continue to unfold. This is primarily because many carriers have yet to fully implement the devices in their fleet. As the industry approaches full compliance, the full effects will be more evident. We discussed the potential impact of the ELD Mandate a year ago and recommend the following to help mitigate the potential impact to your supply chain.

  • Make sure the load is ready at pickup time
  • Be flexible around drop and hooks
  • Maintain appropriate staff during shipping and receiving hours
  • Provide adequate parking and other facilities

 

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