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July 2019 Newsletter

A monthly roundup of our Industry Updates, Blogs and Market Information

Recent Developments regarding Section 301 Tariffs

  • On June 29th, President Trump held a press conference to wrap up the end of the G20 Summit in Japan. Among other topics, Mr. Trump discussed his meeting with China's President Xi and indicated the US would not add tariffs on any more Chinese imports "for at least the time being.". The following is an excerpt of Mr. Trump's remarks: 

..."And we had a great meeting, and we will be continuing to negotiate.  And I promised that, for at least the time being, we’re not going to be lifting tariffs on China.  We won’t be adding an additional tremendous amount of — we have, I guess, $350 billion left, which could be taxed or it could be tariffed.  And we’re not doing that.  We’re going to work with China on where we left off, to see if we can make a deal."

A complete transcript of the press conference can be viewed in White House briefings. As always, we will continue to provide updates on developments concerning China tariffs as new information becomes available. Meanwhile, we invite you to visit our "Section 301 Tariff FAQ's" for more information.

  • Sixth Round of Products Excluded from Section 301 Duties (Tranche 1). On July 10, U.S. Customs and Border Protection issued a CSMS Notice "announcing the decision to grant the sixth round of certain exclusion requests from the 25 percent duty assessed under the Section 301 investigation related to goods from China (Tranche 1)." 
  • According to CBP trade statistics CBP has assessed about $27.8 billion in duties under the major trade remedies started during the Trump administration as of June 19.

We will continue to monitor Section 301 tariff developments and will provide updates as new information becomes available. Meanwhile, we invite you to visit our "Section 301 Tariff FAQ's" for more information.

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 Update on how the switch to low-sulfur fuel could impact overall fuel price

The International Maritime Organization (IMO) will enforce a new 0.5% global sulphur cap on fuel content beginning January 1, 2020. The new lower fuel cap is intended to reduce harmful emissions from ships while in port. In a recent article, Ship & Bunker reports that industry executives signal there is uncertainty in terms of forecasting the future price of low-sulfur fuel. Trevor Matthews of OceanConnect Marine "At present, we can say that the compliant fuel will be available. What we can't say is, at what price." 

The picture should become clearer in late third quarter. By the beginning of the fourth quarter 2020, the market should become clearer in terms of pricing outlook. Matthews stated, "That's when you will start to see the demand emerge, and that's when the pricing picture will become clearer.

Ocean carriers historically pass along cost increases to their customers, so any significant increase in Q4 fuel cost will likely be seen in higher fuel surcharges.

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Class 1 railroads tighten demurrage policies

The Journal of Commerce discusses a recent trend by rail carriers to consider Saturday and Sunday as business days. The practice means that small shippers who are unable to take delivery of cargo that arrives at the rail yard late on Friday could discover on Monday they owe demurrage or storage fees. US Rail carriers have implemented the change in an effort to speed cargo through their terminals. If you have questions or concerns regarding rail demurrage policies, contact our customer service team.

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Peak Season could see capacity manipulation and increases in spot rates 

According to the Journal of Commerce, imports volume from China are down five percent in the first half of 2019. Vietnam by comparison is up 30 percent year over year. Overall, Global Port Tracker is projecting a "subdued peak" this fall. 

  • It is anticipated the US-China trade war will result in another uncertain peak season.
  • There are indications that carrier space is beginning to tighten. The eastbound trans-Pacific market is susceptible to blank sailings as carriers attempt to manage capacity and blank sailings could push spot rates to higher levels. 
  • The first week in July import volumes to US East and West coast ports were steady but not at peak season levels.
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Are you ready for Hurricane Season?

Weather events can cause serious disruption in your supply chain. According to the National Oceanic and Atmospheric Administration, an average hurricane season produces 12 named storms, of which 6 become hurricanes, including 3 major hurricanes.

2019 Hurricane Numbers small

Natural Events

Mother Nature can be harsh and it’s true some weather events can be predicted and prepared for in advance. However, hurricanes, floods, tsunamis, blizzards and even earthquakes are just some of the natural events that can impact your shipments. In the event of seasonal delays, your risk can be mitigated by keeping your options open. Diversify your transport as much as possible by using alternate carriers and even switching modes, from ocean to air and ground to provide the flexibility needed to weather the storm.  How can you mitigate disruption in transporting your cargo? 

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