Trade News

June 23, 2021

Canada to Reopen Border in Phases

Prime Minister Justin Trudeau’s government is ending mandatory hotel quarantines for vaccinated Canadian residents arriving by air.

Health Minister Patty Hajdu announced that Canadian citizens, permanent residents and essential workers who are fully vaccinated will no longer have to spend three days isolating in a government-approved hotel. Instead, they’ll be permitted to quarantine at home while they wait for the results of a test on arrival.

The exemption won’t apply to tourists or foreign business travellers that aren’t essential workers, and they will still need to complete a hotel quarantine if arriving by plane. The government plans to roll out the measures by the first week of July, the health minister said Wednesday.

The change comes as pressure grows for Trudeau to ease COVID restrictions for fully vaccinated travellers in time for the summer season, especially along the U.S.-Canada border. The two countries have created a working group to determine how to reopen the border safely after beginning discussions on the issue earlier this spring.

To qualify for the exemption, a person must be inoculated with one of the four vaccines approved in Canada: Pfizer Inc.-BioNTech SE, Moderna Inc., AstraZeneca Plc-Oxford University or Johnson & Johnson. Radio-Canada was the first to report the policy shift.

The easing of the hotel rule is part of the first phase of the government’s multistage plan to open the border, Hajdu said alongside Intergovernmental Affairs Minister Dominic Leblanc. Further restrictions will be lifted once more Canadians are vaccinated.

Canada closed its borders to non-essential travel in March 2020 to stop the spread of Covid-19.

(Source: Financial Post)

June 21, 2021

Canadian Softwood Lumber Industry Wants U.S. Refunds

Canada’s softwood lumber industry wants the Biden administration to refund billions of dollars that companies have paid since 2017 to cover anti-dumping and countervailing duties.

British Columbia Lumber Trade Council President Susan Yurkovichshe contends that the tariffs were unwarranted and should never have been imposed.

Any reimbursement would likely come as part of a broader agreement on softwood lumber between the U.S. and Canada. Canada has repeatedly asked the U.S. to come to the negotiating table — most recently during a G-7 summit confab between Canadian Prime Minister Justin Trudeau and Biden.

“The United States is open to resolving our differences with Canada over softwood lumber, but it would require addressing Canadian policies that create an uneven playing field for the U.S. industry,” says Adam Hodge, a spokesperson for the U.S. trade representative. “Unfortunately, to date, Canada has not been willing to adequately address these concerns.”

Lumber is not the only point of contention. Ottawa has also requested a dispute settlement panel under the United States-Mexico-Canada Agreement to address the 18% tariff the U.S. has in place on the country’s solar products.

The tariffs, introduced in the twilight of former President Donald Trump’s term in office, have so far been maintained by the Biden administration. “These tariffs are unwarranted and damaging to the global competitiveness of our long-established, secure, and deeply integrated supply chains,” Canadian Trade Minister Mary Ng said in a statement.

(Source: Politico)

June 21, 2021

Container Shipping To See Extended Peak Season

Container shipping is expected to see an extended peak season this year, with no signs of a slowdown in demand, believes Hapag-Lloyd CEO Rolf Habben Jansen, warning that if demand picked up in the traditional third-quarter peak season it would extend beyond the traditional Golden Week slowdown.

“People will start to ship early and it will probably last longer than usual,” he said, noting that demand was still strong, and unlikely to change soon. “Inventories are low, which is why people are eager to get stuff shipped; but even once we are beyond the pandemic, it’s not unlikely that people will want more inventory.”

He expects demand “will stay robust for an extended period of time”, exacerbating the current delays in the supply chain. “The theme remains congestion,” he notes. “The US is improving a little bit, but there are still ships waiting and we have not made the progress we wanted to in the second quarter. We need to have a not too strong peak season there to get out of the difficulties, which is not what we foresee at the moment.”

On top of the current demand was a “backlog of growth” from the decline in volumes shipped in the past year that still needed to catch up.

(Source: Lloyd’s Loading List)

June 16, 2021

How Bad are Global Shipping Snafus? Home Depot Has Contracted Its Own Container Ship As Safeguard

Home Depot is one of the largest importers in the country. Yet with congested ports, container shortages and Covid-19 outbreaks slowing shipments, the company made a decision: It was time to get its own boat.

“We have a ship that’s solely going to be ours and it’s just going to go back and forth with 100% dedicated to Home Depot,” President and Chief Operating Officer Ted Decker said in an interview. It marks the first time that the company has taken such a step.

Decker said the contracted ship, which will begin running next month, is just one example of the unusual measures that the company is taking as it copes with challenges that have ricocheted across the global supply chain.

Other retailers have also had to go to great lengths to try to stock stores and distribution centers and keep up with consumer demand as the economy recovers from the pandemic. For shoppers, retailers’ logistical woes are playing out in the form of out-of-stocks, long delays before a purchase’s arrival and higher prices.

(Read full article via CNBC)

June 16, 2021

Port of Los Angeles Surpasses 1 Million Container Units in Single Month

The Port of Los Angeles processed 1,012,248 Twenty-Foot Equivalent Units (TEUs) in May, a leap of 74% compared to last year. It was the busiest month ever in the Port’s 114-year history, the 10th consecutive month of year-over-year increases and the first time a Western Hemisphere port has handled more than 1 million TEUs in a month.

“The historic level of cargo that we’re managing reflects our commitment to reach new heights by working with our partners to further enhance our productivity, throughput and velocity,” said Port of Los Angeles Executive Director Gene Seroka. “Much credit goes to our longshore workforce, truckers, terminal operators, ocean carriers, railroads and other stakeholders for scaling up to meet this extraordinary demand.”

Last week, the Port of Los Angeles set another Western Hemisphere record, processing more than 10 million TEUs in a 12-month period that will end June 30^th.

(Source: Port of Los Angeles)

June 14, 2021

Container Rates Continue to Skyrocket

The sharp upward increase in container freight rates appears to have no end in sight, much to the alarm of shippers.

Delays, congestion and container availability problems are increasing at ports and terminals, largely due to the continued impacts of COVID-19.

While premium charges on top of spot rates are now so high that index rates are no longer able to capture the true cost of ocean shipping, here are approximate rate jumps for the following regions:

Asia-East Coast

The Freightos Baltic Daily Index for Asia-East Coast surged by around 20% in just the past few days. As of June 10, the Freightos rate reached $9,317 per FEU, its highest point ever and up 224% year on year (y/y).

The Drewry weekly assessment for the Shanghai-New York route was $8,251 per FEU, up 9% week on week (w/w) and 203% y/y.

S&P Global Platts provides daily assessments of Freight All Kinds (FAK) rates. Its North Asia-East Coast FAK assessment, as of Thursday, was $6,800 per FEU, up 152% y/y.

Asia-West Coast

Freightos put Thursday’s Asia-West Coast spot rate at a record-high $6,341 per FEU, up 194% y/y. Drewry’s weekly Shanghai-Los Angeles index is at $6,313 per FEU, up 6% w/w and 199% y/y.

S&P Global Platts’ North Asia-West Coast North America FAK rate was $4,200 per FEU on Thursday, almost triple the FAK rate a year ago.

Asia-East Coast

Asia-East Coast rates have been rising faster than Asia-West Coast rates, according to Freightos’ data.

Freightos’ East Coast-West Coast spread — the premium importers pay to take the long route via the Panama Canal — hit $2,976 per FEU on Thursday, a record high. It has spiked in recent days.

Trans-Atlantic Westbound

Freightos’ Europe-East Coast assessment for Thursday was $5,193 per FEU, a new record and up 164% y/y.

Underscoring how different indexes come up with different figures, Drewry’s number is much lower than Freightos’. Drewry put Rotterdam-New York rates at $3,988 per FEU, up 66% y/y.

Trans-Pacific

Rates for U.S. exports out of the West Coast to Asia have also jumped, albeit off a far lower base. Freightos assessed rates on this route at $1,208 per FEU on Thursday, up 154% y/y.

Drewry’s weekly rate is lower: $808 per FEU, up 61% y/y.

(Source: American Shipper)

June 7, 2021

Further Delays at Yantian Port due to COVID-19 Outbreak

The container shipping industry and global supply chains throughout China are facing renewed challenges due to disruptions at Yantian and the neighbouring Shekou ports in southern China near Hong Kong. The province is facing increased restrictions, which are impacting port operations at one of China’s busiest export terminals, due to newly reported cases on COVID-19.

The increased measures began in late May after cases of the COVID-19 virus were diagnosed among workers within the port. Chinese and port officials implemented stringent restrictions and disinfection routines and this week it appeared that the situation might be improving. Port officials said export would resume from the terminals, although with continuing restrictions.

All the major container shipping companies in recent days have warned customers of disruptions to the flow of containers through the port. Estimates are that there are more than 20,000 TEU now backlogged in the port, with some sources saying as many as 50 or 60 ships are now anchored out. It is sparking scenes of the congestion that built up in southern California in January and February and which the ports of Los Angeles and Long Beach are just now catching up.

As of today, the situation continues to deteriorate, as further cases of COVID-19 have been confirmed in Shenzhen, where the ports of Yantian and Shekou are located. Delays of upwards of 14 days are anticipated in the coming week.

The eastern portion of Yantian, which handles the largest containerships, is open but operating at approximately 30% of normal capacity. The western terminal remains closed entirely. To manage traffic and volumes in the port, officials are also limiting the number of days containers can arrive before their scheduled departure.

Faced with the prospects of continuing backlogs and delays, all the major shipping companies have begun to warn customers to expect delays which if not controlled could reverberate further across the supply chain.

Chinese officials are seeking to reassure the shipping industry, saying they are stepping up testing in the region. They are saying that most of the cases are not in Yantian but instead in the surrounding areas, and they hope to use quarantine programs to isolate the outbreaks. However, the ongoing restrictions and backlogs are likely to have an increasing impact on container volumes on both the European and U.S. routes as Yantian is an export hub for China.

(Source: Maritime Executive)

June 4, 2021

USTR Announces, and Immediately Suspends, Tariffs in Section 301 Digital Services Taxes Investigations

United States Trade Representative Katherine Tai has announced the conclusion of the one-year Section 301 investigations of Digital Service Taxes (DSTs) adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom. The final determination in those investigations is to impose additional tariffs on certain goods from these countries, while suspending the tariffs for up to 180 days to provide additional time to complete the ongoing multilateral negotiations on international taxation at the OECD and in the G20 process.

“The United States is focused on finding a multilateral solution to a range of key issues related to international taxation, including our concerns with digital services taxes. The United States remains committed to reaching a consensus on international tax issues through the OECD and G20 processes. Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future.”
– United States Trade Representative Katherine Tai

On June 2, 2020, USTR initiated investigations into DSTs adopted or under consideration in ten jurisdictions: Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey, and the United Kingdom.

In January 2021, following comprehensive investigations USTR determined that the DSTs adopted by Austria, India, Italy, Spain, Turkey, and the United Kingdom discriminated against U.S. digital companies, were inconsistent with principles of international taxation, and burdened U.S. companies.

In March 2021, USTR announced proposed trade actions in these six investigations, and undertook a public notice and comment process, during which it collected hundreds of public comments and held seven public hearings. USTR also terminated the remaining four investigations (of Brazil, the Czech Republic, the European Union, and Indonesia) because those jurisdictions had not implemented the DSTs under consideration.

(Read the full notice via USTR website)

June 4, 2021

OOCL Durban Destroys Two Cranes at Kaohsiung Port

An OOCL-operated boxship has initiated a massive container crane collapse at the Taiwanese port of Kaohsiung.

The 8,540-teu neo-panamax OOCL Durban initially collided with the 2,940-teu YM Constancy before its accommodation unit hit a crane causing it to collapse and topple another nearby crane.

One shore worker was injured in the incident and two crane operators were trapped in the debris. The crane operators were freed after an hour and are understood to be safe.

The incident is likely to add to significant delays to the container trades. The world’s container ports are already experiencing congestion caused by high cargo volumes and, previously, the grounding of the 20,388-teu Ever Given in the Suez Canal on 23 March.

(Source: Trade Winds)

June 2, 2021

Furniture Among Mid-Value Products Getting Priced Out of Ocean Freight

A number of comparatively lower-value commodities such as furniture and large electrical and electronic appliances are becoming priced out of major intercontinental ocean freight markets because of the elevated freight rates facing importers currently, new analysis by Sea-Intelligence has revealed.

In its latest Sunday Spotlight briefing, the Copenhagen-based container shipping consultant looked at the impact on importers of a variety of different consumer goods of the current elevated freight spot rates on the Asia to U.S. West Coast and North Europe trade lanes.

Its analysis took the average values of consumer goods held within a 40’ container based on data from OECD, compared to an average of four of the more well‑known spot rate indices for spot rates. It then placed these freight rates in the context of the retail value of the cargo, followed by adding in the carriers’ newer surcharges related to equipment availability and space priority.

These surcharges were estimated to amount to US$1,000-2,000 for Asia-NEUR and $2,000-5,000 for Asia-USWC.

Using these add-ons, together with the average spot rates, “means a de-facto spot rate of approximately $11,300-12,300/FFE on Asia-NEUR and of $7,000-10,000/FFE on Asia-USWC”, Sea-Intelligence noted.

Among the worst impacted cargo commodity category in the analysis is assembled furniture, where the freight rate now accounts for up to 62% of the retail value of the goods, and appliances, where the freight spot rate now accounts for up to 41% of the retail value for large appliances and up to 27% of the retail value for small appliances.

(Source: Lloyd’s Loading List)