Trade News

May 31, 2021

U.S. Commerce Department Doubles Tariffs on Canadian Softwood Lumber

A move by the U.S. Commerce Department to increase preliminary tariffs on softwood lumber imports from Canada, if finalized, will raise producer costs and cut into their profits but is unlikely to affect prices to consumers of wood products, analysts say.

The department’s recommendation to more than double the “all others” preliminary countervailing and anti-dumping rate to 18.32% from 8.99% has drawn criticism from the Canadian government and industry, and applause from the lumber industry south of the border.

The increase is unlikely to result in higher lumber prices because they’ve more than doubled in the past year to all-time record highs, said Kevin Mason, managing director of ERA Forest Products Research.

“Prices are supply-and-demand driven,” he said. “(Tariffs) drive the cost up for producers but it’s not going to affect prices.”

Because it’s a preliminary tariff rate, current cash deposit rates will continue to apply until the finalized rates are published, likely in November.

“U.S. duties on Canadian softwood lumber products are a tax on the American people,” said Mary Ng, minister of Small Business, Export Promotion and International Trade, in a statement.

“We will keep challenging these unwarranted and damaging duties through all available avenues. We remain confident that a negotiated solution to this long-standing trade issue is not only possible, but in the best interest of both our countries.”

Former president Donald Trump’s administration imposed a 20% “all others” tariff on Canadian softwood in 2018, before the onset of the COVID-19 pandemic, but lowered it to about 9% late last year after a decision favouring Canada by the World Trade Organization.

Unfair Subsidy Allegations

The increased tariffs will hurt American consumers who are faced with a market where supply can’t keep up with demand, said Susan Yurkovich, president of the BC Lumber Trade Council.

“We find the significant increase in today’s preliminary rates troubling,” she said in a news release.

“It is particularly egregious given lumber prices are at a record high and demand is skyrocketing in the U.S. as families across the country look to repair, remodel and build new homes.

“As U.S. producers remain unable to meet domestic demand, the ongoing actions of the industry, resulting in these unwarranted tariffs, will ultimately further hurt American consumers by adding to their costs.”

She called on the U.S. industry to end its decades-long campaign alleging Canadian lumber is unfairly subsidized and instead work with Canada to meet demand for “low-carbon wood products” the world wants.

In a separate news release, Jason Brochu, U.S. Lumber Coalition co-chair, applauded the Commerce Department’s commitment to enforce trade laws against “subsidized and unfairly traded” Canadian lumber imports.

The coalition says the U.S. industry remains open to a new U.S.-Canada softwood lumber trade agreement “if and when” Canada demonstrates it is serious about negotiations.

(Source: CBC News)

May 27, 2021

California’s massive container-ship traffic jam is still really jammed

Peak shipping season is coming soon — and the “parking lot” of container ships stuck at anchor off the coast of California is still there, with Oakland surpassing Los Angeles/Long Beach as the epicenter of congestion.

Shipping giant Maersk warned in a customer advisory on Wednesday that Los Angeles and Long Beach “remain strained with vessel wait times averaging between one to two weeks.” But it said “the situation is even more dire at the Port of Oakland, where wait times now extend up to three weeks.”

West Coast port delays are having severe fallout for liner schedules. Congestion in California equates to canceled voyages as ships can’t get back to Asia in time to load cargo. Even as U.S. import demand soars, the effective capacity in the trans-Pacific trade is being sharply curtailed by voyage cancellations.

For importers, that means even longer delays, even higher all-in freight rates and a cap on how much can be shipped at any price.

Maersk said that 20% of its capacity from Asia to the West Coast has been lost year to date as a result of operationally induced “blank” (canceled) sailings. It currently expects 16% of its Asia-West Coast capacity to be lost from now until the end of June and 13% to be lost from now until the end of August. “This unfortunately means Maersk may not be able to fully honor its original allocations for all customers,” the carrier admitted.

To put current cancellations in context, they are now running at the same percentage that carriers intentionally blanked in Q2 2020 to compensate for the sudden collapse of import demand when U.S. businesses were shuttered by nationwide lockdowns.

(Read the full article via American Shipper)

May 27, 2021

Yantian Port halts entry for export containers

The Port of Yantian said it will stop taking in loaded containers as congestion at the export hub in Southern China deteriorates.

The restriction will be implemented from 2200 hrs local time on May 25 to 2359 hrs on May 27 and will only be partly lifted afterwards for export boxes with their vessels expected to arrive at the port within the next four days.

Pickups of import or empty containers, however, will still be allowed over the period.

The decision was made due to “the serious delay in ship schedule has led to extremely high density at Yantian’s storage yard and has severely affected the operational efficiency at terminals”, a port statement said.

Schedules of vessels arriving in China have been partly disrupted by the pandemic-led logistics bottleneck at some foreign ports, especially those in the US, as well as by the fallout from the Suez Canal blockage.

However, Yantian’s move also comes with an ongoing coronavirus outbreak in the port area since last week.

The local health authorities reported another infection case on Tuesday following four confirmed earlier. All five port workers were involved in handling the Panama-flagged containership OOCL Vancouver on May 17.

It also warned that more cases might be found in the coming days.

The situation has raised carriers’ concerns over a worsening logistics logjam at the port.

Maersk told Lloyd’s List in a statement: “We expect the Yantian port congestion level will increase due to the quarantine measures implemented by local authorities, contingency plans for service recovery will be reviewed from our side.”

The city’s transport bureau has asked ports, shipping lines and logistics companies to tighten up their anti-virus measures, which could lead to further delay in vessel calls and cargo clearance based on past experience.

Port sources said Yantian has ordered a 14-day quarantine period for vessels with crew members who have tested positive. The isolation will start from the disembarkment date of the infected seafarers on board.

Crew with recent travel to ”high-risk” countries, such as India, are also requested to have a swab test before their vessels are allowed to dock.

Lloyd’s List has sought comments from the local port authorities.

Some carriers are said to have started to avoid Yantian to prevent further service delays.

(Source: Lloyd’s Loading List)

May 19, 2021

New FDA FSVP Importer Portal

The Food and Drug Administration (FDA) opened a new portal for food importers to submit their Food Supply Verification Program (FSVP) documents. The FSVP requires importers who are designated as FSVP importers to conduct activities to verify that their foreign suppliers are producing food in accordance with U.S. food safety standards. When requested in writing by the FDA, FSVP importers must provide FSVP records to the agency electronically. The new portal is meant to facilitate this process.

To access the portal, FSVP importers with an active FDA Account ID and password should go to FDA Industry Systems and scroll down to the FSVP Importer Portal. An account can also be created at this same link.

FDA also reminded the trade that they will close the Dun & Bradstreet (D&B) lookup portal on the FDA website on May 24, 2021. The FDA has had an arrangement with D&B whereby industry partners could request a DUNS number through a dedicated portal on the FDA website. D&B is a private registrar company that provides DUNS numbers-a unique nine-digit identifier used by businesses throughout the world, including many FDA applications.

D&B will continue to provide DUNS numbers and users will be able to perform queries directly via the existing D&B web platform. D&B will provide firms a DUNS number free of charge, but this may take 45 business days or longer. D&B also provides an expedited service for a nominal fee.

May 17, 2021

Why Sky-High Container Rates Could Go Even Higher

Spot ocean container rates are up triple digits year on year, therefore, they must be near their peak. They’re so high they don’t have much more room to run. So goes a common belief in the container market, despite the fact that this premise has already been proven wrong, and that container rates could theoretically have a lot more room to run if the upper limit is defined the same way it is in non-containerized shipping.

Retail inventories-to-sales ratios are still at historic lows, stimulus checks are still supporting spending, and the traditional peak season is right around the corner. Meanwhile, U.S. households accumulated an enormous amount of excess savings during the pandemic (equivalent to 12% of GDP, according to Moody’s) that may now be unleashed.

The current rate spike is unprecedented in the history of container shipping. The sector is in completely unchartered territory (one reason why rate predictions over the past nine months have been repeatedly wrong). However, there is an extensive history of precedents in non-containerized shipping — in crude tanker, gas carrier and dry bulk markets — that shed light on how high the maximum spot rate can go.

The freight rate of a spot cargo in bulk commodity shipping is elastic all the way up to the point where it erases the profit margin of the shipper. Rates for very large crude carriers (VLCCs, tankers that carry 2 million barrels of oil) topped $200,000 per day in October 2019 and March-April 2020. A liquefied natural gas carrier was booked at $350,000 per day in January.

Stifel analyst Ben Nolan explained the max-rate calculation for Capesizes (dry bulk ships with a capacity of around 180,000 deadweight tons) in a research note titled “How High Can You Go?” published last week.

“Turns out, at current commodity prices … the dry bulk market is nowhere close to its theoretical ceiling,” he wrote. “If demand exceeds supply, the primary upward constraint of ship freight cost is the point at which it absorbs the profit of the producer or shipper.”

He noted that the landed price of thermal coal in China last week was about $125 per ton and the producer breakeven was $60 per ton, meaning the transport costs could be as much as $65 per ton. Capesize rates were then around $13 per ton (the equivalent of $40,000 per day), meaning “freight rates would need to rise seven times or to around $300,000 per day before the economics are completely destroyed by freight costs.”

(Read the full article via American Shipper)

May 17, 2021

Hapag-Lloyd Sets A $3,000 GRI

Hapag-Lloyd has just announced a $3,000 per 40ft GRI on Asia to the US and Canada services from 15 June.

A year ago, the Shanghai Containerized Freight Index (SCFI) US west coast component stood at just $1,686 per 40ft – 12 months on, and shippers are paying up to $14,000 to ship the same cargo on the same route in the same ships.

Although today’s Freightos Baltic Index (FBX) reading for the route jumped 9.5%, to $5,516 per 40ft, there is virtually no chance of shippers securing space at that price.

For the US east coast, the FBX spot rate spiked by 11.5% on the week, to $7,358 per 40ft, but here too shippers are likely to have to pay substantially more to get equipment and a guaranteed shipment.

“With nearly 40% of containers getting rolled, many shippers are paying significantly more in premiums in the hopes of getting space,” said Freightos research lead Judah Levine.

Even some BCOs that have signed new annual contracts with carriers are reported to be scrambling to get their products shipped as the lines row back on start dates and volume commitments in favour of abundant lucrative spot and short-term business.

And shippers face much the same challenges on the Asia-Europe tradelane: sky high rates, equipment shortages and premium charges that often still result in containers being rolled.

“The Asia ocean freight market is broken right now,” said UK-based NVOCC Westbound Logistics. “We are experiencing conditions on this trade that we have never witnessed before,” the forwarder told its customers this week.

The FBX component for North Europe increased by 1.74% this week, to $8293 per 40ft, which, although an astonishing 460% higher than a year ago, is unlikely to turn the heads of carriers that are effectively auctioning space to the highest bidders, some of which are prepared to pay $16,000 or more to secure prompt shipment.

It is the same story on Asia to Mediterranean services, where the FBX spot of $9,395 per 40ft, up 5% on the week before, will not buy space much before July or August.

And, perhaps even more worrying for North European exporters to the US, considering the pace of the rate hikes, the FBX transatlantic component leapt by 20% this week to a new record of $4,299 per 40ft, the rates having doubled in the past two months.

However, alongside the highly elevated freight rates squeezing the margins of retailers, leading to higher prices in shops and potentially kick-starting a return to economy-damaging high inflation, Westbound Logistics said there may be some “light at the end of the tunnel” for beleaguered shippers.

“With delayed vessels arriving back in Asia over the next few weeks, we believe we should see an easing of current market conditions between the middle of June and early July,” it said.

(Source: The Loadstar)

May 13, 2021

Over Half of Container Bookings Rolled at Ports

Container shipping service quality is continuing to worsen, with the number of boxes being rolled increasing.

Figures from freight visibility platform project44 shows the percentage of containers missing their scheduled sailings is rising, with some carriers and ports rolling more than half their cargo in April.

Carriers have been watching their rollover rates increase for over a year, and have so far failed to mitigate the situation.

The average rollover rate for April across ports and carriers surveyed by the company was 39%, but there were outliers such as Malaysia’s Port Klang, Rotterdam and Athens showed signs of “endemic congestion”, rolling 64%, 54% and 59% of cargo, respectively.

Hapag-Lloyd, CMA CGM and Ocean Network Express all showed worsening performance in April, posting rollover rates of 51%, 56%, and 53% respectively.

“Other global ports and carriers reported similar numbers showing that abysmal performance now seems to be the industry norm,” project44 said. “With shippers entering their second year of pandemic-induced volatility, these numbers are a sobering reminder that volatility and under capacity are the new normal.

Rates are almost universally trending upwards, and well above the levels posted during April 2020.

(Source: Lloyd’s Loading List)

May 12, 2021

Ports of Los Angeles and Oakland Report Record Cargo Surges

The Port of Los Angeles and Port of Oakland both reported a record cargo surge in March.

During an April 14 press conference, Port of Los Angeles Executive Director Gene Seroka detailed how the L.A. port processed 957,599 20-foot equivalent units (TEUs) last month. It was a 113 percent increase compared to March 2020 when the COVID-19 pandemic severely limited global trade and the port processed fewer than 450,000 TEUs.

Seroka described the cargo surge as the port’s version of “March Madness” and explained that they were “breaking records” with the increased level of activity. The nearly 1 million TEUs, which would be large during the peak season in September or October, is unprecedented during this time of year. “We’ve never seen volume like this in the first half of a calendar year,” Seroka said.

It was the strongest March in the port’s 114-year history, outpacing the previous record of March 2015 by 21%. It was the port’s busiest first quarter, third busiest month and the largest monthly year-over-year increase ever.

“As more Americans get vaccinated, businesses reopen and the economy strengthens, consumers continue to purchase goods at a dizzying pace. I applaud our longshore labor force, truckers, terminal operators and supply-chain partners, who are working day and night to process the additional cargo,” Seroka said. “Collectively, we have been able to significantly reduce the amount of container vessels awaiting offshore. I’m also proud of the steady progress being made to vaccinate waterfront workers at the port’s on-site locations and elsewhere.”

Similarly, the Port of Oakland reported single-month record import and export numbers during March. The port received the equivalent of 97,538 TEUs and shipped out the equivalent of 94,169 TEUs last month. In the port’s 94-year history, neither number had ever been achieved.

“Ships are full, ocean freight rates are sky high and the need for empty containers to ship more cargo is never-ending,” Port of Oakland Maritime Director Bryan Brandes said. “We just don’t see conditions easing in the next several months.”

Similar to the experience at the Port of Los Angeles, the Port of Oakland had a decrease in imports and exports last March at the beginning of the pandemic. But this year’s March imports saw a 45% increase and exports increased 12% year-over-year.

The port also said its volume is up nearly 9% through the first three months of 2021.

And growth is not expected to slow down, according to Marilyn Sandifur, port spokesperson for the Port of Oakland. Sandifur said the port and other industry leaders are expecting large cargo volumes to continue at least throughout the summer.

A couple of key factors for the port’s continued strong performance is that ocean freight rates remain high while vessel space is tight, the U.S. economy continues to bounce back due to consumers’ engagement in retail therapy, and the peak-season trade is expected to begin in August. The port is expected to benefit from these and other factors including major e-commerce retailers, which have established distribution hubs close to the port and an increase in labor to help meet demand and the backlog of containerships.

Both the Port of Los Angeles and Port of Oakland are expecting continued growth in the coming months.

(Source: Apparel News)

May 10, 2021

Shippers Experiencing Massive Increases or Rolled Cargo

Shippers from Asia to Europe saw a further spike in container spot rates this week, particularly for Mediterranean ports, while ocean carriers are said to be preparing big increases in short-term rates as cargo-rolling becomes the norm.

On the transpacific, carriers are sold out for the rest of May and into June.

The North Europe component of the Freightos Baltic Index (FBX) increased by 5% this week, to $8,127 per 40ft, which represents a remarkable 475% increase on the same week of last year.

For the Mediterranean, the FBX spot jumped 10%, to $8,868 per 40ft, as shippers from Asia scrambled for space to meet urgent inventory replenishing for the summer holiday season. Short-term rates have spiked by a ‘less spectacular’ 345% compared with 12 months ago.

The Ningbo Containerized Freight Index commentary reported “considerable cargo” for Europe was rolled this week, as demand for space “remained very high”.

This week has seen FAK carrier rates to North Europe of up to $14,000 per 40ft, with one Shenzhen-based forwarder offering a “very good rate”, with guaranteed space, of $12,000 per 40ft from Chinese main ports to Felixstowe or London Gateway for a late May shipment.

For the transpacific tradelane, this week’s FBX recorded a 3.5% increase for Asia to the US west coast, to $5,015 per 40ft, and a 5.5% uplift to spot rates for the east coast, to $6,584 per 40ft.

Meanwhile, on the normally robust transatlantic route, shippers from North Europe are still struggling to secure space and being obliged to pay much higher rates with a raft of surcharges and premium fees to secure shipment.

The FBX component for North Europe to the US east coast was up 4% this week, to $3,558 per 40ft – nearly double the rate of a year ago. And CMA CGM has hiked its Sea Priority Go premium charge on the transatlantic to $2,000 per 40ft.

With the spot market indices only representing average rates in the marketplace, shippers are often frustrated that they cannot book space at index rates.

(Source: The Load Star)

May 6, 2021

Canada Imposes Duties on Upholstery from China and Vietnam

Upholstered furniture from China and Vietnam sold in Canada now is subject to country-wide duties of 295.5% and 101.5%, respectively, after a preliminary determination of dumping by the Canadian International Trade Tribunal.

CITT found “reasonable indication” that dumping and subsidizing of upholstered seating made in China and Vietnam has or is threatening to damage Canada’s domestic furniture manufacturing industry. The CITT will continue its inquiry and expects to issue its ultimate finding by September 2.

A letter from the Canada Border Services Agency notified importers that provisional duties will be collected on subject merchandise as of Wednesday, May 5.

Twenty-eight Chinese manufacturers were assigned separate rates ranging from 20.65% to 226.45%, while seven manufacturers in Vietnam received separate duty rates ranging from 17.44% to 89.77%. A list of those companies can be found here.

Under Canada’s Special Import Measures Act, importers are required to declare their company’s liability, if any, for provisional duties and taxes on any subject goods imported into Canada, and it is their responsibility to inform their customs broker if they are importing goods subject to provisional duties and to ensure proper declaration of subject goods and proper payment of duties. Importers can go here for a self-assessment.

CBSA launched the investigation in December based upon a complaint filed by Palliser Furniture and supported by fellow Canandian manufacturers Elran Furniture Ltd., Jaymar Furniture Corp., EQ3 Ltd. and Fornirama Inc. The move looks to limit the penetration of motion upholstery and leather stationary furniture from China and Vietnam into Canada. According to CBSA, the Canadian market for such merchandise has been estimated at $675 million annually.

Click here to read the full notice from CBSA.

(Source: Furniture Today)