Trade News

February 17, 2021

Shortage of Shipping Containers a Critical Concern

Recently, shipping containers have become hard to come by. Business who need them to transport goods across the globe are paying an all-time high for them. Normally, this is a good problem, a sign of a searing economy that needs to create a bit more capacity to grow. Shortages in the context of a COVID-constrained economy are harder to grasp.

What is going on, and how are Canadian exporters affected?

Economic conditions were tight just as COVID-19 hit. Unemployment rates were at cyclical lows, income growth was strong, and it looked as though we were finally experiencing the kind of robust conditions that had eluded us since the global financial and economic crisis of 2008. And with all the economic heat, there was no container crisis. Oh, lease rates did rise, but nothing like what we’re seeing now.

The pandemic saw lease rates plunge close to cyclical lows, but the move was momentary: rates were on the rise almost immediately, and they haven’t stopped. The HARPEX index of contained shipping costs is now more than double the pre-pandemic average rate, and every size-class of container ship is affected. In a world still worried about the true state of final demand, upstream price increases like this are a worry of a different kind, as they’re eating into already-thin margins.

The timing of recovery sheds light on the problem. China was the first to be hit with the pandemic and is arguably the most successful in conquering it. China’s merchandise exports were pummelled in February 2020 and recovered fully in the following two months. Everybody else saw their exports suffer in March and April, and it wasn’t until June that levels were nearly back to the pre-pandemic marker. China’s jumpstart pushed full containers to ports everywhere, but the lack of return business stranded empties all over the place.

(Read full piece via EDC)

February 16, 2021

Nigeria’s Ngozi Okonjo-Iweala Appointed Next WTO Director

Nigeria’s Ngozi Okonjo-Iweala was appointed Monday to head the World Trade Organization, becoming the first woman and first African to take on the role, amid disagreement over how the body decides cases involving billions in sales and thousands of jobs.

Okonjo-Iweala, 66, was named director-general of the World Trade Organization, which deals with the rules of trade between nations, by representatives of the 164 member countries.

She said in a statement that her first priority would be quickly addressing the economic and health consequences of the COVID-19 pandemic and to “implement the policy responses we need to get the global economy going again.”

The appointment came after U.S. President Joe Biden endorsed her candidacy, which had been blocked by former president Donald Trump.

Biden’s move was a step toward his aim of supporting more cooperative approaches to international problems after Trump’s “America first” approach that launched multiple trade disputes.

But unblocking the appointment is only the start in dealing with trade disputes launched by Trump and in resolving concerns the United States has about the WTO that date to the Obama administration. The U.S. had blocked the appointment of new judges to the WTO’s appellate body, essentially freezing its ability to resolve extended and complex trade disputes.

Okonjo-Iweala is the first African official and the first woman to hold the job.

She has been Nigeria’s finance minister and, briefly, foreign minister, and has had a 25-year career at the World Bank as an advocate for economic growth and development in poorer countries. She rose to the No. 2 position of managing director, where she oversaw $81 billion US in development financing in Africa, South Asia, Europe and Central Asia.

(Source: CBC News)

February 10, 2021

B.C. Blueberry Growers Await U.S. Decision on Tariffs

Blueberry growers in British Columbia are eager to learn the outcome of a U.S. International Trade Commission decision this week on the question of whether American blueberry producers have been harmed by imports from countries like Canada.

Since September, the threat of tariffs or quotas on the majority of the province’s blueberry exports has loomed. On Thursday, the USITC will vote to either proceed with determining what those will be, or determine there has not been harm from imported blueberries and the issue will go away.

The National Farmers Union claims that between 2015 and 2019, growers’ operating returns fell by 32.4%. The statement names Canada, along with Mexico, Peru, Chile and Argentina as countries responsible for the increased imports to the U.S.

But according to Anju Gill, the executive director for the B.C. Blueberry Council, that surge isn’t coming from British Columbia, which grows about 95% of Canada’s highbush blueberries. There’s a wild blueberry industry based in Eastern Canada.

Gill added that B.C. and the U.S. share a very close relationship when it comes to blueberries, with an even and reciprocal amount of berries crossing the border in both directions most years.

The USITC process is what’s known as a Section 201 Global Safeguard investigation. Unlike World Trade Organization disputes, it’s undertaken by an agency within the U.S. government and it doesn’t look into conditions like subsidies that make international trade unfair — just whether a U.S. industry is suffering as a result of imports

(Source: CBC News)

February 10, 2021

CP Winter Planning: Extreme Cold Weather

Due to the extreme cold from the Prairie operating region (Alberta, Saskatchewan, Manitoba) to Northern Ontario, North Dakota and Minnesota, Canadian Pacific has enacted its winter operating plan and train-length restrictions.

Customers may expect near-term delays of up to 48 hours. CP is encouraging customers to plan ahead and account for extended timelines, as the cold weather is expected to continue throughout this week.

Click here to learn more from CP.

February 10, 2021

U.S. Container Imports On Track For Record-Setting Year

U.S. containerized imports are expected to set new monthly records from now into the summer as the country’s economy continues to recover from the pandemic, according to retail experts.

The National Retail Federation project record volumes for each of the first six months of the year, January through June, while the first half of 2021 as a whole is forecast at 11.5m teu, up 22.1% from the same period in 2020.

The import numbers reflect retailers’ expectations for consumer demand to the point that many factories in Asia that normally close for Chinese New Year this month are choosing to remain open to keep up with demand.

Record holiday season and numbers for 2020 demonstrate consumer optimism, with a surge in purchasing that has been sustaining for months, so that retailers are importing merchandise faster than ever.

February is historically the slowest month of the year for imports, both because of the lull between the holiday season and spring and because factories in Asia close for the Chinese New Year holiday.

But this February is forecast at 1.91m teu, up 26.3% year on year, with 25-30 container ships waiting to berth at the ports of Los Angeles and Long Beach and with many Asian factories remaining open during the holiday to meet demand.

March is forecast at 1.93m teu, up an “unprecedented” 41% from March 2020, while April is forecast at 1.82m teu, up 13.3% year on year; May at 1.9m teu, up 23.8%, and June also at 1.9m teu, up 18.2%.

Retail sales during the November-December holiday season in 2020 hit a record $789.4bn, up 8.3% from 2019, and preliminary figures show retail sales for all of 2020 were up 6.8% year-over-year.

(Source: Lloyd’s List)

February 8, 2021

Montreal Airports Increasing Cargo Landing Fees

Montreal’s airport authority, ADM Aeroports de Montreal, is increasing fees in an attempt to stay financially afloat during the pandemic.

ADM Aeroports de Montreal is the airport authority for the Greater Montreal area responsible for the management, operation and development of YUL Montreal-Trudeau International Airport, and YMX International Aerocity of Mirabel.

Effective April 1, 2021, the airport is increasing landing fees for all-cargo flights. An airport improvement fee (AIF) equivalent fee of $10 per seat will also be charged for all non-terminal flights and general aviation at YUL, effective on the same date.

ADM has introduced an increase in airport improvement fees (AIF) charged to departing passengers from YUL, similar to other Canadian airport authorities. The AIF, used exclusively to fund infrastructure projects essential to maintaining safe operations at YUL, was increased from $30 to $35 on February 1.

“Although a major budget rationalization exercise has reduced ADM’s operating expenses and capital budget for the coming years to a strict minimum, it is clear that stronger measures were needed to provide us with the flexibility to continue operating our airport sites. ADM is at a crossroads, although we still believe in the resilience of our industry. While these rate increases will help us, they are far from sufficient. When the time comes, we will have to train the hundreds of employees we had to let go at the beginning of the crisis to ensure adequate service when the recovery comes.”
– Philippe Rainville, President and CEO of ADM Aéroports de Montréal.

For 2020, the not-for-profit ADM estimates it will have a shortfall of $300 million. It says new restrictions, the emergence of variants of Covid-19, and the extended border closure will continue to put significant pressure on its financial performance in 2021.

(Source: Inside Logistics)

February 3, 2021

CBP Issues Region-Wide WRO on Products Made by Slave Labour in Xinjiang

In line with Canada’s decision, U.S. Customs and Border Protection will detain cotton and tomato products at all U.S. ports of entry produced in China’s Xinjiang Uyghur Autonomous Region.

CBP issued a Withhold Release Order (WRO) against cotton products and tomato products produced in Xinjiang based on information that reasonably indicates the use of detainee or prison labour and situations of forced labour. The agency identified forced labour indicators through the course of its investigation including debt bondage, restriction of movement, isolation, intimidation and threats, withholding of wages, and abusive living and working conditions.

The WRO on cotton and tomato products originating in China’s Xinjiang Uyghur Autonomous Region applies to cotton and tomatoes grown in that region and to all products made in whole or in part using this cotton or these tomatoes, regardless of where the downstream products are produced.

These products include apparel, textiles, tomato seeds, canned tomatoes, tomato sauce, and other goods made with cotton and tomatoes. Importers are responsible for ensuring the products they are attempting to import do not exploit forced labour at any point in their supply chain, including the production or harvesting of the raw material.

Click here to read the full notice from US CBP.

February 3, 2021

B.C. Exporters Experiencing Container Squeeze Amid COVID-19 Recovery

Canadian exporters are being caught in a squeeze trying to get products out of the Port of Vancouver, as they face a surge of imports flooding into North America from China’s manufacturing sector since a COVID-19-related downturn, and a rush to return empty shipping containers to keep up with factory output.

From August 2020 to the end of the year, container terminals received 467,217 import containers, a 17% increase from the same period in 2019. During the same period, they handled 160,476 containers being sent back to destinations empty, a 26% increase from 2019.

“I’m hearing a couple of different stories,” said Brian Hawrysh, CEO of B.C. Wood, an industry group that represents B.C. value-added wood producers. “Some folks have said, ‘No, it’s not an issue,’ and others have said, ‘Yes, we’re having a hard time getting containers for export shipment, particularly for shipping to Asia.’ ”

The rush to get containers back to Asia has also caused a time squeeze for exporters, Hawrysh added.

The squeeze is putting pressure on exporters globally, particularly in food commodities, Bloomberg News reported this week, resulting in higher prices for everything from sugar to soy beans.

At the Port of Los Angeles, officials told Bloomberg three out of four containers leaving its terminals were being sent back empty to destinations.

Such a mismatch between where the world’s containers are versus where they’re needed is a dynamic that export economists feared would be inevitable as the restart of the world’s economy following COVID-19-related interruptions has happened unevenly.

Since September 2020, Hall said shipping rates for container vessels have more than doubled, according to an index compiled by Harper Peterson & Co Ship Brokers and published under the Harpex title.

For Canadian retailers struggling through a radical shift to online retailing, those surging shipping rates “take away the margins that you’re desperately hoping for just to cobble your business back together,” Hall said.

(Source: Vancouver Sun)

February 1, 2021

UK Applying to Join Asia-Pacific Free Trade Pact

The UK will apply to join a free trade area with 11 Asia and Pacific nations today in an effort to boost UK exports — a year after it officially left the EU.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership – or CPTPP – covers a market of around 500 million people. Members include Australia, Canada, Japan, New Zealand, Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam.

Joining the bloc would reduce tariffs on UK exports such as whisky and cars, as well as service industries. However the immediate impact is likely to be modest, as the UK already has free trade deals in place with several CPTPP members, some of which were rolled over from its EU membership.

The UK already has trade deals with seven of the 11 nations – and is pursuing two more. In total, CPTPP nations account for less than 10% of UK exports, a fraction of what goes to the EU. This deal would however deepen some of those ties – and allow UK manufacturers who source components from multiple nations in the bloc some benefits under “rules of origins” allowances.

But the real boost could come in the future, if others join – in particular the US, as President Biden has hinted. That would give the UK that hoped-for trade deal with America – within a trading bloc wielding considerable power on the global stage.

(Source: BBC News)

January 27, 2021

China, New Zealand Sign Upgraded Free Trade Deal

China and New Zealand have signed a deal to upgrade their existing free trade pact, which will give commodities exports from the Pacific nation increased access to the world’s second-largest economy.

New Zealand said the agreement “modernizes” the existing free trade agreement with China and ensures it remains fit for purpose for another decade. It makes exporting to China easier and is expected to reduce compliance costs for New Zealand exports by millions of dollars each year.

The upgrade will also mean that 99% of New Zealand’s nearly NZ$3-billion ($2.16-billion) wood and paper trade to China will be granted tariff-free access.

The deal will benefit New Zealand exporters of perishable goods such as seafood, the forestry sector, and other primary sector industries.

Existing conditions for dairy products have been maintained, with all safeguard tariffs to be eliminated within one year for most products, and three years for milk powder.

New Zealand was the first developed country to sign a free trade agreement with China in 2008, which has long been touted by Beijing as an exemplar of firsts with Western countries.

China is now New Zealand’s largest trading partner, with annual two-way trade of over NZ$32-billion ($21.58-billion).

(Source: The Globe and Mail)