Impact on US Imports and Accessibility Challenges

The closure of the Port of Baltimore due to the Key Bridge collapse presents significant challenges for US imports, particularly those destined for the East Coast. As one of the largest ro-ro ports in the United States, Baltimore handles a substantial portion of imports, with approximately 70% of its volume dedicated to inbound cargo. This closure disrupts the usual flow of goods into the region, affecting businesses and consumers reliant on timely imports.

With the port’s container terminals rendered inaccessible by the bridge collapse, importers face a critical logistical hurdle. The inability to unload incoming shipments directly at the Port of Baltimore disrupts supply chain continuity and complicates inventory management for businesses across various sectors.

Impact on Importers:

  1. Delayed Deliveries: Importers reliant on goods arriving through the Port of Baltimore are likely to experience delays in receiving their shipments. The rerouting of vessels to alternative ports, combined with potential congestion and increased transit times, prolongs the delivery process.
  2. Inventory Management Challenges: The unpredictability of delivery times and potential congestion at alternate ports pose challenges for importers in managing their inventory effectively. The inability to access goods as planned may disrupt production schedules and impact sales forecasts.
  3. Increased Costs: Rerouting cargo to alternative ports involves additional transportation expenses, such as trucking or rail fees. Importers may also face higher freight rates due to increased demand for transportation services and potential congestion-related surcharges.
  4. Supply Chain Disruptions: The disruption in the flow of imports can ripple through supply chains, affecting downstream operations and customer satisfaction. Industries reliant on just-in-time inventory systems or perishable goods may face heightened challenges in maintaining operations.

Addressing Accessibility Challenges:

To mitigate the impact of the Port of Baltimore’s inaccessibility, importers may explore alternative transportation routes and modes. This could involve diverting shipments to nearby ports with available infrastructure or leveraging intermodal transportation solutions, such as rail and trucking, to transport goods to their final destinations.

Additionally, close collaboration and communication with logistics partners and carriers are essential for devising contingency plans and adapting to evolving circumstances. Importers may need to reassess their supply chain strategies and prioritize flexibility to navigate the challenges posed by the temporary closure of the Port of Baltimore effectively.

An intense and prolonged drought in Panama has caused a worldwide shipping backlog as hundreds of ships wait to cross the canal, and logistics experts are predicting that the impact will likely continue for the rest of the year and into 2024.

The Panama Canal is the primary route for 57% of the total cargo transported in container ships from Asia to the east coast of North America, and around 6% of all global maritime commerce relies on the canal.

But unlike the Suez Canal in Egypt, which relies on free-flowing seawater, the Panama Canal waterway is supplied by fresh water from a nearby artificial lake, Lake Gatun. This year has been unusually dry, and water levels in the lake, and by extension, the Canal, have fallen significantly.

As a result, the canal authority has had to limit the number of vessels that can travel through the Panala Canal per day. Currently, that number sites at 32, which is down from the usual 36 to 38 ships per day. But as of Nov. 1, the number will be further reduced to 31.

According to Business Insider, the situation has become so dire that some shipping companies have paid millions of dollars to buy an earlier place in line. This comes as December approaches and goods for Christmas are starting to be delivered.

The Panama Canal opened in 1914 as a shortcut/alternative to ships having to sail all the way around the tip of South America. But Canal Administrator Ricaurte Vasquez told the media back in August that, “The big disadvantage that the Panama Canal has as a maritime route is that we operate with freshwater, while others use seawater.”

He added: “We have to find other solutions to remain a relevant route for international trade. If we don’t adapt, we are going to die.”

In the meantime, Automotive Logistics is reporting that container box shipments aren’t feeling supply chain problems as strongly, as the canal authority is prioritizing those vessels.

Alternative modes of transportation are also being explored. For example, Mexico’s government is reviving the 188-mile trans-isthmus railway between the Gulf of Mexico and the Pacific Ocean as an alternative for container traffic, which is planned to be up and running by next September.

To stay informed on trade news and other important updates, stay connected with a customs broker.

The U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) is proposing to significantly increase the fees for its AQI program, which assures that cargo and passenger baggage entering the country is inspected for plant pests and potential sources of animal diseases that could affect U.S. agriculture, trade and commerce.

Fees for the AQI program were last updated in 2015 based on data from 2010 through 2012, making the fee structure almost a decade out of date. According to APHIS, the outdated fee structure, combined with recent changes in international travel and shipping, means that current fees do not generate enough revenue to cover the costs of the AQI services provided.

To develop the proposed rule, APHIS conducted a comprehensive review of the AQI program to determine the actual costs incurred by APHIS and CBP (who administer the program jointly) to deliver AQI services.

The updated cost model accounts for inflation, capital improvements, and additional staffing needs. For example, for 2017 through 2019, the AQI program ran an average annual deficit of over $166 million. From 2010 to 2021, agricultural cargo imports grew over 61% by volume, and AQI staffing dedicated to conveyance and cargo clearance was not able keep pace with this growth. Workload per frontline employee increased 25% by volume from 2010 to 2021.

At the same time, changes in the size of conveyances (ships, trains, trucks) and the amounts they transport have resulted in more work being done with less funding because APHIS fees are tied to the number of conveyance arrivals, not the volume of cargo contained within them.

Proposed fee changes

Fee Service Activity Current  Proposed
January 1, 2024 October 1, 2024 October 1, 2025 October 1, 2026 October 1, 2027
Commercial Vessel (per vessel arrival) $825 $3,219.29 $3,302.23 $3,386.23 $3,471.18 $3,557.18
Commercial Truck (per truck arrival)2 $7.29 $11.40 $12.40 $13.45 $14.50 $15.55
Commercial Rail (per railroad car arrival) $2.00 $5.81 $6.51 $7.23 $7.97 $8.72
Commercial Aircraft (per aircraft arrival) $225.00 $288.41 $309.00 $330.07 $351.64 $373.68
Air Passenger (per passenger arrival) $3.83 $4.29 $4.44 $4.60 $4.76 $4.93
Cruise Vessel Passenger (per passenger arrival) $1.68 $1.20 $1.25 $1.29 $1.34 $1.39
Treatments (per hour) $237 (per treatment) $232.97 $253.19 $273.90 $295.12 $316.83

 You can leave your feedback on the proposal by Oct. 10, 2023 by visiting www.regulations.gov.

To stay informed on trade news and other important updates, stay connected with a customs broker.

The U.S. International Trade Commission (ITC) has published a report detailing the significant impact that the COVID-19 pandemic had on U.S. supply chains. The document, titled Recent Trends in U.S. Services Trade: 2023 Annual Report, includes specific discussions on retail supply chains, e-commerce, logistics, warehousing, maritime shipping, port services, trucking and rail, air cargo, and express delivery via drone.

Impacts of pandemic on transportation

The transportation services sector experienced multiple economic shocks related to the COVID-19 pandemic. These included a consumer shift from in-person purchases to online retail purchases, volatile fuel prices, and disruptions to global value chains.

A large increase in consumer demand for retail goods in the wake of the pandemic initially overwhelmed global supply chains, causing shipping and airfreight rates to spike and resulting in historic profits for ocean carriers.

U.S. cross-border exports of sea transport services changed little during 2017–20, declining at an average annual rate of 0.8% during the period, but grew by 10.2% to $19.6 billion in 2021. U.S. cross-border imports, on the other hand, grew by 63.6% to $55.9 billion in 2021, substantially faster than mymedic.es the 2.9%average annual growth rate during 2017–20.

These rate and profit increases, in turn, spurred governments to review maritime freight transport rules. Demand for goods transport via airfreight rose significantly. Firms in the e-commerce and maritime shipping sectors have recently established or significantly expanded their air cargo operations, as well as their investments in the logistics and warehousing services industries.

Increased goods imports in the United States also resulted in heavy port congestion and significant delays, concurrently spurring long-term investments in port automation and expansion.

Labor-related issues in the rail and trucking industries, resulting from worker demands for higher pay and better working conditions, have underscored the economic importance of these industries.

The delivery of goods via drone has developed more slowly than industry participants predicted. Product offerings in a few U.S. and overseas locations are limited, but firms continue to pilot new drone delivery projects.

Effect of the pandemic on imports

U.S. goods imports fell by $86 billion from first quarter of 2020 to the second quarter of 2020, representing a decline of 14.4%. However, good imports quickly returned to pre-pandemic levels by the third quarte of 2020, increasing at a faster rate than during the pre-pandemic period.

Goods services also recovered at a faster rate than service imports.

This rapid recovery in goods imports likely reflects the sharp swings in U.S. consumer demand during the pandemic. Consumer preferences shifted from purchasing services (like travel) toward recreational goods (like consumer electronics and sporting equipment). Purchases of durable goods likely also rose during the pandemic because of an increase in disposable incomes resulting from stimulus payments and other fiscal policy measures.

You can read the full report here.

To stay informed on trade news and other important updates, stay connected with a customs broker.

Shipping container fires are a growing concern for the marine shipping industry, which has reported 70 shipping container fires and counting over the past five years.

According to the Allianz Risk Barometer, the risk of fire and explosions now ranks #3 on the list of top business risks in marine shipping at 25%, behind only business interruptions (42%) and natural catastrophes (33%).

So what is causing all these fires?

The culprit is typically the combustible cargo in the containers, which includes batteries, charcoal, and cleaning products that contain chemicals like calcium hypochlorite.

According to an article in Maritime Logistics Professional, around 10% of all shipping containers loaded onto ships are declared to contain dangerous cargo. Another 5% of shipping containers contain dangerous goods that are undeclared or mis-declared, either due to honest administrative errors or because the declaration has been deliberately falsified.

Mis-declared items resulted in two serious container fires in March 2022 and August 2021. In the March incident, a shipping container caught fire as it was waiting to be loaded onto a container ship bound for China. According to the US Coast Guard (USCG), the bills of lading said that the container was carrying “synthetic resins” when it was actually carrying lithium-ion batteries.

In a similar incident in August 2021, a container full of discarded lithium batteries that were mis-declared as “computer parts” caught fire while being transported by road to the Port of Virginia, where it was due to be loaded onto a container ship.

Had these containers caught fire after being loaded aboard the container ships, the results would have been “potentially catastrophic,” according to the USCG. In fact, fires on board carrier ships have resulted in the sinking of at least two vessels in the past two years: the Felicity Age in February 2022, which sank in the Atlantic Ocean along with the 4,000 vehicles it was transporting, and the sinking of the container ship X-Press Pearl in May 2021 off the coast of Sri Lanka.

How is the shipping industry responding?

According to the Maritime Logistics Professional article, the size and design of large shipping vessels makes fire-fighting more challenging. The shipping industry needs to look at more effective ways of detective and responding to container fires, while also cracking down on dangerous goods that are mis-declared by introducing stricter regulations on how dangerous goods are classified and declared.

To stay informed on import and shipping challenges and other important updates, stay connected with a customs broker.

Every business wants their goods delivered quickly, efficiently, and if they can avoid any shipping snafu, all the better. But it’s no secret at all to importers that delays were common due to the pandemic, along with other supply chain issues. Aside from these delays, the other issue at hand is that shipping rates have increased quite a bit, forcing businesses to either raise their costs or eat the extra.

The slowdowns have gotten so intense that, in some cases, you can even find goods on boats just waiting on the open sea to enter the port.

Recommended reading: 

A Look At Record High Freight Costs

In this report by the Economist, they break down the various hurdles that importers are facing in 2022.

China immediately stopped port terminal docking after a few new cases of COVID-19 cropped up on their shores. And the new Omicron variant comes with even more closures. The problem here is that many customers are shopping online even more than before, so the demand has increased quite a bit. And while supply chains are working quite well in some places, the pandemic still leads to delays. That, combined with the volume of orders does show that there are some major challenges to overcome.

In a recent issue of FreightWaves on the topic:

“Amid the uncertainty permeating global shipping, one thing is certain: Delays at port are inevitable — and will be for quite some time. This leaves importers no time to spare, rendering additional delays unaffordable.”

All these things are obviously keeping the total costs at a very high rate. It’s a good idea to assess the total shipping costs before finding the right operator to work with for your importing needs. That’s because prices have increased quite a bit, yet there are still some options less expensive than others, which is something to keep in mind right now. Shopping around is key!

shipping delays at ports

Ports are not used to having the volume of traffic they’re dealing with right now, and more often than not, they do have a long queue of ships that are waiting to unload the merchandise that they sold. With that in mind, port congestion is causing a lot of issues for businesses on the ground. Where possible, importers and their shipping partners should add a time buffer, so end-consumers don’t get sacked with delays.

But for a lot of businesses, the main issue is that these shipping rates will not go down. If anything, they are going to continue to climb, which can be very problematic for those trying to keep themselves in the green. So at this point, the Economist suspects that we can expect the problem to last for at least the end of the year — into 2023!

It might go even further than that, some even expect 2023 to bring the same problems. We hope things will become even better, so only time can tell where we go from here and what results we can expect. It’s more important than ever to implement better shipping solutions, but due to the demand and restrictions caused by the pandemic, we can expect these things to last for a lot more time. That being said, the industry is very profitable, since profits are higher when doing the year after year comparison. 

Working with the right partners across your network is going to be incredibly important for riding the waves of the coming year. On this list of partners, a customs broker can ensure that your goods move through checkpoints smoothly — shaving off valuable time from your shipping time. If you’d like to explore working with a customs broker, you can start here. 

Most importers will be familiar with ocean transport for commercial goods in one way or another. Ocean shipping has been a central mode of moving goods throughout the world for centuries! Today, we see an increased reliance on ocean shipping in the advent of the pandemic. Even more so in 2021, as the United Nations Conference on Trade & Development (UNCTAD) has stated they predict ocean trade will likely grow by 5% this year. 

According to the Council of Supply Chain Professionals State of Logistics Report: transportation makes up 66% of total logistics costs. This is substantial and making any savings in this area can have a huge impact on the success of the business. In the same report, they state that road freight and trucking is slowing down, after years of: “scarce capacity and increasing rates reversed in favor of shippers.” As such, it is in an opportune time to explore other modes.

Of course, the global trade industry has been navigating a rocky road and there will undoubtedly be changes, as we adapt to a post-pandemic world. 

Expanding markets and taking advantage of trade opportunities is difficult without proficiency in maritime shipping!

Below, we’ll be discussing a few tips for importers that are new to ocean transport or want to learn more about this mode in general. 

Recommended Viewing: 

Import USA: Clearit USA’s Guide to importing by Ocean

Avoid Ocean Traffic Jams 

The US is one of the most maritime-connected economies in the world. This may be demonstrated by US ports reaching full capacity in 2020. This situation is expected to continue as consumer goods continue to flow into the US. Importers must find alternative routes into the US in order to avoid these “traffic jams”. The Los Angeles Port is an example of a port that should be avoided going forward. 

port traffic

Prioritize End-to-End Transparency

As we are all consumers ourselves, you may have noticed that consumers now appreciate visibility at every stage of the shipping process. From leaving the warehouse, to freight transit, to delivery accuracy. 

Trade professionals now rely on technology, such as a Transportation Management System, to help them get a good view of their operations and improve their order tracking. 

Going Intermodal

If done right, leveraging other modes of shipping, like freight and air, can help improve the efficiency of the network. Businesses that do this are looking to remain flexible to market shifts and have other options open in the case of port congestion (or other obstacles). 

Going intermodal is a trend across many markets that don’t show any signs of slowing down! As stated in the Global Intermodal Freight Transportation Market report in Research and Markets:

“The Intermodal Freight Transportation Market is expected to register a CAGR of 8.27% over the forecast period from 2020 to 2025.”

—

The CSCMP report concludes with some interesting remarks and recommendations for shippers going forward:

“Supply chains will need to be more flexible to cope with uncertainty. That will result in less emphasis on lean operations and more on optionality and inventory.”

Economically bright times are ahead. The success of a business often lies in its logistics and learning to leverage multiple modes of transport — including ocean — will be an important step towards vitality and growth in 2021. 

If you’d like to learn more about partnering with a customs consultant to assess your supply chain or a broker to help you move goods into the US, click here to get started. 

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As we are now a few months out from the initial COVID-19 outbreak, it’s clear that importers are reckoning with shifts in the market. All things considered, it’s an opportune time to look into an overview of the identifiable impacts of the pandemic on the industry so far, perhaps as a way to prepare for the unexpected. 

Other recommended reading on the topic: 

American Imports and Navigating COVID-19: Q&A With Founder & President Adam Lewis

Guide to HS Classification Codes for Medical Supplies

Surprising Goods Spiking in Import Volume During the Pandemic

There is still no way to know exactly what the future holds — for the importing industry — and world trade at large. In the name of staying informed, it’s important to look at what has happened in the US, on the whole, so far. 

Here are some quick demonstrative stats:

It’s certain that the disruptions in the global supply chain is a clear demonstrator of the impacts of COVID-19, starting with China’s forced shutdowns of factories as a preventative measure, and beyond.

In the US, companies must manage their supply chain processes closely in order to be prepared. Many importers/companies have historically operated with tight lead times, looking more like weeks and not the recommended couple of months, which must change in order to adapt to the “new normal”. In turn, we might see more US companies unable to finish their own production and unable to bring products to customers in a timely fashion.

importer less demand

Moving into more indicators in the importing space of how the pandemic has shifted the realities, let’s take a look at some import specific factoids: 

import FBA essentials

In these strange times, it is unclear what the full scope of the impact of the pandemic might look like. But what is clear is that importers must keep themselves apprised of economic trends, work with brokers to navigate regulatory shifts, and (in most cases) prepare for decreased revenues.

Now is an opportune time to link up with a customs broker to ensure the business is moving forward with caution and taking advantage of any possible duty/tax breaks that may be provided at the regulatory level. To start a no-commitment conversation with customs broker, you can click here.

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The logistics of getting your goods from supplier to warehouse is a big part of importing. Sea, air, or land, insured or uninsured, LCL or FCL — you have a lot of decisions to make. How do you know what’s right for you?

Your customs broker partner — that’s us — can help you make the right decisions for every shipment. In general, however, there are some guidelines that will ring true for every import — like the differences between FCL and LCL shipping.

In a nutshell, deciding between FCL and LCL ocean freight for your imports is like deciding between monthly or yearly payments for a subscription. If you only need a few months, paying monthly is cheaper — but if you’re planning on subscribing all year, you should pay the yearly lump sum up front to save money overall.

There is a little bit more to it than that, though — so let’s go over FCL and LCL shipping!

Affordable Bulk Shipping: FCL

FCL stands for Full Container Load. An FCL designation means the goods in a container belong to just one importer — no consolidation of cargo happens before shipping. Given FCL shipments start in 20 foot containers and go up in size from there, small importers are less likely to ship FCL.

Typically, FCL shipments are priced at a flat rate per container size. This makes FCL shipping more expensive if you’re not using most or all of the container, but if you do need that much space, FCL will save you money. To that end, FCL is a smart choice for big importers or anyone with a lot of stock to import at once; if you don’t need all stock on hand right away, letting your orders sit until you have more to ship can cut costs.

When you ship FCL, the shipment is typically loaded and sealed by the supplier; the shipping company doesn’t touch it. If you’re worried about safety, FCL reduces the number of people who interact with your goods. Typically, FCL is also the quicker option — though only by a few days — because less people are involved in packing.

There are a few downsides to shipping FCL, though. Even though some people ship FCL without filling an entire container, you still need enough stock to fill at least half of one for FCL shipping to make more monetary sense — not every importer can wait that long for that much stock to ship. There is less flexibility for your delivery options, and typically, you’ll be involved with unloading in some way; FCL shipping is less convenient than LCL.

Convenient Shipping: LCL

LCL — Less than Container Load — is the alternative to FCL shipping for anyone without a lot of goods to import at once. Though it’s more expensive per item to ship LCL, it’s cheaper overall if you’re not shipping bulk.

The biggest advantage LCL has is its flexibility. Shipping LCL makes delivery appointments easier, and you might not even have to think about the logistics of delivery at all — just hit order and wait for your stock. It’s a convenient option for small importers who aren’t ordering in bulk and allows you to top off popular items without needing to wait for a full shipment.

LCL does have its downsides, though it’s hard to justify waiting for enough backordered stock to ship FCL. Because LCL is packed by a consolidator, more people are involved in handling your goods than FCL, which opens then up to more chances for damage. You typically can’t track your LCL shipment, and FCL is usually a few days faster.

Shipping on Land: FTL and LTL

FTL (Full Truckload) and LTL (Less Than Truckload) are types of shipping closely related to FCL and LCL.

Like FCL, FTL shipping is cheaper overall if a shipment can fill all or most of a trailer, starting at 48 feet. In the same vein, LTL is like LCL; more expensive per item, but cheaper for small volumes and more convenient overall. Like with LCL and FCL, the choice to use one or the other will generally fall on how much you have to ship. If what you’re shipping fills up half or more of a truck as LTL, you should consider FTL.

If you still have questions — or if you’re unsure about what you should use for your shipment — get in touch! As customs experts, we’re on hand whenever you need. Clear your shipment in minutes with Clearit!

 

 

Like it or not, whether you’re shipping by land, sea or air, there’s always a possibility that your cargo will be damaged along the way.

There’s no way of completely guaranteeing safe cargo. You can’t control natural disasters, weather anomalies, human error, or, if you’re unlucky, dishonest shippers. Just a handful of problems could cause a major financial impact — from thousands of dollars to millions for the larger shippers in the industry.

When shipments are lost, stolen, damaged, or worse, irreparably ruined, your business can run into serious problems. Luckily, there are steps you can take to ensure you control your losses if it should happen.

What is cargo insurance?

First and foremost, there are things that a shipper can do in order to safeguard their cargo. These small steps can go a long way in ensuring your goods will reach their destination without any hiccups or damages:

The last point is important, because while doing it on your own can save you money, that isn’t necessarily the best practice. You can triple check your inventory and personally secure all of your shipments, but issues can, and will likely, arise.

Cargo insurance, at its most basic form, is a policy that protects your goods from physical loss or damage during transit. That means if your cargo doesn’t arrive safely to its destination, you’re taking precautions and the insurance will provide compensation so you can replace the lost or damaged goods.

Of course, cost and coverage will vary from package to package, and also varies depending if you want to insure land cargo transport, sea and air cargo transport, or a combination of two.

Why do I want cargo insurance?

Cargo insurance will save you money in the long run. Cargo damage is an almost unavoidable phenomenon eventually, so why take the chance?

Here are few examples of insurance package types typically available:

All risk coverage insurance: The name says it all. With this type of insurance, you should expect to be protected in most facets of the shipping process — though there are always some exemptions. This coverage usually insures:

Average coverage: In these cases, prior to shipping, the shipper usually decides how much the insurance will cover. It will only come into effect if there are serious financial losses to the cargo. This coverage is more suited to sea shipments, and usually covers a specified number of unforeseen issues, such as:

Ready to purchase cargo insurance? Hire a customs broker.

Taking care of the insurance package of your cargo might seem easy enough, but there are certain nuances only a customs broker will know. Their knowledge of cross-border shipping and government policies on trading will help you discover the most efficient and affordable package.

A customs broker can also help you in the process of understanding cargo insurance. You might feel knowledgeable and comfortable dealing with insurance companies, but ultimately the broker will be far more suited in handling these discussions while keeping in communication with you as you decide on what kind of coverage you’d like for your shipments.

Contact Clearit USA for your cargo insurance needs.