December 2021
By NNR USA In Uncategorised On 7th December 2021
Market Summary
As the year ends, we can soon put 2021 behind us. 2021 brought us port congestion, rail delays and shutdowns, truck and drayage shortages, demurrage, labor shortages, trade policy changes, and unheard-of rate increases. 2021 has challenged us and forced us to innovate faster and smarter than ever before. Air and ocean charters, transloads, cross-border, omnichannel, and FBA are just some of the tools we had to learn to use to overcome the challenges of 2021.
International transportation hasn't been this interesting since… ever.
Today, tens of thousands of TEUs are piled up at U.S. west coast ports, with over 96 container ships still on the water outside the ports of LA and Long Beach; this is compounded by all the additional containers still tied up elsewhere in the supply chain. One thing is clear. There's a lot of freight far from its final destination.
So, what does the new year mean for you? Coming soon, the beginning of the end of severe congestion and rate increases. And if you are importing, don't forget to check your tariff classifications for changes coming Jan 1st!
Air Freight
Tip of the Month
- Keep communication open with your freight forwarder. Communicate your needs early and often
- Think outside the box and have an open mind. Consider multi-modal transportation like air-sea hybrid options.
Buckle up! We're still on the roller coaster!!!
The air freight situation in the U.S. and worldwide is not improving. Rates remain extremely high from APAC to the U.S. and Europe and may not decline before the Chinese New Year.
On the Ground in the U.S.A.
The cargo handling situation at the ground handler level creates a rippling bottleneck.
- Terminal congestion remains a problem at our main hubs JFK, ORD, and LAX.
- Ground handlers have increased their import and export handling rates despite providing poor service, inability to locate freight timely.
- Trucking companies are now placing a cap on how long their drivers will wait at airport terminals as wait times reach all-time highs.
Demand
Interestingly, according to CLIVE Data Services, demand decreased in November by 1.2% compared to the previous month. It is not due to lack of demand but mostly because cargo cannot be pushed efficiently through the supply chain. Airports' ongoing congestion, ground handler backlog, ULD-pallet shortage, and labor shortage have created an intense airfreight industry.
Capacity
Cargo capacity remains a problem despite the reopening of passenger flights adding cargo availability on widebody aircraft.
- November capacity was down 12% compared to pre-COVID.
- Capacity improvement will take some time.
- Depending on aircraft type and routes, capacity may slightly recover or decline.
Ocean Freight
Tip of the Month
Chinese New Year is approaching with planned vessel suspensions.
If you have any cargo originating from the South China region, please check with your suppliers and plan with our NNR offices an alternative route and options to move your products.
The U.S. southern Californian coastline continues to be congested with vessels lined up waiting to berth. West coast ports have implemented several fees to motivate the movement of containers off port property. And the International Longshore Warehouse Union (ILWU) rejected a one-year contract extension request from west coast carriers and terminals.
Notable Disruptions & Port Highlights
- BNSF Railway Congestion, containers will no longer be able to ingate at Logistics Park Chicago to Los Angeles until further notice. There is no estimated time of when the gate will reopen. Reopening is dependent on congestion conditions improving in Los Angeles.
- Port of Charleston is targeting mid-December to clear anchored vessels.
- Port of Los Angeles, Long Beach has 96 ships waiting offshore. Average days at anchor: 20.6 days. Dwell time averaging around 6 days. Total import containers on terminal at Port of Los Angeles: 58,554
- Port of Vancouver suffers from congestion caused by flood, heavy rain, and landslide, with over 53 vessels at anchor.
- South China Feeder Services will be suspended for Chinese New Year, causing shipping disruption.
New Fees Effective in December
There are new fees arising from port terminal congestion where containers are slow to move out of the port. Fees have been implemented to encourage the movement of import containers.
Ports of Los Angeles & Long Beach
- Container Dwell Fee: Effective date to be determined. First announced in late October, the effective date has been delayed several times due to a nearly 40% decline of aged cargo on docks. The ports will reevaluate the situation and reconsider the fee on December 13th. When implemented, the fee will accrue on import containers dwelling at the ports for nine days or more and rail containers for six days or more at $100 per container, increasing in a $100 increment per container for each day that follows.
- Pier Pass: Effective from December 1, 2021 through January 31, 2022, the Traffic Mitigation Fee (TMF) will be $78.23 per TEU or $156.46 for all other sizes of container for non-exempt international container moves through the terminals at the ports of Los Angeles and Long Beach between the hours of 7:00 a.m. and 5:59 p.m. Monday through Friday. This temporary adjustment is subject to regulatory clearance by the Federal Maritime Commission. The purpose is to incentivize container movement during off-peak hours.
Port of Seattle/Tacoma
- Dwell Charge: $50 per day effective December 1, 2021, on containers dwelling longer than five days. The per-day fee increases every five days.
Domestic Transportation & Warehouse
Tip of the Month
Recognizing that Amazon will continue to innovate and be a supply chain leader, we invite you to join our upcoming quarterly webinars to learn how to do business with Amazon to get maximum return on your supply chain resources.
When Overnight Shipping is no Longer Guaranteed Overnight
In the past, both UPS and Fed-Ex guaranteed refunds on express-level service packages that didn’t meet delivery goals.
In March 2020, citing the pandemic and increased e-commerce shipping, both companies ended the guaranteed refunds program. In April 2020, both companies reinstated their overnight guarantee, though UPS changed the delivery standard from 3 pm to 11:59 pm.
Fed-Ex has suspended its Money-Back Guarantee until January 16, 2022. Fed-Ex has not yet stated if they will restart their refund program.
Shippers will need to consider this new landscape as they plan their delivery strategy in 2022 and beyond.
Amazon Continues to Push the Boundaries
To meet holiday demand and build on customer trust created during the pandemic lockdowns, Amazon continues to push on the edges of global supply chain.
Recognizing the situation of the U.S. west-coast ports, Amazon chartered a vessel, the Olive Bay, and started running shipments directly from China to Everett, Washington.
This new capacity, along with the 80 aircraft of Amazon Air, has allowed the company to publicly state they expect to fulfill at least 95% of their holiday demand.
Cross-Border: USA - Mexico - Canada
September Cross-border Truck Facts
In September 2021, the three busiest U.S. border truck ports were Laredo, Detroit, and El Paso, accounting for 43.8% of cross-border trucking movements.
On the U.S. – Mexico border, trucking accounted for 71% of movement between the two countries, transporting goods with a value of $38.7 billion. This is a 13% increase over September 2020.
Cross-border trucking between the U.S. - Canada border accounted for 55% of movement between the two countries, transporting goods with a value of $29.9 billion.
Customs Brokerage & Trade Compliance
Tip of the Month
Review your tariff classifications and Schedule B numbers against the WCO Correlation Table to check if your product classifications will change in the new year.
New Tariff Classification Changes Coming January 1st
The World Customs Organization (WCO) recently announced that the final 2022 edition of the Harmonized System tariff nomenclature is now available on its website. The new edition, which replaces the 2017 version, will take effect January 1, 2022. WCO HS Convention members must implement the changes in their own tariff schedules.
The 2022 Harmonized System includes significant changes to the tariff nomenclature with 351 sets of amendments as follows:
77 = agricultural sector
58 = chemical sector
31 = wood sector
21 = textile sector
27 = base metal sector
63 = machinery sector
22 = transport sector
52 = other sectors
The nomenclature is used by over 200 countries at the six-digit level with countries free to finalize their own tariff schedules at the eight- and 10-digit levels.
- The WCO also posted correlation tables that correlate the 2017 and 2022 editions of the HS tariff nomenclature.
- U.S. International Trade Commission Recommended Modification to the Harmonized Tariff Schedule, 2021
Feature Article
How Long Will the Great Supply Chain Chaos of 2021 Last?
Go in-depth with Markus Armstrong, Business Development Manager - National Accounts, to find out more about the Los Angeles / Long Beach port congestion issue.