November 2002 - Issue #8
In This Issue:
West Coast Strike Update
Update on Customs 24-Hour Cargo Manifest Rule Proposal
U.S. Customs Grants Legal Authority to Brokers for Social Security Requests
Soon to be Designated ATPDEA Beneficiary Countries
Standard Duty-Free Personal Exemption Due to Increase
Reconciliation Seminar Offered
Trade Industry News
West Coast Strike Update
The backlog of vessels continues in all west coast ports. There are over 65 vessels awaiting berths in Los Angeles/Long Beach. Thanks to federal mediation, the International Longshore and Warehouse Union (ILWA) and the Pacific Maritime Association (PMA) resumed negotiations on October 24, 2002 in San Francisco. The Taft-Hartley eighty-day cooling off period expires on December 26,2002. Carriers report that ports are not operating at 100% productivity. The PMA is seeking Federal action; they have filed papers in court stating the union is operating at 70% productivity. The National Labor Relations Board is asking for documentation from both sides.
The good news is that there are no major delays reported for East Coast-destined cargo, once the containers reach the rail terminal. The bad news is that there is still significant congestion at the ports of L.A./ Long Beach and San Francisco/Oakland. (Seattle and Tacoma are in much better shape). For a listing of vessels queued to berth at L.A. or Long Beach, please refer to the following website: www.marexlalb.org.
Right now, most carriers are not taking bookings right now to the East Coast via West Coast ports; it could be several weeks before the service is offered again. Carriers that provide all water service to the East Coast are at full capacity. As a result, ocean freight rates are increasing on almost on a daily basis. While shipping via the Panama Canal is an option, the vessels that sail to the East Coast via the Canal are smaller than the vessels that call on West Coast ports.
In an effort to recoup losses incurred during and after the West Coast strike, effective mid-November 2002, ocean carriers are implementing a West Coast Congestion Surcharge of $ 500.00 per 20’ container and $1000.00 per 40’ container. The surcharge is payable along with the ocean freight, and will apply to any import or export cargo at west coast ports; it will also apply to shipments arriving from or sailing to Europe, South America, Australia, New Zealand and Africa. All shippers will have to pay the charge - even parties with service contracts are not exempt.
There is a major container shortage in Asia at this time. Several carriers have run out of equipment because vessels that would have normally taken back empty containers are still on the west coast or have just begun their journey back to Asia. The port of Shanghai, in particular, is suffering major problems.
Airfreight space is extremely scarce everywhere and rates are increasing; unfortunately, there is not enough capacity to meet the requirements of importers. This is especially true from Asia; rates that were $3.00 per kilo in September are now over $5.00 per kilo from Hong Kong to JFK. The airfreight market from Europe is still strong. Rates have gone up by an average of .05-.10 per kilo.
Ocean freight rates from Europe have also been increasing. Most carriers have taken increases from $ 75.00 - $150.00 per TEU from Northern Europe and the Mediterranean. All carriers raised their bunker fuel surcharge by as much as $49.00 per TEU. Carriers are expected to raise rates again after January 1, 2003. The airfreight market from Europe is still strong.
Export rates are very competitive for air and ocean shipments. Some carriers are reporting that their vessels are overbooked for up to two weeks. The situation on the West Coast, and the impending surcharge has resulted in a higher demand for all water service to Asia.
Samuel Shapiro & Company can meet the transportation needs of our import and export clients. We have space on vessels and airlines from Asia to the east coast. Please contact Marketing@shapiro.com if you require assistance.
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Update on Customs 24-Hour Cargo Manifest Rule
As previously reported in Issue 6 of "Shap" Talk, the U.S. Customs Commissioner announced recently a proposal which would require that sea carriers provide cargo manifests to Customs 24 hours prior to the loading of cargo for shipment to the United States.
According to the latest information available, Customs will continue to respond to the numerous comments that have been presented by the trade community and will work to ease any concerns. However, Customs is determined to quickly move forward with its approval and implementation of the proposal. Final approval of the 24-Hour Rule by the U.S. Treasury Department is pending. The final rule is expected to be issued in three to four weeks if little or no changes are made.
The advanced notice of manifest information will enable Customs to evaluate the terrorist risk of cargo containers before they are loaded on vessels bound for the United States. The 24-Hour Cargo Manifest Rule, which may be staged in phases, is an essential component of the Container Security Initiative (CSI). Under the CSI program, the U.S. is entering into partnerships with other governments to target and screen high-risk sea containers in foreign ports before they are shipped to the United States. Customs advised that this regulation is needed to fully implement this initiative.
In a recent address, U.S. Customs Commissioner Bonner lauded the benefits of the proposal; he suggested that it will allow Customs to focus their resources and more accurately target at-risk cargo. He explains that timely and accurate descriptions of cargo are a "must" and that, for the CSI program to succeed, we must prohibit the past practices of providing incomplete or vague descriptions. The Commissioner says that, without the 24-Hour Rule Customs "cannot substantially increase the security of global trade" and "cannot provide the efficiency benefits provided by CSI".
Source: "Update on Customs' Proposed Rule to Provide Cargo Manifests to Customs 24-Hours Prior to Vessel Lading", from International Trade Today-All News Edition, dated 10/10/2002, and "Customs Commissioner Discusses the Importance of the Proposed 24-Hour Manifest Rule to the Success of CSI" from International Trade Today-All News Edition, dated 10/22/2002.
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U.S.Customs Grants Legal Authority to Brokers for Social Security Number Requests
After it was determined that ultimate consignees were refusing to provide information, the U.S. Customs Service has authorized that Customs Brokers be legally allowed to request the social security numbers of ultimate consignees, in cases where the ultimate consignees are not the importers of record. For a copy of the authorization letter please contact our Compliance Department at compliance@shapiro.com
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Soon to be Designated ATPDEA Beneficiary Countries - Colombia, Bolivia and Peru
The Bush Administration has announced that Colombia, Bolivia and Peru will soon receive favorable trade benefits provided for under the Andean Trade Promotion and Drug Eradication Act (ATPDEA). Only the countries of Bolivia, Colombia, Ecuador, and Peru, currently beneficiary countries under the Andean Trade Preference Act (ATPA), are eligible for consideration for benefits under ATPDEA. The United States continues to carry on discussions with the government of Ecuador regarding future participation in the program. President Bush is expected to proclaim the three countries as beneficiary countries under the ATPDEA program soon. The Harmonized Tariff Schedule (HTS) will subsequently be amended to include the provisions of ATPDEA, the African Growth and Opportunity Act (AGOA) and the Caribbean Basin Trade Partnership Act (CBPTA), which were all provided for in the Trade Act of 2002.
Source: "USTA Announces that Colombia, Bolivia and Peru Will be Designated ATPDEA Beneficiary Countries", from International Trade Today-All News Edition, dated 09/27/2002.
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Standard Duty-Free Personal Exemption Due to Increase
The enactment of the Trade Act of 2002 has resulted in an increase of the standard duty-free personal exemption from $400 to $800. The standard personal exemption is the total amount of merchandise that foreign travelers may bring back into the U.S. without having to pay duty. The increase is scheduled to take place on November 4, 2002. Customs advises that all other personal exemption rates will remain unchanged.
For additional information see the fact sheet posted to the U.S. Customs website at http://www.customs.ustreas.gov/hot-new/pressrel/2002/1016-02.htm.
Source: "Traveler's Standard Duty-Free Exemption will Increase to $800", from International Trade Today-All News Edition, dated 10/18/2002.
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