ShapTalk 33 - January, 2005

"Shap" Talk

January, 2005 - Issue #33

In This Issue:

Shapiro Launches Regularly Scheduled Direct – LCL - Service from Italy to Baltimore
World Customs Organization (WCO) Endorses “Framework of Standards”
Customs Quota Processing During December Holidays
CITA Announces Guidelines for Entry of Over-shipments of Quota Goods
Entry Limits for Over-shipments of 2004 Quota Exports
Entry Limits for Over-shipments of Chinese Textile Quotas
CBP Free Trade Agreement / Program Comparison
2006 Expiration of the GSP Program
National Industrial Transportation League (NIT) Criticizes CBP’s Second Draft of Proposed C-CTPAT Security Standards
U.S. and Canada Commit to Further Cooperation on Security
USTR Considers Removing GSP Eligibility from Brazil Due to IPR Concerns
State Department / DDTC Raises Registration Fee
Transportation Update – January 2005

Trade Industry News

Shapiro Launches Regularly Scheduled Direct – Less than Container Load - Service from Italy to Baltimore

Avoid the delays and congestion in New York. Shapiro ocean consolidations provide faster delivery time of goods to Mid-Atlantic region.

In a continuing effort to turn Baltimore into an alternative hub for LCL cargo, Samuel Shapiro & Company, Inc. announced another regularly scheduled direct – less than container load (LCL) service. Shapiro is now offering LCL service from Italy to Baltimore. Following the footsteps of Shapiro’s successful inaugural Hong Kong consolidation, Shapiro, along with its Italian agent M.P. International, have managed to reduce transit times once again.

“The concept is pretty simple; all cargo is received weekly in Milan and sails from La Spezia to Baltimore on Mediterranean Shipping Company vessels,” said Marco Mazzanti, Director of M.P. International’s Operations in Milan. “This is the only direct LCL service into Baltimore from Italy. Most consolidations from Italy arrive in New York where LCL containers are broken down and then moved by truck, in-bond to Baltimore, Philadelphia, and Boston. Cargo can take up to seven to fourteen days to travel from New York to Baltimore,” said Mazzanti. Bypassing the bottleneck in New York by using the Port of Baltimore has enabled customers to realize an actual reduction in transit to the Mid-Atlantic.

As Shapiro’s services continue to grow based on customer demand, other regularly scheduled consolidations will be inaugurated in 2005, with a goal of providing weekly services from Germany, Shanghai, and Taiwan as well. “Our consolidations are becoming more popular because of our competitive pricing and the fact that we can meet the needs of customer transit times,” stated James Shapiro, Vice President of Transportation and Director Regional Sales for Samuel Shapiro & Company, Inc. “We did the analysis and found an alternative service on which we can deliver. No importer wants to wait an additional seven to fourteen days for cargo to travel from New York to Baltimore,” said Shapiro. “We can serve a large market by using Baltimore. Our local charges for stripping and truck loading are 40-50% lower than New York,” Shapiro added.

Shapiro hopes that both LCL consolidation services from Italy and Hong Kong will help accelerate the arrival of direct LCL cargo into the Mid-Atlantic region. Typically, LCL cargo into Baltimore arrives in-bond from New York. However, due to congestion and customs delays in New York, cargo can take one week or more to arrive into Baltimore by truck. Shapiro’s consolidated cargo is usually available at the warehouse within one to two days of arrival at the port. The Port of Baltimore is one of the few main ports in the United States that is not congested.

If you would like more information regarding our new consol service from Italy, please email us directly to Marketing@shapiro.com or call 410-539-0540 ext. 221.

World Customs Organization (WCO) Endorses “Framework of Standards”

U.S. Customs and Border Protection (CBP) has issued a press release announcing that on December 9, 2004, the World Customs Organization (WCO) endorsed a Framework of Standards to secure and facilitate global trade that is based upon principles designed and implemented by CBP.

The WCO Framework is designed to encourage cooperation between worldwide Customs administrations to secure international supply chains and facilitate the movement of goods. The use of advanced electronic information and smarter, more secure containers are vital components.

The Framework will create an international, consistent system for identifying businesses that offer a high degree of security. In return, they receive tangible benefits including the speedy clearance of low risk cargo through Customs.

The WCO Framework shares some key elements with current CBP initiatives such as:

The 24-Hour Rule
The Advanced Targeting System housed at the National Targeting Center
The Container Security Initiative (CSI)
The Customs-Trade Partnership Against Terrorism (C-TPAT)

The Framework consists of four core elements:

1.it harmonizes the advance electronic manifest information requirements on inbound, outbound, and transit shipments;

2.each country that joins it commits to employing a consistent risk management approach to address terrorism and other security threats;

3.it requires that at the reasonable request of the receiving nation, based on a comparable risk targeting methodology, the sending nation’s Customs administrations will perform an outbound inspection of high-risk containers using non-intrusive detection equipment, such as large-scale x-ray machines and radiation detectors; and

4.it defines benefits that Customs will provide to businesses that meet minimal supply chain security standards and best practices.

While the Framework is considered a minimum set of standards, it will be implemented at various stages in accordance with each administration’s capacity and the necessary legislative authority. The WCO Secretariat, in conjunction with the HLSG, will develop an Implementation Plan for the Framework Standards.

Authorized traders and logistics service providers will reap benefits, such as faster processing of goods by Customs, through reduced examination rates. This, in turn, translates into savings in time and costs. One of the main tenets of the Framework is to create one set of international standards with uniformity and predictability. It also reduces multiple and complex reporting requirements.

Source: CBP press release (dated 12/09/04) available at http://www.cbp.gov/xp/cgov/newsroom/highlights/12102004.xml

Customs Quota Processing During December Holidays

CBP Offices will not be open to accept or process quota entries on December 24, 2004 or December 31, 2004. Entries can be presented from 8:30 a.m. to 4:30 p.m., Monday through Friday, December 13, 2004 through December 23, 2003 and December 27, 2004 through December 30, 2004.

Whenever holidays fall on a non-workday – weekend – the holiday is observed on Friday if the holiday falls on Saturday or Monday if the holiday falls on Sunday. This year Christmas and New Year’s fall on a Saturday. Therefore, December 24th and 31st are designated as a public holidays for Federal employees.

Questions regarding this message should be directed to Headquarters Quota Enforcement and Administration Branch at (202) 344-2650.

CITA Announces Guidelines for Entry of Over-shipments of Quota Goods

The Committee for the Implementation of Textile Agreements (CITA) has announced that it is directing U.S. Customs and Border Protection (CBP) to stage the entry of goods exported in 2004 in excess of 2004 quota limits. The CITA notice is available at: http://otexa.ita.doc.gov/fr2004/dec13.htm

Entry Limits for Over-shipments of 2004 Quota Exports

All textile and apparel shipments exported from the following list in 2004 will not be allowed entry into the U.S. until February 1, 2005.

WTO countries
Non-WTO countries with expiring bilateral agreements (currently Laos, Russia, and Ukraine), that exceed their applicable 2004 agreed quota limit. U.S. bilateral agreements with Laos, Russia, and Ukraine expire on December 31, 2004, but could be extended.

Over-shipments will be permitted to enter in an amount equal to 5% of the applicable 2004 base quota limit. These limits will be effective for each month beginning February 1, 2005.

In addition, 2004 quotas that are currently either closed or on-hold in 2004 may be affected by this policy as well.

Entry Limits for Over-shipments of Chinese Textile Quotas

Exports of textiles and apparel subject to the China safeguard quotas on cats 222, 349/649, and 350/650 that are in excess of their applicable December 24, 2003 – December 24, 2004 limits will not be allowed entry until January 24, 2005.

These China safeguard quotas are currently filled for the period of December 24, 2003 – December 24, 2004.

Effective for each one-month period beginning January 24, 2005, such over-shipments will be permitted to enter in an amount equal to 5% of their applicable safeguard limit.

Additionally, Burma textiles and apparel, as well as other products, are subject to an import ban. Kuwait’s category 361 and United Arab Emirates (UAE) categories 315 and 361 are subject to limits of zero.

Source: Notice on Over-shipment Procedures is available on The Federal Register Website at: http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-27374.pdf

CBP Free Trade Agreement / Program Comparison

Customs and Border Protection has posted to its website a comparison document of The NAFTA Implementation Act, US-Singapore FTA Implementation Act, US-Chile FTA Implementation Act, and the Generalized System of Preferences (GSP). This document is an excellent reference source covering such items as the US Code citation, the Code of Federal Regulations citation, the primary party responsible for compliance, the level of documentation or data required to be on file with importer at time of entry summary, value, complete Duty Phase-Out Period, and other helpful items to navigate these agreements and programs.

To access the full comparison document, please refer to the CBP website at: http://www.cbp.gov/linkhandler/cgov/import/international_agreements/fta_comparison.ctt/fta_comparison.doc Additional questions maybe directed to compliance@shapiro.com.

2006 Expiration of the GSP Program

We have received queries from our importers concerning the expiration of the Generalized System of Preferences (GSP) program, which is due to expire December 31, 2006. At this time, we expect the GSP program to be renewed by Congress. As time draws near, we will observe closely in order to advise our importers of any developments concerning the expiration of GSP.

National Industrial Transportation League (NIT) Criticizes CBP’s Second Draft of Proposed C-TPAT Security Standards

On December 3, 2004, the National Industrial Transportation (NIT) League sent a letter to U.S. Customs and Border Protection (CBP) expressing concerns over the second draft of the revised security standards that have been proposed by CBP regarding the Customs-Trade Partnership Against Terrorism (C-TPAT).

Source: NIT League letter to CBP (dated 12/03/04) available at http://www.nitl.org/CBPFiling.pdf.

U.S. and Canada Commit to Further Cooperation on Security

Over the past decade, Canada and the United States, in conjunction with Mexico, have taken important steps to expand economic opportunities in North America. Since September 11, 2001, the U.S. has also worked closely to address the threat of terrorism and enhance the security while increasing the flow of trade.

On November 30, 2004, Canada and the United States committed to deepening cooperation in North America and in the world. Both nations work bilaterally to address Canada-U.S. priorities and continue its close cooperation with Mexico on issues of trilateral importance.

This New Partnership will set an agenda designed to increase the security, prosperity, and the quality of life of our citizens by (partial list):

Reinforcing the joint efforts pursuant to our Smart Borders Accord, keeping borders open for business but closed to terrorism;
Expanding economic opportunity by making businesses more competitive in the global market place;
Enhancing mutual efforts to protect the environment, improve the ability to combat infectious disease, fight crime, and prevent trafficking in humans and illegal drugs;
Improving the coordination of intelligence-sharing, cross-border law enforcement and counter-terrorism;
Taking further steps to secure the Canada-U.S. border while improving the flow of legitimate traffic;
Ensuring the security and integrity of passports issued by each country;
Pursuing joint approaches to partnerships, consensus standards, and smarter regulations, while enhancing the health and safety of citizens;
Accelerating efforts to reduce "rules of origin" costs on goods traded between both countries;
Expanding technology partnerships that promote the clean and efficient use of energy resources;
Enhancing public health coordination in infectious disease surveillance.

This partnership extends beyond North America. Internationally, Canada and the United States are committed to working together to advance democratic values and fundamental human freedoms; both nations will work to counter terrorism and prevent the proliferation of weapons of mass destruction and their delivery systems, among other goals.

Source: “Common Security, Common Prosperity a New Partnership in North America” at http://www.whitehouse.gov/news/releases/2004/11/20041130-3.html appearing on The White House website on November 30, 2004.

USTR Considers Removing GSP Eligibility from Brazil Due to IPR Concerns

On December 6, 2004, the Office of the United States Trade Representative (USTR) announced that it will continue to review a petition to remove Generalized System of Preferences (GSP) benefits from Brazil for inadequate protection of intellectual property rights.

The U.S. Generalized System of Preferences (GSP), a program designed to promote economic growth in the developing world, provides preferential duty-free entry for more than 4,650 products from 144 designated beneficiary countries and territories. According to International Intellectual Property Alliance (IIPA), estimated losses due to piracy of copyrighted materials totaled $785 million in 2003, an increase of $70 million over the previous year and the largest loss in the hemisphere.

The U.S. Government has held a series of meetings with the Government of Brazil and notes the measures taken to date to address copyright piracy concerns. These discussions have resulted in identification by the Government of Brazil of a number of key priorities and actions to combat copyright piracy through enforcement of existing laws. There have been some positive developments in Brazil, including the report of the Commission on Parliamentary Inquiry to address piracy, some moderate successes in civil copyright infringement cases and improved dialogue and information sharing regarding copyright piracy through the U.S. – Brazil Bilateral Consultative Committee. In the meantime, the review of the petition has been formally extended through March 31, 2005 in order assess Brazil’s progress in meeting these shared goals.

Despite the recent efforts, U.S. copyright holders argue that they continue to suffer substantial losses due to piracy. In 2003, duty-free GSP imports from Brazil totaled $2.5 billion and comprised 14 percent of total imports from Brazil of $17.9 billion. Brazil accounted for 12% of total U.S. GSP imports of $21.3 billion in 2003. Key GSP imports from Brazil include: motor vehicle parts and accessories; granite monument/other stone; copper cathodes and other copper products; and wood and millwork products.

Source: “Brazil Generalized System of Preferences Intellectual Property Rights Review Extended” at http://www.ustr.gov/Document_Library/Press_Releases/2004/December/Brazil_Generalized_System_of_Preference s_Intellectual_Property_Rights_Review_Extended.html appearing on the Office of the United States Trade Representative’s website on December 6, 2004.

State Department / DDTC Raises Registration Fee

The Directorate of Defense Trade Controls (DDTC) has raised registration fees. Effective December 8, 2004, all new or renewing registrants must pay the increased annual registration fee of $1,750. Registrants may renew up to a maximum of two years. Registrants may refer to Federal Register (Vol. 69, No. 235) published on December 8, 2004, for detailed information on this ITAR revision http://www.pmdtc.org/docs/FRNotices/22FR70888.pdf. The registration code format will also be changed.

All manufacturers, exporters, and brokers of defense articles, defense services, or related technical data, as defined on the United States Munitions List, are required to register with DDTC. Registration is primarily a means to provide the U.S. Government with necessary information on who is involved in certain manufacturing and exporting activities. Registration does not confer any export rights or privileges, but is a precondition for the issuance of any license or other approval for export.

Registration Fees are as follows:

1 Year $1750.00
2 Years $3500.00

For additional information, please refer to the U.S. State Department website at: http://www.pmdtc.org/registration.htm

Transportation Update – January 2005

OCEAN TRANSPORTATION

FAR EAST
Space problems have eased a bit from the Far East to the east coast. The all water services to the east coast are running at nearly 100% capacity. There is a new all water service that will begin in early January from the Far East calling on Savannah, Norfolk and New York. This will add approximately 3000 TEU’s to the trade.

The delays on the west coast of the USA in Long Beach/Los Angeles have continued. It’s still taking upwards of 2 weeks for containers to arrive by rail to the east coast. Seattle and Tacoma are experiencing record increases in container throughput at this time. Evergreen Lines will open its new state of the art container terminal in Tacoma in January 2005. The new terminal will give Evergreen an even stronger presence in the Port of Tacoma.

Carriers are raising the bunker fuel charge from Asia to the United States.

Carrier bunker fuel charges will change as follows:

20’ container $ 205.00 will go up to $ 240.00
40’ container $ 275.00 will go up to $ 320.00
40 HC container $ 310.00 will go up to $ 360.00
45’ container $ 350.00 will go up to $ 410.00

The Alameda Corridor Surcharge will remain at $16.00 per 20’ container but will go up to $33.00 from $32.00 per 40’ container and 40’ HC container.

EUROPE
Northern Europe
Carriers have announced that they will lower the bunker fuel surcharge effective January16, 2005 from Northern Europe to the United States. They will remain in effect until at least February 15, 2005.

The new bunker surcharges are as follows:

20’ container $156.00 to the East Coast and $ 247.00 to the west coast
40’, 40’ HC and 45’ container $322.00 to the East Coast and $ 484.00 to the west coast.

This is a significant reduction on this trade. The carriers will also raise the Currency Adjustment Factor (CAF) from 7% to 9%. There is also a significant shortage of open top containers throughout Europe at this time. Carriers are raising their special equipment surcharges due to this shortage.

Carriers are also charging a congestion surcharge for all containers destined to Long Beach/Los Angeles. Effective November 15, 2004 there is a $200.00 surcharge per 20’ container and $400.00 surcharge per 40’ container.

Germany
The long delayed nationwide truck toll is expected to be launched in January 2005. The toll will be charged on the German highways throughout the country on a per kilometer basis. It is expected to add up to 15% in additional costs for transporting cargo in or through Germany. The cost is essentially 15 cents per mile. The toll will be levied on all trucks weighing more than 12 metric tons. The goal is to shift cargo from the highway to the rail and riverways. The toll is expected to raise 4 billion dollars annually from the 1.4 million trucks that use the German highways each year.

The Mediterranean
Carriers are still having major problems in the MED/USA trade lane. The redeployment of larger vessels to Asia and the introduction of smaller vessels into the trade have created a space problem from Turkey, Italy, Spain and Portugal. Carriers are overbooked for up to 2-3 weeks. Bad weather has also caused delays.

Italy & Spain
Some carriers have announced a General Rate Increase (GRI) effective January 1,2005 of $400.00 per 20’ container and $500.00 per 40’ container. Mediterranean Shipping Company (MSC) is leading the pack in announcing this increase. To date all the carriers have not followed suit. If MSC does raise their rates it will affect importers in Baltimore and Boston the most since MSC is the only direct call to either port.

Air News
Air AMS has been implemented all over the USA. Rates from Asia should begin to move downward now that the peak shipping season is over. Air rates should begin to drop off in early January.

Fuel surcharges are starting to do down. The fuel surcharge from Hong Kong has been reduced from 42 cents per kilo to 36 cents per kilo. If the price of oil continues to decline we can expect a drop in the fuel surcharge.

Export Ocean News
The TACA (Trans Atlantic Conference Agreement) carriers to Europe have announced increases in 2005. It remains to be seen if carriers will be able to increase rates to Europe as announced. Carriers have a plan to raise rates quarterly by $160.00 per 20’ container and $ 200.00 per 40’ container effective Jan 1st, April 1st, July 1st and Sept. 1st. It is doubtful that the carriers will be able to raise rates to this degree going westbound.

Domestic USA
There are still major rail delays from the west coast to the east coast due to a shortage of rail cars, personnel issues and surges in volume from Asia.

There are still truck driver shortages. Truckers are very busy at all ports in the USA. Trucker’s continue to raise their fuel surcharge as the price of diesel fuel goes up around the country.

There continues to be major congestion in the Port of Miami resulting in delays in picking up containers. The port has been overwhelmed by increased volume and a crippling trucker strike in October. There is still aftermath from that strike.

Regulatory News
The Federal Maritime Commission (FMC) passed by a 4-1 vote agreed to allow NVOCC’s (Non-Vessel Operating Common Carriers) to be able to sign confidential service contracts with shippers. This was previously not allowed under the regulations. Only VOCC’s (Vessel Operating Common Carriers) were allowed to sign confidential service contracts with shippers. The new regulations should become effective in Mid-January.

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This newsletter is for informational purposes only. Although every effort is made to ensure accuracy, Samuel Shapiro & Company, Inc. assumes no legal liability for any erroneous information. Links to other websites are provided for reference and convenience and do not constitute endorsement of the content of those sites.