Consumer Product Safety Commission Tests Electronic Filing
The Consumer Product Safety Commission (CPSC) Office of Import Surveillance (EXIS) works closely with U.S. Customs and Border Protection (CBP) to identify and examine imported shipments of consumer products.
CPSC issues Letters of Advice when there is a violation of a mandatory standard. These letters advise companies of the violation and of the nature of the necessary corrective action, which may include a recall, stop sale, or correction of the production.
CPSC, in consultation with CBP, plans to conduct testing for the electronic filing of targeting/enforcement data with CBP for regulated consumer products within CPSC’s jurisdiction and specified products that are imported into the United States.
A list of HTSUS Codes that include consumer products to be sought in eFiling Alpha Pilot can be found here.
Verification of Foreign Suppliers Required for Importers of Human and Animal Food
The Food & Drug Administration (FDA) adopted regulation on foreign supplier verification programs (FSVPs) for importers of food for humans and animals.
The regulations require importers to verify that food they import into the United States is produced in compliance with the hazard analysis and risk-based preventive controls and standards for produce safety provisions of the Federal Food, Drug, and Cosmetic Act, is not adulterated, and is not misbranded with respect to food allergen labeling.
Importers are responsible for determining and documenting foreign supplier verification activities that are appropriate to provide assurance that hazards requiring a control in food are significantly minimized or prevented. The appropriate verification activities and their frequency will vary depending on the food, the foreign supplier, and the nature of the control.
Importers must conduct supplier verification activities before importing a food into the United States and periodically thereafter.
Reduced Reporting Threshold Now Applicable for Certain TSCA Products
The Toxic Substances Control Act (TSCA) authorizes the Environmental Protection Agency (EPA) to require persons that manufacture (including import), process, and distribute in commerce TSCA-covered chemical substances and mixtures to keep certain records and report certain information to the EPA.
Manufacturers (including importers) are required to report to the EPA certain production volume thresholds, generally 25,000 lbs or more of a chemical substance at any one single site. A reduced reporting threshold (2,500 lb) now applies to chemical substances subject to certain TSCA actions.
The reporting requirement includes any chemical substance that is in the Master Inventory File at the beginning of a submission period. Submission periods are from June 1 to September 30 at 4-year intervals, beginning in 2016.
WTO Rules against U.S. Country-Of-Origin Labeling (COOL), Mexico and Canada Allowed Retaliation
On December 7, 2015, the World Trade Organization (WTO) ruled against U.S. Country-Of-Origin Labeling (COOL) requirements on beef and pork, permitting Canada and Mexico to impose collectively over $1 billion annually in retaliatory tariffs. The controversial labeling law was part of the 2002 Farm Security and Rural Investment Act and requires meat packaging to show where an animal was born, raised, and slaughtered.
While COOL is popular with U.S. consumers and domestic ranch operations, the WTO decision has placed the burden back onto Congress to repeal the law or face punitive tariffs on a variety of other trade industries. As the U.S.’s number one trading partner, Canada wields a heavy threat to exports. In 2013, the Canadian government released a commodity list of industries that could be targeted with 100% taxes from food products to furniture. Mexico, the U.S.’s third largest trading partner, has listed apples, dairy, hygiene products, and alcohol as potentially impacted commodities. Canada was granted permission to seek $780.9 million and Mexico is allowed to seek $227.8 million in retribution against U.S. trade.
The ruling has created urgency to repeal or modify COOL requirements to appease the NAFTA neighbors and avoid a trade war. The House of Representatives has already passed a bill to repeal the COOL law, which now sits with the Senate.
Congress Approves Huge Boost to Freight Project Funding Bill
On December 15, in a rare show of bipartisanship, Congress approved an appropriations bill to support freight project funding for U.S. ports. The bill’s main focus is to aid ports in maintaining federal dredging depths to accommodate mega-vessel port calls and support a variety of freight port projects and support programs.
U.S. ports are scheduled to receive $1.2 billion for dredging and $2.6 billion for coastal navigation by Army Corps of Engineers. The Transportation Infrastructure Generating Economic Recovery (TIGER) program has also been slated for $500 million in additional grant funding. The bill includes $405.6 million to the Inland Waterways Trust Fund, $121 million towards general investigations, and $100 million in port security grants. The funding finally meets Water Resources Reform Development Act (WRRDA) goals after the administration dropped the ball last year.
The funding is to supplement the existing Harbor Maintenance Tax (HMT/HMF) which restricts the funds acquired from imported cargo to be used for channel deepening and post Panamax cranes.
To read more on this topic, check out Shap Blog: Dredging the Confusion Surrounding the Harbor Maintenance Fee (HMF).
U.S. Reemerging as Germany’s Top Export Destination
The U.S. is on track to emerge as the top export destination for German goods this year. This would mark the first time in over five decades that the U.S. will likely outdo France as Germany’s premier export destination. This change is largely due to the weakened state of the Euro, which increased non-Euro buying power and lessened demand around Europe. Additionally, there has been a significant influx of machinery exports, primarily in the form of engineering goods, from Germany to the U.S.
From January to September of this year Germany’s engineering exports increased by 2.6 percent, totaling nearly 116 billion Euros. The U.S. was the recipient of roughly 12.5 billion Euros worth of the total. China, which has historically been Germany’s premier machinery export destination, received about 12 billion Euros of the total. As the Euro continues to fluctuate, the future appears bright for a market that has all the right conditions to further boost U.S. and German trade.
New DOC Ruling Eliminates Duties on Certain Bed Frames Manufactured in China
On December 4th, the Department of Commerce (DOC) published a final ruling that eliminates duties from certain bed frames produced in China. Duties are typically assessed against Chinese furniture manufacturers, though the U.S. importers of record are responsible for payment, in an effort to create greater pricing parity between U.S. and Chinese manufacturers.
The ruling is the direct result of a request made by a large furniture importer back in April of 2015. The ruling moved through the DOC uncontested and successfully removed duties from bed frames consisting of “three wooden cross beams, one perpendicular center wooden support beam and three wooden slats over the beam.”
Despite the removal of duties from this particular type of bed frame, the 2005 antidumping measures still levy duties on Chinese manufactured bedroom sets that include the same type of frame; a set is typically comprised of a bed frame, a dresser, night stands and a chest.
U.S. Oil Export Ban Lifted
Restrictions on oil exports put in place in the 1970s have finally been lifted. The initiative was part of a spending deal that was pushed through the House and Senate and signed by President Obama a few weeks ago. Some view lifting the restrictions as a positive initiative while others have some concerns regarding the outcome.
Oil companies have long been pushing for the lifting of restrictions. By increasing the supply of crude oil into the international market, experts speculate that the cost of oil/gas will be reduced and this will benefit industries such as manufacturing and international shipping in which fuel is a major cost. The additional exports should also create more jobs for Americans and help stabilize the supply of oil and gas.
While many people see this change as a major win for the U.S., others speculate that flooding the already saturated oil market will only cause more issues for oil producers and companies within the industry.
Retailers Disappointed in Lackluster Transportation Package
The Retail Industry Leaders Association (RILA), comprised of more than 200 companies from numerous segments of retail industries, isn’t thrilled with the much-needed transportation funding plan. Kelly Kolb, vice-president of RILA, states that while agreement on a long-term transportation package is good news, retailers wish that there were more provisions added in regards to port efficiency and congestion.
All retailers, whether selling toys or apparel and footwear, will benefit from this long-term transportation funding plan since they all depend on the transportation infrastructure to get their goods to U.S. consumers. Improving infrastructure is crucial since all retailers depend heavily on these life lines to distribute cargo, but as we saw in the past year, port congestion and inefficiency have also become major concerns for all industries that rely on international trade in their supply chain.
Kolb states, "Congestion at our nation's ports continues to be a huge concern for retailers, and unfortunately, the transportation deal did not go far enough in addressing what is a growing problem for businesses dependent on a global supply chain. Sound roads and bridges are important, but our nation's ports are equally vital as the gateway for retail goods, raw materials, and billions of customers around the world."
Regardless of how retailers feel about the lack of changes to port policies and efficiency, the transportation package takes major steps in improving and supporting the growing U.S. economy.
Ben Franklin Stirs Innovation Once More
To paraphrase a line from the popular movie, Field of Dreams, “If you build it, they will come.” Well, what they have built is a behemoth of a vessel called the Ben Franklin that came to the Port of Los Angeles the weekend of Christmas on its inaugural voyage. CMA CGM’s brand new vessel is the largest to ever call Los Angeles, with enough space to hold 17,859 20’ foot containers.
The arrival of the Ben Franklin will begin the anticipated influx of larger capacity vessels all along the trans-Pacific trade lanes. These mega ships have already been operating in the Asia-Europe and Mediterranean routes where there is now an excess supply of capacity compared to weak demand. To reduce some of this excess, and to take advantage of a relatively strong market to the U.S., carriers have their sights set on the trans-Pacific routes in hopes of balancing worldwide demand and increasing U.S. market share. There are currently only a handful of U.S. ports that are capable of handling a vessel of this size, which will keep shipping channels from being overrun in the foreseeable future.
U.S. importers and exporters may see this new development as a windfall in terms of more available space for their cargo. In reality, the additional capacity increases pressure on already limited trucker and chassis supplies. The current operating environment at the port will most definitely change with the appearance of these larger vessel calls, as the surge of so many containers will likely overwhelm operations at the terminals. The time it takes to work the larger vessels will delay work on the smaller carriers. Additional man and machine power may be required to continue operations at current levels of expectation for cargo release and transfer to rail lanes.
For now, all we can say for sure is that APM Terminals Pier 400 in L.A. received a very large Christmas present on December 26th. While APM is already handling some of the largest vessels coming into the U.S., the Ben Franklin is sure to add historic significance as it docks. Staying on trend, MSC currently has 13,000-14,000 TEU vessels calling both L.A. and Oakland.
Time will tell if what man has built will help to transform the trans-Pacific route into the “next big thing.” But for now, the biggest thing on the horizon is the Ben Franklin itself.
Trans-Pacific Market Heats Up For the Holidays
On Christmas Eve, importers from the trans-Pacific trade were given a few coals in their stockings. Vessels to the U.S. East Coast are completely full and space to the U.S. West Coast is tightening up as well. As the New Year begins, carriers are feeling they finally have the upper hand as far as freight rates go. In the days approaching Christmas, freight rates from Asia to the U.S. have hit historic lows but carriers insist that they will hold fast to a January General Rate Increase (GRI) that could likely double the current rates.
After the January 1 GRI, carriers have also announced another GRI and Peak Season Surcharge for January 15 in preparation for the annual rush of freight volume coming in for the pre-Chinese New Year rush. The carriers are using this window of opportunity to take full advantage of the demand in the market and additionally plan to pull ships out of their vessel rotations during the Chinese New Year week-long holiday, which annually throws a wrench into February shipping cycles. Expect rates to rise swiftly in January and February followed by a decline after Chinese New year.
Based on announcements from the carriers, rates are estimated to increase by an average of $1200/FEU to the U.S. West Coast and $1600/FEU to the U.S. East Coast. Based on current fill factors due to blank sailings and the anticipation of pre-Chinese New Year increase in volume, it is almost certain that rates will begin to recover but likely only at a portion of the announced amount. Early estimates show the initial increase to settle in the $600 to $700 per FEU range. So as we begin the New Year, be prepared for less available space and a new cycle of rate hikes and fluctuations announcements, followed by more modest increases.
Slumping U.S. Exports to Lift Modestly In 2016
Global economic growth is expected to lift U.S. exports out of the doldrums to some extent in 2016, led by growth of the middle class in China and other Asian countries. As the dollar remains particularly strong against the Euro and as European economies see very slow growth, exports to that region will continue to slump in 2016.
The only areas of growth for exports in 2015 were Oceania, Central America, and the Indian Sub-Continent. Exports to Brazil were particularly hit hard due to political and economic issues. The total export market dropped by 2.5 percent as compared to 2014, but economic indicators have caused JOC Senior Economist, Mario Moreno, to predict exports to rebound by 4 percent over 2015. Important traditional export commodities such as cotton and resins have been particularly impacted. Next year’s recovery will bring total export volumes slightly behind 2013 levels. This modest growth is in part because China’s economic growth has slowed, although China’s growth continues to be impressive when compared to the rest of the world. More than half of U.S. containerized exports are to Asia and the vast majority of exports are to China, totaling about 49% of all exports to the Asian continent.
One result of the export growth forecast is that Trans-Pacific Stabilization Agreement (TSA) carriers have announced a February rate increase of $100 per FEU from the U.S. West Coast and $200 per FEU from the East and Gulf Coast ports for dry containers.
Container Weight Reporting a Hot Topic in 2016
As the July 1st, 2016 deadline gets closer, upcoming changes to container weight reporting regulations are becoming a hotter topic. These regulations, approved by the International Maritime Organization (IMO), will require that all ocean cargo containers have their weights certified prior to being allowed to load onto a vessel. The problem of misreported container weights has long plagued the industry. By requiring correct weight be certified prior to loading, the industry is looking to improve the safety of all parties involved in containerized supply chains.
The certification, called the Verified Gross Weight (VGW), will be required from all shippers starting on July 1st. The VGW is the gross weight of the cargo being shipped, inclusive of all packing material, plus the weight of the empty container. To calculate the VGW, shippers will be required to either have the loaded container weighed at a certified weighbridge or scale, or by providing their certification of the weight breakdown of the items loaded in the container. The VGW must be received, and confirmed, before the container can be loaded on the vessel. If the VGW is not received timely, the container will not be allowed to be loaded on the vessel. Enforcement of these regulations will be the responsibility of individual country’s maritime associations.
With the worldwide implementation date months away, there are still a number of questions that must be answered. Who will be weighing the containers and at what stage in the shipment process the weighing will take place are two of the largest questions. How to ensure that the container flow is maintained at already congested terminals and what would be the added cost for weighing services are also concerns that must be addressed prior to the effective date.
While many U.S. port terminals have weighed outgoing containers for a number of years, many other terminals worldwide do not follow this practice and are hesitant to take on the work or liability of providing the VGW.
Rotterdam Dock Workers Threaten Strike in the New Year
On December 20th, Dockworkers in Rotterdam voted almost unanimously to strike in the New Year in an effort to protest potential job losses with the increased automation at APM terminals. The Federatie Nederlandse Vakbeweging (FNV) union has requested that the port guarantee no job losses for nine years, which the port employers have rejected as unrealistic. In response, the union has given the port employers until January 6th to improve their contract offer or face walk-offs for three days in January and three days in February. This threat has both importers and exporters concerned with the potential impact on cargo as Rotterdam ranks as the busiest container hub in Europe.
The potential strike is driven by union fears that 700 of 4,000 jobs will be lost at the two new highly automated container terminals operated by APM. The increase in automation at the terminals is in response to the fact that traffic grew only 1 percent in the first nine months of 2015, partly because the terminals are not yet operating at the speeds necessary to handle the large cargo volume demands. In Antwerp, the second ranked container hub in Europe, traffic grew by eight percent in the first nine months of 2015. Rotterdam continues to feel the pressure to improve, as the world watches in hopes that dock workers union and terminal employers can come to an agreement with minimal impact on importers and exporters.
Zim Adds 1900 Reefer FEU’s to Fleet
Zim Integrated Shipping Ltd. has expanded their reefer container capacity by adding 1900 40’ containers in an effort to meet growing reefer demand. The new reefer containers will have the capability to provide real time updates for temperature levels and gas levels within the containers using the ZIMonitor service.
The ZIMonitor service provides shippers with updates and alerts via email or text. The service will also allow the shippers to monitor, track, and remotely control the environment within the container. Although the service is tailored for shippers of pharmaceuticals, this can also be used for perishable foods and other items that require a specific environment.
Container lines have been facing a chronic shortage of reefer container as reefer demand has been growing faster than supply. Maritime analysts have predicted that the reefer trade will grow 17 percent in the five years between 2013 and 2018 and container line reefer capacity will grow 22 percent over the same time frame to 1.9 million 40-foot slots.
Qatar Airlines Adds Freight to Dallas-Liege Route
Qatar Airways, one of the world’s largest air cargo carriers, has announced plans to add two weekly Boeing 747 freighter flights on their Dallas to Liege, Belgium route. The Doha based carrier has been aggressively expanding and growing its network over the last several years and sees the U.S. as a major component of its growth plan. The airline currently operates weekly 747 freighters in Atlanta and Chicago to Europe and Doha. The additional flights should add about 600 metric tons of export capacity from Dallas to the European hub per month, as well as 300 metric tons of import cargo capacity. Growth in the defense, financial services, information technology, semiconductors, telecommunications, and transportation industries will be counted on to fill the additional capacity in the Texas region.
Lithium Batteries Changes Coming in 2016
In November, the International Civil Aviation Association (ICAO) voted 11-7 in favor of permitting passenger aircraft carrying rechargeable lithium batteries in the holds of passenger airplanes. The vote emphasized the increasing debate between forwarders, airlines, pilots, and shippers regarding the lithium battery issue.
If a lithium battery is activated in transit it can transfer heat and activate the adjacent battery. When shipped in bulk, hundreds of batteries can become activated causing a “thermal runway” effect. Current aircraft fire suppression systems are not equipped to handle the intense heat and temperatures created by active lithium battery fires. Lithium battery fires have caused numerous issues over the years, most notably the crash of a UPS 747 freighter from Dubai to Germany in 2010.
Lithium batteries power a majority of cell phones, laptops, tablets, electronic toys, and some healthcare products. The regulations for packaging, documentation, and shipping lithium batteries have been strict and ever changing over the last several years.
The increase in e-commerce has added a multitude of shippers and buyers to the international transportation world without the proper regulatory background. Many e-commerce sites tell customers to ship items via air mail, though most postal services prohibit the transport of all dangerous goods, including lithium batteries. Even when shipping one or two small batteries as cargo, whether it be in a cell phone, laptop, or electronic device, proper packaging and documentation must be completed.
The International Air Transportation Association (IATA) is once again revising the lithium battery regulations for 2016. “There will be changes to the provisions applicable to the transport of lithium ion batteries as cargo to require them to be shipped at no more than 30% state of charge. Lithium ion batteries (UN 3480 PI 965, Section II) and lithium metal batteries (UN 3090 PI 968, Section II) will also be restricted to no more than one (1) package per consignment. These changes are expected to become effective 1 April 2016, to be confirmed.”
IATA offers complete guidelines for the packaging, documentation, testing, and labelling of all types of lithium batteries.
Final Truck Driver Log Mandate Released to Save Lives
The Federal Motor Carrier Safety Administration (FMCSA) released the final rule mandating truck driver logs. Once the final rule is published, truck drivers will have two years to install some type of electronic logging device (ELD). The Department of Transportation believes the ELD will eliminate 1,844 truck-related accidents, saving 26 lives annually and preventing 562 injuries.
This new rule will apply to all commercial truck drivers required to keep record of duty status, except for model year 2000 and older trucks. The DOT estimates ELDs will cost trucking operators $1 billion, but it will create net savings by reducing $2.4 billion in paperwork.
Due to its high price tag, the mandate is expected to reduce truck capacity in the U.S. putting pressure on truck rates. But not all is bad news. The mandate also will generate near-real-time data that could benefit supply chains. In the long-term this new data could help transform how freight is managed, generating more capacity.
Proposed Rail Merger Could Have Effects on Chicago Congestion
There has been a flurry of merger and acquisition activity in the transportation sector in 2015. One of the largest proposed acquisitions is that of Norfolk Southern Railway by the Canadian Pacific Railway. There are a number of hurdles that remain before this acquisition can take place; chiefly among them is regulation approval by both U.S. and Canadian authorities. To help gain support of their purchase, Canadian Pacific Railway is touting that their ownership of Norfolk Southern would help to alleviate the severe rail congestion that has plagued Chicago for a number of years.
Due to its geographic location, Chicago acts as a rail hub for most rail traffic moving east to west, or vice-versa, throughout the U.S. It has become a maze of complex interchanges where rail cars and the cargo they hold have to switch between multiple rail services and carriers. Schedules and service are notoriously unreliable, and when faced with a severe winter like the region faced in 2013 and 2014, traffic can grind to a halt with resulting long delays in getting cargo moving again.
Canadian Pacific’s purchase of Norfolk Southern will give them a greater controlling interest in the region, and they believe that this market share will allow them to provide more efficient and streamlined operations. Many critics are wary of these claims and feel that the challenges facing rail operations in Chicago are too complex which will require a broader solution than what this acquisition could bring about. Regardless of whether this purchase is ultimately approved by regulators, or shareholders, the industry must be focused on improving interchange in operations in 2016.
The Baltimore Sun Names Shapiro as a Top Workplace for the Fifth Year in a Row
Shapiro has been named one of Baltimore’s best places to work for the fifth year in a row by the Baltimore Sun. Firms were nominated and then evaluated using confidential surveys conducted by Workplace Dynamics, a leading research firm on organizational health and employee engagement, which focused on gauging employees’ satisfaction in multiple categories, including corporate direction, execution, pay/benefits, and engagement.
The Baltimore Sun invited 1,274 companies to participate and surveyed 172 of them. In total, 37,339 area employees received surveys, and 22,502 responded on paper or online. Employers were then categorized into size bands and ranked within their size band based solely on employee responses to 22 survey questions.
Shapiro ranked as number 47 out of 65 companies on the small employers list. The company employs a little over 70 employees in its headquarters office in Baltimore and also has offices along the East Coast in Rosedale, New York; Philadelphia, PA; Charleston, SC; Atlanta, GA; and Dulles, VA, with a total of approximately 127 employees. Shapiro is now in its third generation of family ownership and management under Margie Shapiro, the company’s president and CEO.
“Samuel Shapiro & Company is very honored to be selected as a ‘Top Workplace’ for the fifth consecutive year by the Baltimore Sun and, most importantly, by our family of employees,” said Shapiro. “Our mission statement is ‘We Deliver. Problem Solved.’ This promise to our customers continues to be delivered by passionate, creative people with the fire and commitment to design the best logistics solutions in the business.”
The Baltimore Sun published the complete list of Top Workplaces on December 2nd.
Shapiro Helps Bolster Inner City Education by Supporting Non-Profit CollegeBound Foundation this Holiday Season
Shapiro recently selected CollegeBound Foundation as the recipient of its annual holiday endowment. CollegeBound encourages and enables inner city students within the Baltimore City public school system to pursue a college education. Founded in 1988 as a small non-profit, CollegeBound has established a nationally recognized college advising model and helped to secure college acceptance for more than 1,500 students during the 2014-2015 school year. For more than 26 years, the CollegeBound Foundation has helped Baltimore City students realize their dreams of a college education and has aided in transforming the lives of more than tens of thousands of students. Today, CollegeBound operates on-site in 14 Baltimore City public high schools, providing full-time college advisors, delivering need-based funding through “Last Dollar Grants,” and administering an annual scholarship portfolio exceeding $1.5 million.
Shapiro, whose philanthropic work can be traced back to its humble beginnings in 1915, has been providing holiday donations on behalf of its customers for the past seven years and incorporates education and charitable activities into the core of its culture. Its Educational Committee grants an annual scholarship, open to all Shapiro employees’ children, to a deserving student. Shapiro also contributes teaching hours to the University of Baltimore’s Export Import Management course in the Merrick School of Business. The company maintains an internal education program, Shapiro University, for employees to learn and cross-train in varying career paths, and covers tuition for qualifying courses and performance levels for staff who seek continuing education. Shapiro, which was recently named one of Baltimore’s Top Workplaces for the fifth year in a row by the Baltimore Sun, completes its community support program by allowing employees to volunteer once a year on company time and matches employees’ donations dollar-for-dollar to most non-profit organizations.
“We are excited to present something that not only demonstrates our commitment to the communities we serve, but is also a reflection of the Shapiro culture, “ noted Margie Shapiro, Shapiro’s President and Chief Executive Officer. “Shapiro is proud to support an organization that emphasizes the importance of education and strives to make a difference in the lives of our youth.”
To learn more about CollegeBound’s college access program in Baltimore City public high schools, visit their website at www.collegeboundfoundation.org.
Employee of the Month
As previously featured in Shap Talk, Shapiro has been sharing with you the names of employees who have been recognized for their exceptional efforts and contributions to our Company.
At Shapiro, we continually work to develop, challenge, and inspire all of our employees to grow individually and with the Company. This month, we would like to recognize Maria Martinez-Bettini, Domestic Pricing Supervisor in Baltimore, for her outstanding performance and contributions.
Please email us at email@example.com.