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Shap Talk

Featured Headlines:

A Little Q&A With the EPA

USDA Had a Grand Old Flag Day

ACE Currency Exchange Rates Flowing

STB or FMC?

The Rail Lunch Pail

Panama Canal Corral

Rectify the GRI

A Little Q&A With the EPA

  • Did you know that the Environmental Protection Agency (EPA) released a refresher on EPA Import Programs in May?
  • The document provides detailed answers to questions raised by importers during a webinar hosted by the National Customs Brokers and Freight Forwarders Association of America (NCBFFA) on October 31, 2022.
  • EPA officials have cautioned that this document is not meant to be taken as new policy; and will not be updated to reflect any future changes in applicable law or Agency policies.
  • Click here to view the full Q&A summary.
  • For additional information, please refer to CSMS # 56556424.

USDA Had a Grand Old Flag Day

  • The U.S. Department of Agriculture (USDA) has announced that a new flag designation will be assigned to certain Harmonized Tariff Schedule (HTS) codes flagged by the Animal and Plant Health Inspection Service (APHIS).
  • The new flag, dubbed “A99,” will be applied to approximately 150 HTS numbers currently flagged with “AQ1” by APHIS.
  • Any items marked with the A99 flag will warn the trade community that certain APHIS requirements may apply. However, officials have cautioned importers to remain diligent with entries, as flag disclaimers aren’t always provided.
  • According to officials, APHIS will announce the implementation of the new flag within the test environment; and will then wait at least 45 days before deploying it into production.
  • Any questions? Feel free to reach out to our compliance experts!

ACE Currency Exchange Rates Flowing

  • U.S. Customs and Border Protection (CBP) officials have confirmed that the Automated Commercial Environment (ACE) Currency Exchange Rates Enhancement was successfully deployed to the ACE production environment on June 10; and the ACS Currency Exchange Rates were subsequently retired.
  • Per CBP officials, “Trade will continue to receive daily and quarterly exchange rate information as they have in the past, using vendor-provided software or by visiting CBP’s Foreign Currency Exchange Rates website.”
  • Click here to view more information about ACE Currency Exchange Rates.
  • Click here to read additional CBP guidance (CSMS # 56211628).

STB or FMC?

  • CSX Transportation (CSX) filed a motion with US maritime regulators to dismiss a demurrage complaint from Hapag-Lloyd that was lodged with the Federal Maritime Commission (FMC). CSX conceded that the FMC has jurisdiction over jointly moved multi-modal cargo, but they contended that it has no direct authority over rail carriers.
  • As one anonymous lawyer close to the case quipped, “The FMC simply isn’t CSX’s Momma!”
  • The case highlights the colossal patch of governmental oversight gray area created when demurrage, per diem, or storage is billed at rail ramps across the US.
  • The FMC case began with a dispute between Hapag-Lloyd and non-vessel-operating common carrier (NVOCC) M.E. Dey—which is seeking $136,500 in relief for 13 containers stored at the railroad’s Nashville ramp last September.
  • CSX became a target in April when the container line filed a complaint against the railroad, alleging CSX “independently collected” the storage charges from Dey and “retained 100% of the $136,500 in storage charges for its own benefit.”
  • CSX pushed back in a filing on June 19th, saying the FMC does not have oversight over the railroad—or the “reasonableness” of its actions—simply because it contracted with Hapag-Lloyd, which is under the agency’s jurisdiction. Ah, yes, the plot thickens, my dear Watson!
  • CSX believes the US Surface Transportation Board (STB) alone has regulation over rail carriers, but shippers, shipping advisors, the National Industrial Transportation League (NITL) and any and all fat cat lobbyists representing shippers in the maritime industry are pleading with Congress to bring clarity to the issue.
  • If the new rules, laws, and (frankly) teeth the FMC wants to establish for a fair system governing maritime demurrage/per diem/storage are going to lodge in the neck of our international transportation system, we need to change our book title from 50 Shades of Grey to Equally Weighed Fair Play…Hey, it kind of rhymes!

The Rail Lunch Pail

  • The state of Michigan will contribute $5 million toward improvements at Norfolk Southern Railway’s Detroit intermodal facility that will allow the Class I railroad to consolidate its auto parts business, making the site more easily accessible to drayage drivers.
  • They also plan to add a pretty groovy coffee maker to keep all the workers hoppin’!
  • The statement said the $5 million grant will go toward the Detroit Intermodal Freight Terminal (DIFT) project—which is expected to cost $40 million overall. The DIFT’s broad outline “involves consolidating intermodal operations in Southwest Detroit at the Livernois-Junction yard,” according to a project summary from the state.
  • Along with the yard expansion, the project aims to improve an interchange at Interstate 94 for trucks to access Livernois-Junction’s eastern entrance, adding two new entrances on its western portion and improving a road on its northern portion for a new terminal contiguous to the yard.
  • Once completed, NS wants to consolidate its “Triple Crown” business—a premium domestic intermodal service for Detroit automakers—at Livernois, the project summary said.
  • Though the announcement may seem incredibly dull on the face of it, better, scalable rail operations in Chicago and Detroit are crucial for the future of multi-modal transportation designs from Mexico to the upper US and Canada. So, the timing of this project is perfect.
  • On June 16, the railroad industry sued to block new environmental rules in California, arguing they would force the premature retirement of about 25,000 diesel-powered locomotives across the country, long before their zero-emission counterparts are ready to take their place.
  • One former official also said something about “not giving the unmentionable part of a rat’s anatomy about any condors or tree-huggers.” I guess we can see clearly why the official is now “former.”
  • The rules governing railroads would ban the use of locomotives that are 23 years old and over effective 2030; and, starting this fall, would force railroads to begin setting aside more than $1 billion a year solely to purchase zero-emission locomotives and related equipment.
  • In a lawsuit filed in federal court, the industry says the technology for zero-emission locomotives hasn’t been sufficiently tested and therefore won’t be ready to carry the load of delivering more than 30 million carloads of freight nationwide each year.
  • The transportation sector contributed the largest share of greenhouse gas emissions in 2021, but rail only made up 2% of those emissions, according to the US Environmental Protection Agency (EPA).
  • The new California rules would have the biggest effect on Union Pacific (UP), BNSF, and short-line railroads that operate in that state. But the changes would affect every railroad since they all regularly pass locomotives back and forth to keep trains moving efficiently across the country. A single locomotive might cross the entire country every couple of months. Meaning any changes would have to be standardized across the industry.
  • The major freight railroads are already working with major manufacturers to test out battery-powered locomotives, with the first ones starting to roll out to UP railyards in Nebraska and California this year. They’re also experimenting with alternative fuels—like hydrogen—as possible replacements for their diesel-powered workhorses.
  • The pathway to the greener pastures of a clean global transportation system is fraught with practical, commercial, and political obstacles, dear readers. This will be a dominant theme in our industry for the rest of our careers (even you kids working a summer job in college doing something scintillating…like filing!).

Panama Canal Corral

  • A good movie skillfully keeps the viewer in suspense; and, for the last five years, it rained more and more from July through December in Panama. Five years in a row, people!
  • The trend line shows more and more humidity, moisture, and rain starting each July and lasting through each December or January. We’ll work on our screenwriting skills sometime later!
  • Despite what we just told you, shippers of “chubby” freight that wears Tough Skins Huskies, the infamous plus-size Sears jeans seemingly made of steel wool, may find that carriers have a convenient reason to roll your fuel-consuming, low revenue cargo. Hey, it’s just a theory!
  • Current canal realities are much more connected to the real and miserable Panamanian drought that has kicked-off 2023; it is considered the worst since the 1950’s! So, the physical truth is there, but the commercial realities are more of a dare, mon frere.
  • The Panama Canal Authority (ACP)—did you notice that the acronym is backwards in English?—has forecast that the maximum draft allowance will drop by another 12 inches by July 19. Since 14,000 TEU Neopanamax workhorse vessels will still squeeze through the locks, who gives the unmentionable part of a rat’s anatomy?
  • Well, the ACP (which should be the PCA!)  says that when they lose that extra foot, they will lower the number of potential vessel transits per day by over 20%. Talk about a transit time disturbance…Talk about a new KPI you shippers will demand…Not good!
  • Industry analysts have also indicated that maximum weight allowances for the Neopanamax stallions may be reduced by as much as 40% per sailing. The question is whether these analysts work for steamship lines or for ocean carriers! Just teasing!
  • So, if you blank 25% of the space, and your average vessel utilization runs at about 85%… you know, adding the 25% blanks and the missing 15% of utilization, the 40% weight reduction creates perfect market equilibrium!
  • Phew, 40 does equal 40!   But this does at least tell us why heavy cargo is again made to stand in the corner in their cheerful-colored steel wool Tough Skins.
  • Back here on Earth, the carriers continue to postpone or eliminate Panama Canal Fees, while reducing rates rapidly immediately after issuing each and every GRI. We’re going to say a lot more about this in the International Freight News section!
  • Moral of the story: Feel bad for Panama; and send them bottled water, perhaps…But try not to make the Panama Canal a big part of your current supply chain planning or use of your highly creative minds!

Rectify the GRI

  • The April 15th GRI for the Asia trade to the US was a desperate move by the ocean carriers to move the ball forward on BCO contracts. Yes, it was notably disconnected from shipping demand; yes, it was largely manufactured by turning down the volume on… well, on the volume of space through blank sailings. But at least it was logical.
  • On June 1, we got another “impressive” GRI of about 15%, only to watch rates begin sliding 48 hours later! By the end of June, rates have slid by 30% from the GRI spike.
  • Is there a secret society or invisible union of clerical workers offering the steamship lines magical, transactional renumeration of some kind, folks?!
  • Since GRI levels are not real levels, it seems that the only possible purpose is to encourage our entire industry to spend all our labor dollars on rate sheets, quotations, beautiful alerts, and tariff filings! If this secret, nefarious clerical society is a public company, buy their stock…and now!
  • Excluding the painful madness of the Covid cargo surge, the steamship industry has held onto a mere 43% of GRIs within two weeks of implementation on average for the transpacific trade since 2017. Is there a law against fair monthly pricing?
  • Are the carriers so desperate for profits that they are targeting tardy cargo that just-so happens to in-gate during the first week of a given month? Is it a giant game of bait and switch?
  • Or is it more about magical thinking? “This is the month a GRI makes shipper demand spike! It is, I swear!”
  • The ski lift approach to pricing—you know, drag us up the mountain by $400 or so, only to let us haul the unmentionable part of a rat’s anatomy down the slope right away—is comically inefficient and illogical.
  • It provokes waste, irritates shippers and forwarders alike, and doesn’t even align well with the carriers’ use of blank sailings. In a word, “wah!”
  • Oh, and Shapiro’s favorite “symptom”:  the roaming hordes of fly-by-night NVOs guessing at future markets and offering great “deals” …deals that do not move cargo unless the market has dropped enough by cargo in-gate. Is this Three Card Monte?
  • (Though made famous in New York City, Three Card Monte was invented in Spain in the 17th century and flourished in Paris in the 18th century.)
  • Foolishly, the political leadership of the steamship industry has not yet called Shapiro’s cell.  How silly!  We would tell them to issue two-month contract deals at one fair rate (to Shapiro only, of course) and call it a day! This would allow us all to save innumerable hours sending information that is stale by the time of shipment anyway!
  • Don’t look now, but here comes the July ski lift. The word in front of the fireplace at the resort is that we’ll see about a $300 lift followed by immediate reductions. Why??!!