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Staying Current on ACE Currency Exchange Rates
US Experts Take Export Control Actions
Staying Current on ACE Currency Exchange Rates
- US Customs and Border Protection (CBP) has announced that an enhancement to the Automated Commercial Environment (ACE) Currency Exchange Rates will take effect on June 10.
- Importers should note that CBP will retire the current ACS Currency Exchange Rates once the enhancement is deployed to the ACE Production Environment (PROD).
- However, the trade community can still receive its daily and quarterly exchange rates by visiting CBP’s Foreign Currency Exchange Rates webpage.
- Vendors and software developers will also need to update their products by changing the Batch and Block headers from ACS to ACE.
- Click here to read additional guidance from CBP.
US Experts Take Export Control Actions
- The Disruptive Technology Strike Force—which is co-led by the US Departments of Commerce (DOC) and Justice (DOJ)—has been tasked with the responsibility of coordinating enforcement actions against Russian attempts to circumvent US export controls.
- Last week, the DOJ and the Bureau of Industry and Security (BIS) revealed the first five cases brought on by the new Strike Force.
- In the announcement, the federal agencies detailed criminal charges against six men—including a former Apple employee—crediting the new Strike Force with thwarting conspiracies to export US weapons and technology to destinations including Russia and Iran.
- The Strike Force’s work has also led to the unsealing of charges against multiple defendants accused of crimes including export violations, smuggling and theft of trade secrets in each of the cases.
- Click here to view the Temporary Denial Order (TDO) suspending the export privileges.
- Click here to read the full BIS press release.
- Any questions? Feel free to reach out to our compliance experts!
The Railroad Road
- Norfolk Southern (NS)
- NS is converting all its terminals to grounded operations for international intermodal because it believes US port volumes will grow in the long term. Why, thank you for your optimism, NS!
- Since the railroad cannot necessarily expand physical footprints for every terminal, a grounded operation also provides additional capacity as needed.
- NS is investing heavily in new cranes to increase productivity for grounded operations as much as possible. After all, a wheeled scheme is faster!
- Trucking companies are now required to make reservations to retrieve and drop off ocean containers at NS’s Memphis terminal, a new policy the railroad said is designed to improve cargo flow.
- The embattled railroad will launch the same concept in Austell, Georgia (just outside Atlanta) by year’s end.
- NS will offer a one-hour appointment window with a 30-minute grace period on each side. If a trucking company, for example, books an appointment for between 9:00 a.m. and 10:00 a.m., its driver can arrive between 8:30 a.m. and 10:30 a.m. and will be allowed through the terminal gates—though the railroad did reserve the right to scold drivers who take advantage of the grace period.
- NS has demonstrated proof of concept in its hometown, The Port of Virginia. The combination of an appointment system, semi-automated cranes and a container grooming process have been largely successful. No surprise here, given Virginia is for railroad lovers!
- Burlington Northern Santa Fe Railroad (BNSF)
- Next month, BNSF Railway will begin regular intermodal service from the Port of Houston to Dallas and Denver, just over one year after it began testing market demand for rail service from the fast-growing Gulf Coast port.
- The service will have twice weekly cutoffs on Tuesday and Friday evenings, with scheduled container availability at destination on the following Thursday and Sunday morning, respectively. At present, the service to Denver is once weekly.
- No ocean carrier is offering the inland intermodal service from Houston yet, according to sources familiar with the matter. However, BNSF has discussed such a service offering with Mediterranean Shipping Co. (MSC), Maersk, Hapag-Lloyd and Ocean Network Express (ONE).
- “Them Texans sure do love their trucks,” said one former official of BNSF.
- “Them steamship lines sure do love to keep their empties close to a port,” said one former editor of ShapTalk!
- Houston has not had regular intermodal service since March 2019—when the Union Pacific (UP) ended their once weekly service to Dallas.
Mayhem Plea for FMC
- What is pure mayhem… (besides American politics, silly!)? Right! It’s railroad demurrage, detention and per diem policies and realties with ramp free time down to 15 minutes (at least that’s how it feels!).
- A group of cargo owners formed to advise the Federal Maritime Commission (FMC) that it wants the agency to update its detention and demurrage rules to take oversight of rail storage fees, arguing door delivery in ocean shipping includes every move from origin to destination.
- No US government agency has the authority to regulate rail storage fees at present, and that is comically absurd. No…seriously!
- The National Shipping Advisory Committee (NSAC)—a group of shippers appointed by the FMC—says it considers the agency to be the most obvious regulatory authority on rail storage fees.
- To shift rail storage to the FMC’s jurisdiction, NSAC recommends that the agency’s soon-to-be-published final rule on demurrage include all land storage, not just marine, and any per diem charges assessed by or on behalf of ocean common carriers.
- Currently, the FMC’s definition of detention and demurrage reads: “any charge assessed by common carriers and marine terminal operators related to the use of marine terminal space or shipping containers.”
- NSAC previously discussed the topic of rail storage with the FMC in May 2022, but the agency’s response a month later was that “any expansion of its jurisdiction must be legislated by Congress.” (Ahem, we don’t have 20 years to save shippers from the atomic detonation of their freight budgets, people!).
- A group of more than 70 shippers, forwarders and other transportation interests wrote a letter to the leadership of the House Transportation and Infrastructure Committee last week, pleading for clarification on whose authority it is to regulate the assessment of rail storage charges.
- The FMC is currently investigating a rail storage complaint involving a Milwaukee-based NVO that is seeking relief over $136,500 in demurrage fees assessed by CSX. Since the FMC—like all the rest of us—has no jurisdiction here, the outcome could be telling and might just establish a precedent?
The Export Control Back Hole
- When the G7 focuses on export controls, you know they have made the big time! Pointing to Russian military aggression and China’s “economic coercion,” the G7 recently committed to using economic actions to fully support geopolitical aims.
- The illustrious club, Japan/UK/France/Germany/Italy/Canada/US, used to have eight members—until Russia annexed Crimea in 2014. Ironically, the G7 was formed in 1973 to tackle an economic crisis…the infamous oil shortages of the time. Thus, a return to economic “weaponry” is a return to the body’s existential roots.
- From an American perspective, export controls have historically been leveraged to limit technological access to terrorist groups, shell companies, and mad scientists bent on destroying the planet, while laughing maniacally. Sorry, that got a little melodramatic!
- Let’s take a quick peek at recent US agency actions for export controls:
- 67% of the Justice Department corporate criminal settlements since October have been connected to national security violations from exports.
- The Treasury Department’s Office of Foreign Assets Control (OFAC) levied over $43 million in penalties in 2022—more than double 2021’s total.
- The Commerce Department (DOC) has added 50 enforcement staff focused on export controls, while also increasing penalties for non-compliance in the private sector.
- Back to the “Halls of Justice”: the department is also adding staff, some 25 prosecutors to its National Security Division. Justice also looks to hire a chief counsel to manage and direct highly complex cases involving corporations.
- The DOC—proud recipient of less than 1% of the federal budget—has the crucial responsibility of managing the Entity List, essentially a blacklist of companies that must obtain a license to export certain commodities to certain countries.
- Not surprisingly, membership in the Entity List VIP Club has expanded by 37% since February 24, 2022 (the date somebody invaded somebody else!). And guess where 82% of the new VIP members reside? Yup, Russia and China.
- Before we make Russia and China stand in the corner alone, US firm Seagate Technology paid the largest fine in US export controls history—$300 million for selling hard drives to Huawei of Shenzhen China, an Entity Lister.
- So, how are the export controls faring? Great question! Thousands of shipments of American aircraft parts, chips, and high-tech tools have made it to Russia, with $14.4 million of aircraft parts arriving in 2022 alone—62% of which were manufactured by a leading U.S. global aerospace company. And most of the products were routed from the United Arab Emirates, Turkey, the Maldives, and…China!
- Additionally, Kazakhstan and Kyrgyzstan have been accused of shipping military goods to Russia by masking the true country of origin for many products. Call us paranoid, but if you can’t spell or pronounce a country, they must be shipping to Russia!
- Before we wallow in despair over the $14 million, please note that since the invasion, the value of Russian imports of aircraft parts per year is down 88% and shrunk to $286 million last year. That’s the good news…
- The bad news is that China and India continue to ship their own manufactures of aircrafts and parts, drones, and military technology, with China accounting for over half by value.
- No matter how powerful the G7 and US may believe they are, there is a notable black hole when exports to Russia are uncontrolled from economic powers like China and India.
Air Freighters' Fate
- Wouldn’t it be nice if ONE news item highlighted a surprising freight volume recovery in 2023?! Well, we apologize, because this is NOT that item!
- As this illustrious, award-winning gazette has mentioned, the return of air passengers creates strong headwinds for air cargo operators, especially the all-cargo airlines.
- First, let’s take a peek at the bigger picture…year-over-year (YoY) air cargo volumes are down 10% with rates tumbling nearly 40%. Sounds awful (well, it is awful), but the rates are still above 2019 levels at least.
- “Hey Shapiro! At least the volume decline is just hitting pharma, right?!” First, stop interrupting us impatient readers; second, wrong! Yes, pharma/medical air volumes are down 29%, but fashion (-18%), high tech (-12%), automotive (-11%) and chemicals (-10%) are all enduring double-digit downs.
- All-cargo and express operators—who obviously do not benefit from pretzel-munching, drink-spilling, baby-burping humans—are withdrawing capacity quickly. April’s all-cargo flight hours were down over 5% YoY, a rate that has been increasing since February.
- The express operators, primarily UPS and FedEx, are doing even worse YoY. Not only is Big Brown the worst nickname in corporate history, but they also had a 22% decrease in operating income in Q1 “lead” by a 6.2% decline in international air volumes.
- From a consumer point of view, it is good news that UPS has been forced to put domestic deferred cargo on overnight planes, but that would normally be seen as a desperate move to reduce flying time.
- FedEx has reduced flight hours by 10% through a combination of parking airlines and retiring older aircraft earlier than planned. Fedex has also announced that they are selling to Amazon ASAP! Okay, okay, we made that up to see if you were listening!
- Air freighter operator, Cargojet, has indefinitely postponed the conversion of Boeing 777’s to freighters, citing a 40% decline in operating income YoY.
- Just this week, Air China and China Southern Airlines canceled six freighters due to anemic export demand out of China. Wowza!
- In the only good news for air cargo…German giant, K&N, and Danish behemoth, DSV, are both down 20% YoY, while Shapiro’s air business is rumored to be up 211%! (That wasn’t very nice, and we are deeply sorry.)
