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Your IOR Application Has Been Selected for Additional Screening

The Theory of Sourcing Relativity

For all the attention paid to IEEPA tariffs, Section 122, and the latest courtroom dramas, most trade professionals still view Section 301 as Washington’s most durable (if comical) trade weapon. The sudden concern for forced labor is… oh, never mind!
The first twist? The White House has announced 10-12.5% 301 duties for 60 countries; in a sign of the times, this is a relatively low level (before 122 at least)!
The second twist? The broader Section 301 becomes, the more it risks helping the very country it was originally built to target. (Pssst, it starts with a “C”!)
Importers spent much of 2025 assuming China would remain the tariff heavyweight champion. That assumption may deserve a rematch. To mix our sourcing metaphors negligently, tariffs are like gravity: everything is relative.
China doesn’t need lower tariffs than, let’s say, Vietnam to win, it just needs to have a lower tariff penalty relative to India, Thailand, Germany, Micronesia, Lichtenstein, and Vietnam (among a few other famous names).
Enter Brazil (stage left). A 25% tariff looks better than last year’s 50%, but it still creates real world sourcing friction when buyers are comparing global options (like the “C” word).
When duties climb, importers often aren’t choosing between foreign and domestic supply. They’re choosing between higher-cost imported products or entirely different materials, designs, and sourcing strategies. In some sectors, tariff policy is influencing engineering decisions as much as purchasing decisions.
232 products, for example, have relatively higher duty than substitutes in order to protect US industries without much current market metal or mettle (puns intended).
As Section 301 continues to expand globally, expect trading partners to take a hard look at US export pressure points:

Agriculture	Soybeans, corn, pork, beef, poultry, and specialty crops remain perennial favorites.
Energy	LNG and petroleum exports are increasingly attractive targets.
Aerospace	Aircraft and aerospace components carry both economic and political value.
Industrial Machinery	A classic retaliation candidate with broad exposure.
Chemicals + Plastics	Large export volumes make them difficult to ignore.
Technology + Medical Products	Where regulatory friction can be just as painful as tariffs.
Steel + Aluminum	NOT AT ALL!

The bottom-line question is no longer: “How high are China’s tariffs?” The better question is: “How close are China’s tariffs relative to everyone else’s?” Pre-existing cases against China belong in that Calculus 301; complexity is king, intelligent readers.
The more countries that find themselves under the Section 301 umbrella, the more sourcing decisions become a contest of relative pain rather than absolute tariff rates.
That’s the sourcing paradox of 2026: Oddly enough, after years of trying to make China the expensive option, Washington has been busy making the playing field more even.

Root Canal Meets Panama Canal

The Panama Canal Authority (ACP) has reached for the lock before reaching for the panic button.
Starting July 3, vessels transiting the canal’s Neopanamax locks will face a slightly shallower maximum draft of 49.5 ft, down from the usual 50 ft. On paper, that half-foot reduction sounds about as dramatic as trimming a container ship’s fingernails. In shipping, however, fractions matter.
The ACP insists this is merely a precautionary move, citing current and projected water levels in Gatun Lake and the possibility that El Niño may once again decide to audition for the role of global supply chain villain-of-the-year.
For now, canal officials are locked in on reassurance. Both Gatun and Alhajuela lakes are reportedly full after an unusually wet dry season, daily transit numbers remain unchanged, and management says it sees no major disruption looming before December. This is locking the lips to whistle in the dark, gang.
Still, anyone who suffered through the canal’s drought crisis in 2023 and 2024 may be experiencing a touch of hypothetical hydrological PTSD.
Back then, the world’s most important shortcut became a bottleneck. Transit restrictions and draft limits reduced throughput by as much as 40% below normal levels. Ships queued for days. Some operators paid eye-watering sums at auction for priority passage. Others simply gave up and sailed around South America, rediscovering routes last popular when sailors still worried about scurvy.
The ACP clearly wants to avoid finding itself locked in that battle again. The problem is that Panama’s challenge today isn’t merely a drought. It’s popularity.
According to Clarksons Research, record US energy exports are placing increasing pressure on available transit capacity. Product tanker movements hit record levels in April and May, while LPG and ethane exports continue to pile additional demand onto an already busy waterway.
The result? Waiting times are creeping upward. Clarksons estimates deep sea cargo vessel delays averaged around 50 hours during April and May, compared with roughly 30 hours before the recent traffic surge.
Meanwhile, competition for transit slots has become so intense that average auction prices have reportedly tripled to around $400,000. In some cases, priority bookings have traded hands for as much as $4 million per vessel. Hmmm, golly, how can ocean carriers afford such a bill?!
Viewed globally, Panama’s situation arrives at an awkward moment. The world’s two most strategically important shortcuts are both under scrutiny. One is wrestling with geopolitics. The other is managing rainfall forecasts while hiding from El Niño. Goldilocks is NOT impressed!
For canals, conditions can never be too wet or too dry. Water levels must be just right. Traffic must be just right. Drafts must be just right. And customer confidence must remain just right as well. After all, nobody wants to find out the porridge is too cold or too hot, nor do we EVER want to discover somebody’s been sleeping in our bed!
For now, cargo remains moving, the locks remain open, and ACP officials appear locked and loaded with contingency plans.

OFAC Just Published the Drivers Manual

International trade occasionally creates the impression that sanctions compliance is something handled by a mysterious department somewhere down the hall. Usually behind a locked door. With acronyms. And maybe even some theories.
Unfortunately, the Office of Foreign Assets Control (OFAC) has now handed everyone the study guide.
On June 1, OFAC released a new introductory guide explaining who must comply with sanctions requirements, how sanctions programs work, how organizations evaluate potential matches, and what happens when somebody decides compliance is more of a suggestion than a requirement.
Think of it as the driver’s manual for sanctions. Nobody reads it for fun, but everyone wishes they had before the test.
The guide covers:
- What OFAC is
- How sanctions programs work
- Sanctions lists
- Licensing
- Compliance expectations
- Enforcement consequences
- Additional resources
One of the biggest takeaways is that OFAC jurisdiction reaches further than many organizations realize. U.S. citizens, lawful permanent residents, U.S. entities, and foreign branches (among others) may all find themselves sitting for the exam.
OFAC also reminds organizations that sanctions screening is rarely a simple game of “got a match” or “didn’t get a match.” Evaluating potential hits often requires additional diligence, context, and risk-based decision making.
And then there’s the chapter nobody skips to voluntarily: penalties. OFAC notes that sanctions violations can carry substantial civil and criminal consequences. Put differently, this is one of those areas where guessing is significantly more expensive than studying.
The guide doesn’t create new obligations. It simply lays out the rules of the road in one place.
The good news? OFAC just gave everyone the answer key. The bad news? You’re still expected to show your work.
Review the full guide here: Introduction to the Office of Foreign Assets Control
For more information on evaluating alerts and assessing potential matches, review FAQ 5, FAQ 48, and the OFAC Basics: Sanctions List Search instructional video.
Need a study buddy? As a CTPAT-certified provider, Shapiro helps customers prepare for compliance exams long before the test is on the desk.

Your IOR Application Has Been Selected for Additional Screening

Anyone who has ever been randomly selected for “additional screening” at the airport already knows the feeling.
On June 3, President Trump signed an executive order directing CBP to significantly tighten how Importers of Record (IORs) are vetted, monitored, and held accountable.
The order doesn’t change anything immediately, but it does signal where CBP may be heading over the next 180 days: more scrutiny, more disclosures, and fewer opportunities to simply blend into the crowd.
Among the potential changes under development:
- Higher bonding requirements and/or minimum U.S. asset thresholds
- Expanded disclosures covering ownership, affiliations, import volumes, and domestic assets
- A new “good standing” status tied to compliance history and payment of Customs liabilities
- Enhanced and recurring vetting for importers, brokers, freight forwarders, and bonded custodians
Foreign IORs may find themselves standing in the shortest line of all.
The order calls for restrictions on informal entries by foreign IORs and would generally require formal-entry filers to either participate in CTPAT or work through a CTPAT-validated Customs broker.
CBP has also been directed to expand reporting requirements and sharpen enforcement tools.
Think more audits. More investigations. More focus on forced labor, misclassification, undervaluation, and illegal transshipment. Less patience for repeat offenders.
Customs brokers should pay attention as well. The order specifically calls for aggressive penalties where brokers fail to perform adequate due diligence or respond promptly to CBP requests.
Before anyone starts stress-refreshing ACE, remember that none of this happens tomorrow.
The rulemaking process still lies ahead, and CBP is expected to seek public input before implementation moves forward.
For now, consider this a notice that the security checkpoint is getting an upgrade. The line hasn’t moved yet. The metal detectors are just being wheeled into place.
For more details, check out the White House Fact Sheet – Strengthens Customs Enforcement.

Fueling the Acronym Economy

Ocean carriers have long insisted that bunker fuel is far too important to simply include in freight rates. Instead, they provide a delightful assortment of fuel acronyms, including BAF, FSC, BUC, BSC, FAF, FAS, SBF, NBF, MFR, and OBS. The goal appears to be ensuring that no two invoices look alike.
For newcomers, “bunker” has two meanings:
- Marine fuel.
- A reinforced underground shelter used during wartime.
Shippers are experiencing both!
Carriers on the same trade lane often charge bunker surcharges that differ by more than $200 per 40-foot container. Apparently, some fuel is artisanal, small-batch, curated, and bespoke, y’all!

Procurement teams must compare competing bunker formulas, indexes, adjustments, and exceptions. This process is more commonly known as fueling anxiety.
But ordinary fuel surcharges are only the beginning. When fuel prices spike, carriers often unveil a second generation of fuel charges, including EBAF, EFS, EBS, BRC, FRB, IFA, and EBA. This creates the classic logistics sequence:
- Fuel surcharge.
- Emergency fuel surcharge.
- Revised emergency fuel surcharge.
- Meeting to discuss emergency fuel surcharge.
- Coffee surcharge for everyone reviewing the invoice.
Recent Middle East tensions have helped fuel another wave of emergency bunker charges. These surcharges are now fueling fear, debate, rumors, conference calls, and …headaches.
One thing they are generally not fueling: growth.
Drewry argues that the hundreds of bunker methodologies circulating the industry create billing complexity, invoice disputes, and enough spreadsheet tabs to qualify as a workplace hazard.
Their proposed solution is refreshingly boring: tie bunker charges to a published fuel index using a standard formula agreed before the contract begins. It works like this:
- Shipper and carrier agree on a baseline.
- Link it to a public fuel index.
- Adjust quarterly using a predefined formula.
- Everyone argues about something else.
Drewry’s larger point is simple: fuel recovery should be transparent, predictable, and standardized. A surprisingly controversial idea. We applaud Drewry in this case!
Moving cargo across oceans remains one of shipping’s greatest achievements. Inventing new bunker fuel acronyms whenever markets get exciting may be its second greatest!

Suspicion, Sabotage & Supply Chains

This article is both for The Birds (1963) and Psycho (1960)!
- Before we get into this week’s domestic freight intrigue, a quick programming note. We’ve decided to pay tribute to Alfred Hitchcock, the Master of Suspense, by shamelessly stealing the titles of some of his greatest films for our section headers. You’ll be just fine, we swear!
The Weight of Suspicion (1941)
- Two of the largest US less-than-truckload (LTL) carriers are reporting heavier shipments in Q2. Translation: fewer boxes of yoga mats and air fryers, more pallets of things that require forklifts and steel-toed boots.
- Old Dominion Freight Line (ODFL) said average shipment weight rose 1.6% year-over-year in May, up sharply from the sleepy 0.3% increase seen in Q1.
- Why does heavier freight matter? Because manufacturers tend to ship denser, heavier products than retailers in the US. Think machine parts, industrial equipment, fabricated metals, not throw pillows and scented candles.
The Man Who Knew Too Much …Kinda (1956)
- And these PMI things everyone keeps talking about?
- PMIs are essentially monthly surveys asking purchasing managers one simple question: “Are things getting better or worse?” A reading above 50 = expansion. A reading below 50 = contraction. That’s it. That’s the whole magic trick.
- S&P Global’s PMI hit 55.1 in May while ISM reached 54.0, the strongest readings for both indexes in roughly three years.
- Nobody actually cares whether it’s 54.0 or 55.1. What matters is that both are comfortably above 50 and moving higher. Translation for mere mortals: factories are generally busier today than they were a month ago.

Strangers on a Train (1951)
- Union Pacific and Norfolk Southern’s regulatory blind date continues!
- The Surface Transportation Board (STB) unanimously agreed to accept Union Pacific’s revised application to acquire Norfolk Southern! Woot!!
- Before anyone pops champagne, regulators simultaneously slammed the brakes on a final review. Why? Environmental questions.
- The STB wants additional information before formally kicking off the merger review process and gave UP until July 26 to provide it. This is not a rejection. It is also not an approval. It is the regulatory equivalent of: “Your application looks promising, but we’re going to need a few more forms.”
- The bigger risk may be cost. UP and NS previously disclosed merger expenses running roughly $40 million to $60 million per quarter each. At some point shareholders may ask whether spending hundreds of millions merely to seek permission to merge is the best use of capital.
- The deal isn’t dead. But the meter is running.
North by Northwest (1959)
- Seattle is re-writing the script!
- The Northwest Seaport Alliance (Seattle-Tacoma) wants to become more hands-on in terminal operations rather than remaining strictly a landlord port.
- Management believes a hybrid operating model could create greater consistency across terminals and allow faster responses to customer needs.
- Translation: “If we’re losing cargo, maybe we should stop watching from the sidelines.” Through April, imports into Seattle-Tacoma plunged 20.6% year over year. That is above a 15-point higher loss than any other WC port. Youch!
- When your decline is four times worse than everyone else’s, strategic experimentation suddenly becomes very fashionable.
Foreign Correspondent (1940)
- The Gordie Howe Bridge finally takes the stage.
- US and Canadian officials are preparing a ribbon-cutting ceremony for the new $4.6 billion Gordie Howe International Bridge connecting Michigan and Ontario.
- Construction began in 2018 and is finally nearing the finish line. The bridge was financed by Canada to create an alternative to the privately owned Ambassador Bridge.
- Why should supply chain people care? Because this corridor is one of North America’s most important trade gateways, particularly for automotive manufacturing. More border capacity generally means fewer bottlenecks, more redundancy, and fewer opportunities for a single crossing to ruin everyone’s week.
Saboteur? (1942)
- Ohio is revoking licenses for roughly 1,200 foreign truck drivers and ending issuance of non-domiciled commercial driver’s licenses. Approximately 5,000 drivers will receive notices indicating either revocation or expiration limitations.
- The move follows federal scrutiny of non-domiciled CDL programs after several high-profile crashes and broader concerns about state licensing practices. Expect this issue to remain politically charged and operationally complicated.
Rear Window (1954)
- Manufacturing data says factories are waking up. Freight data says customers remain cautious. Rail mergers remain trapped in regulatory purgatory. Seattle is reinventing itself. Canada built a giant bridge. And somewhere, purchasing managers are filling out surveys that the rest of us pretend to understand.
- Just another week in supply chain.
- Now, before the film buffs send angry emails, yes, we know Hitchcock directed more than just Psycho and The Birds.
- Over a career spanning six decades, Hitchcock turned ordinary situations into nerve-wracking drama, which feels strangely appropriate given the current state of all freight markets, rail mergers, port volumes, tariffs, and supply chain “forecasting.”