European Factory Closures Continue, Trucking Supply Declines Correspondingly

Apr 1, 2020

We continue to hear from our partner agencies in Europe that because governments are taking increasing steps to reduce community spread, businesses are closing or being ordered closed by local and national governments.

Anecdotally, and based on what we are hearing from customers and their corresponding suppliers, these drops are from 60–70% in Spain and 40–50% in France. We have heard and seen some component factories that are open or being retooled to produce medical equipment, but these are the exception rather than the rule.

With the decline in cargo being shipped comes a concurrent drop in available trucking.

Many truck drivers are from central and eastern European countries and rather than sheltering in place in whatever country they may have had loads, they are returning to their home countries and families. From a supply and demand point of view, this is good because it equalizes the amount of trucking in service with the amount of cargo being produced.

Indian Lockdown Continues

The Indian government’s decision to seal off the country has led Indian airports and seaports to restrict imports and exports. Of all the countries that are dealing with the impact of COVID-19, India is perhaps the most restrictive. The announced lockdown runs until April 14th and the government is allowing the movement of emergency shipments. At the moment, if the shipper can secure the approval of the local authorities, cargo can be handed over and taken to the airport. We are working through these issues for clients on a case-by-case basis.

Port Congestion In The United States On The Uptick

With many warehouses closed, the only cargo moving on and off docks is for essential items such as medical equipment and supplies. The cargo which remains behind as vessels full of exports from China and other Asian countries will start to crowd ports. This congestion comes at a time that because of the low volumes from Europe and some other countries, ports are choosing to close for a day or two or drop second or third shifts of longshore labor to reduce their costs.

We are working with our truckers and carriers to minimize the additional costs that come with the holding of cargo at terminals or demurrage or detention for having equipment out past free time.

Duty Relief? Maybe This Time For Real, But Not For Everything. 

Bloomberg posted a story late on March 31st which indicates that the White House may have finally signed off on duty deferral for ninety days and the conditions under which they will apply.

You can read the story here, but the tone is that an Executive Order will be issued deferring duty for MFN column one duties that are being collected, but not on 301 and 232 duties. We will continue to monitor this and if something concrete happens, we’re sure it will be all over the news but will issue a separate advisory with the EO and clarification from CBP how they will handle collection.


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