TOC Logistics is a proud member of the NCBFAA, the trade association representing customs brokers and freight forwarders in the United States. What is great about the NCBFAA is that while, yes, their members are our competitors, those members come from across the United States, including key areas like the US/Mexico border where TOC Logistics does a tremendous amount of USMCA business. They are also remarkable advocates for our industry when the voice of a single company like ours cannot adequately capture the attention of one of the many regulatory agencies governing international trade.
Announcements from Customs and Border Patrol
Customs and Border Patrol (CBP) addressed a number of topics with the audience, including forced labor and the Uyghur Forced Labor Prevention Act, America’s Cutting Edge (ACE), and the concept of “ally-shoring,” or working with trading partners whose markets and geopolitical views are in alignment.
CBP is currently managing 54 active Withhold Release Orders (WROs) and 9 active findings across several industries. The largest change with the Uyghur Forced Labor Prevention Act (UFLPA) is rebuttal provisions, which is when there is a presumption of guilt that something was produced by forced labor. The burden is explicitly on the importer to prove the contrary.
UFLPA, coming into law on June 21st, is one of CBP’s biggest concerns. Actively and aggressively communicating to each business that it affects, CBP wants to make sure organizations understand how they will be impacted by the law and what they need to do once it’s in place. CBP’s website is a great page to bookmark for details.
Port Congestion
Another topic that came across the table was Port Congestion. Executive Director of the Port of Los Angeles, Gene Seroka, and Chairman of the FMC, Dan Maffei, as well as Vice President of Supply Chain and Customs Policy of the National Retail Federation, Jonathan Gold, all spoke at the conference, providing insight and details needed to understand just what was going on.
Seroka gave background and details on the Container Dwell Fee that ports continue to push out because of hard work and determination not to be hit with the fee. Seroka added that they looked at the terminals, and more than 40% of the containers left on docks were containers which had been there 9 days or more. The threat of the fee has led to a 75% drop in containers of that duration.
Maffei used a great plumbing analogy for the port congestion issue, saying, “If your sink clogs, you call a plumber. You don’t call a plumber because you’re trying to stuff twice as much water in the sink and it clogs up.” Cautioning that more cargo is moving earlier (such as back to school supplies) because retailers don’t want to be caught without inventory, Maffei said this will only contribute to the problems at hand.
Seroka cited a 53% appointment utilization rate, but the crowd and the Federal Maritime Commission (FMC) rapidly pointed out that the figure was artificially constrained by terminal return restrictions, availability of chassis or lack thereof, and unavoidable delays in making turns that truckers rely on because they’re paid by the trip.
Other Major Takeaways
As the conference moved onto other topics, demurrage and detention were rightly and importantly mentioned, where Chairman Maffei stated he was unable to comment on the Hapag Lloyd fine, and. after the conference, the announced and nearly identical amount imposed on Wan Hai Lines. The FMC under Maffei’s leadership has been notably active despite both staffing and budgetary constraints. He was, however, able to say that the agency would be willing to look at bringing a case and testing their jurisdiction and reach. That reach could include ocean cargo moving on through a bill of lading to an inland point by rail, not just cargo on the water. Maffei hinted at working with the Surface Transportation Board who has jurisdiction over the railroads to find a way to hold them accountable.
He also made note that there have been major changes in containerized shipping since ocean shipping was deregulated in 1984. Everything has changed, including ships growing from 5,000 TEUs to 25,000 TEUs and the decline from more than 24 carriers (including US flagged carriers) operating on the transpacific to less than 10 today (with no US carriers remaining). With a budget of about $30 million annually, the Commission functions with a staff of only 120 nationwide. Because of this, however, Congress is taking note and will likely increase the budget, allowing for more staff and beefing up consumer affairs and enforcement bureaus.
From TOC Logistics’ point of view, even though the number of ships waiting to berth in Los Angeles and Long Beach are at levels not seen since a year ago January, we are watching China’s factories sputter back to life and the PMA and ILWU negotiate a new coast-wide contract. There is no shortage of issues supply chains are dealing with today, but we will continue to monitor and share information of interest to our clients.