FTZ’ine July 2021
July 1, 2021
FTZ’ine September 2021
September 1, 2021
Things Could Get Bumpy Again. . . .
The August peak for trans-Pacific Ocean freight is now upon us, but transportation lanes never fully recovered from their pandemic-induced woes. That means longer wait times and higher prices may be in the future and spot rates are already at multiples of pandemic and pre-pandemic pricing.
Floods in Germany and China exacerbated the difficulties in eliminating persistent supply chain bottlenecks for many importers. Goods trying to move to, from, and through affected regions were delayed and a complete restoration of inland transportation routes may be months away.
The Delta variant is causing a surge in COVID-19 cases around the world. While here in the United States 90% of new cases are linked to unvaccinated persons, the CDC has warned new evidence shows even vaccinated folks can transmit the variant. This may cause a reintroduction of mask mandates and interfere with the planned reopening of schools and offices around the country.
The US and China traded a new round of jabs, with the areas of disagreement continuing to expand. Its not just the global climate that seems to be getting hotter.
Top Story: Forbes Magazine Spotlights de minimus Quandary
One magazine article quickly accomplished what the U.S. retail industry has been unable to do since 2016. Forbes published an article highlighting the perverse impact the TFTEA changes to the de minimus limit have had on U.S. distribution operations, and Washington is starting to notice.
In 2016, Congress raised the U.S. de minimis threshold to $800 in the bipartisan Trade Facilitation and Trade Enforcement Act (TFTEA). The 2016 change has been a boon for U.S. consumers, but Congress only granted the exemption to shipments from other countries, leaving U.S. facilities without an invitation to the party.
Attempts to expand eligibility to the U.S. have not gotten any traction in Washington until now.
U.S. Customs and Border Protection (CBP) has published trade statistics through the end of April showing that at the current pace, the value of imports into the U.S. in FY21 will increase 26% over FY20 figures, and de minimus procedures will be used to handle over 900 million transactions through mail, manifest, and the new Type 86 entry format.
In contrast, CBP is on pace to process just over 40 million entry summaries during the fiscal year which ends on September 30th. The massive surge in de minimus imports portends transaction volumes that CBP’s ACE system may not be prepared to handle. While FTZs reduce entry volume for CBP, de minimus filings greatly increase them without the payment of any fees to support ACE development or expansion.
Importers already experienced ACE slowdowns and outages related to de minimus demand on ACE resources when the new Type 86 entry filings were introduced. CBP will need to plan for continued growth for these filings to avoid further disruptions to supply chains in the upcoming peak import season.
Tech Tip
With the recently implemented aluminum licensing requirements, questions are arising about how to report the required license information for merchandise going into an FTZ.
For all steel, and now all aluminum imports, a license must be obtained prior to bringing the goods to the United States. In a non-FTZ scenario, this would mean reporting the license number on the 7501 used to import the goods. But, in the case of an FTZ, the licenses must be obtained prior to the goods being admitted to the zone and license information is reported on the 214.
In a recent CSMS message (CSMS #48923327 - Steel/Aluminum license validation causing Type 06 entries to reject), CBP confirmed that this also means that licenses do NOT have to be reported on the 7501 upon the goods leaving the zone. Some zones were including the licenses on the 06 entry, and the entries were being rejected because the license had already been used on the 214 at the time of admission. FTZ’s must only report the license when admitting the goods on a BOL that contains steel or aluminum.
This also highlights the fact that the steel and aluminum 232 tariffs are still with us. There have been rumblings in D.C. about them being lifted, especially for European imports. That prospect raises the question of what happens to PF status goods after the tariffs are lifted. This is still an unanswered question, and one that the FTZine staff is watching closely. When we know more, we’ll be sure to let you know!
If you have questions about materials subject to steel or aluminum licensing, send them to us at Info@iscm.co .
China Issues Grow More, Not less, Complex
U.S. relations with China continue to degrade on several fronts, including trade. Late last month, a U.S. delegation led by the Deputy Secretary of State Wendy Sherman met with China’s Foreign Minister Wang Yi in Tianjin, China.
The State Department described the meetings as "frank and open", a term similar to the one used to describe the near-brawl in Anchorage, Alaska the last time the countries met face-to-face.
Just before the talks began, China imposed sanctions on U.S. individuals including former Secretary of Commerce Wilbur Ross. The action was in response to an international coalition led by the U.S. that condemned China for its global cyberattacks. And that wasn’t the only recent action helping to set a sour tone for the talks.
In a sign of Washington’s efforts to expand the circle of countries opposing China, Germany sent a warship to the South China Sea for the first time in almost two decades, adding itself to the list of Western nations with a military presence amid growing alarm over China's territorial ambitions in the region.
Germany, like the U.S., is walking a tightrope between its security and its economic interests. China has become Berlin's most important trading partner.
Nevertheless, Berlin has made it clear the mission serves to stress the fact Germany does not accept China's territorial claims. China’s economy grew nearly 8 percent in the second quarter from a year ago, short of expectations, but still a figure that would be the envy of most other countries. As the world’s #2 economy, slowing growth in China would have repercussions for the many countries whose economies revolve around it, including the U.S. and Germany.
Docking This Ship Took For Ever
The Ever Given finally reached the Netherlands almost four months after catapulting into the spotlight when high winds pushed it aground on March 23rd, blocking the Suez Canal and crippling global supply chains to and from Asia.
Carrying more than 18,000 containers, the behemoth made the Port of Rotterdam late last week, and heads to England today.
Container ships rarely make headlines, but the Ever Given was a daily news feature for each of the six days in March while it was stuck.
Even after it was refloated, the ship was detained while the cost of its assistance was discussed with Egypt, which operates the Suez Canal. The ship was finally released by Egyptian authorities in early July following an agreement on compensation of the costs to dislodge it.
Roughly 15% of world shipping traffic transits the Suez Canal, the shortest shipping route between Europe and Asia. The Ever Given was scheduled to dock at Rotterdam's ECT Delta terminal for unloading until Aug. 3rd before departing for Felixstowe, England.
Top Story: USTR Adds Media Staff
Kamau Marshall, President Biden’s former director of strategic communications during the 2020 campaign, is now USTR’s deputy assistant for media and public affairs.
The addition of Marshall to the USTR leadership team comes as the United States is in the midst of an ongoing trade and public relations war with China.
The President has yet to announce any plans to lift the tariffs on Chinese imports, but in a speech last week he warned American companies that business conditions are deteriorating in Hong Kong.
Marshall was a speechwriter and communications advisor for the Department of Agriculture during former President Barack Obama’s administration. He’s also had stints with the Democratic Congressional Campaign Committee, Rep. Al Green, D-Texas, and late Democratic Reps. John Lewis and Elijah Cummings.
Computer Troubles Disrupt Port of Houston Operations
Two container terminals at Port Houston have reopened after a major hardware failure halted operations.
Executive Director Roger Guenther said the port experienced a failure of the storage devices supporting all applications at Barbours Cut and Bayport Container Terminals on July 27th. An initial fix failed again a few hours later. Combined, the two terminals average close to 11,000 truck transactions per day.
“I want to be clear that this is not a cyber-attack on the Port Houston operating system.” He said in a letter to Port Houston customers and stakeholders.
Port Houston is one of the busiest ports in the nation. Last year, the Houston Ship Channel was ranked the busiest waterway in terms of tonnage by the U.S. Army Corps of Engineers.
The issue is now resolved, but with peak freight season right around the corner it certainly added unwelcome stress to an already strained transportation industry.
FTZ Staff Activity
FTZ Board Activity
- Lockheed Martin Corporation received authorization of production activity for additional components of satellites and other spacecraft within FTZ 123 in Littleton, Colorado. MORE
- Miraclon Corporation received authorization of production activity for flexographic/aluminum printing plates and direct imaging/thermo imaging layer film within FTZ 106 in Weatherford, Oklahoma. MORE
- Bridgeport Port Authority received authorization for the reorganization of Foreign-Trade Zone 76 under the Alternative Site Framework in Bridgeport, Connecticut. MORE
- The FTZ Board is inviting public comment on the rebuttal submission of Teijin Carbon Fibers, Inc. within FTZ 38 in Spartanburg, South Carolina. MORE
- Nikola Corporation submitted a notification of proposed production activity for electric road tractors and motor vehicles within FTZ 75 in Coolidge, Arizona. MORE
- VF Outdoor, LLC submitted an application for the expansion of subzone 50R in Corona, Ontario, and Santa Fe Springs, California. MORE
- IPR Pharmaceuticals, Inc. received authorization of production activity for additional components of pharmaceutical products within FTZ 7 in Canovanas, Puerto Rico. MORE
- AstraZeneca Pharmaceuticals LP received authorization of production activity for additional components and finished pharmaceutical products within FTZ 99 in Newark, Delaware. MORE
- Galdisa USA submitted a notification of proposed production activity for peanut products within FTZ 265 in Conroe, Texas. MORE
- Liebel-Flarsheim Company, LLC submitted a notification of proposed production activity for diagnostic imaging contrast media within FTZ 93 in Raleigh, North Carolina. MORE
- Watco Transloading, LLC received approval to operate its facility in Parsons, Kansas as Subzone 161D. MORE
- AstraZeneca Pharmaceuticals LP received authorization of production activity for additional components and finished pharmaceutical products within FTZ 177 in Mount Vernon, Indiana. MORE
- Schlumberger Technology Corporation submitted a notification of proposed production activity for sand screens and related accessories within FTZ 84 in Baytown and Houston, Texas. MORE
- The Huntsville-Madison County Airport Authority submitted an application to reorganize FTZ 83 under the Alternative Site Framework in Huntsville, Alabama. MORE
- Liebel-Flarsheim Company, LLC received authorization of production activity for diagnostic imaging contrast media within FTZ 93 in Raleigh, North Carolina. MORE
- Merck & Co., Inc. received authorization of production activity for additional components and finished pharmaceutical products within FTZ 185 in Elkton, Virginia. MORE
- Zoetis Services, LLC received authorization of production activity for additional components and finished pharmaceutical products within FTZ 59 in Lincoln, Nebraska. MORE
- LUC Urethanes, Inc. submitted a notification of proposed production activity for wheels, rollers and friction pads for industrial machinery and material conveyance within FTZ 265 in Conroe, Texas. MORE
- Phillips 66 Company received approval for the expansion and modification of Subzone 149C in Brazoria County, Texas. MORE
- M.M.O. Companies, Inc. submitted a notification of proposed production activity for disassembly of firearms and ammunition within FTZ 31 in Mascoutah and Edwardsville, Illinois. The notification review has been terminated. MORE
- AbbVie, Inc. submitted a notification of proposed production activity for additional components and finished pharmaceutical products within FTZ 22 in North Chicago and Lake County, Illinois. MORE
- The Economic Development Council, Inc. submitted an application to reorganize FTZ 114 under the Alternative Site Framework in Peoria, Illinois. MORE
- Black & Decker (U.S.), Inc. received authorization of production activity for production and kitting of power tools and injection molded parts within FTZ 38 in Fort Mill, South Carolina. MORE
Things Could Get Bumpy Again. . . .
The August peak for trans-Pacific Ocean freight is now upon us, but transportation lanes never fully recovered from their pandemic-induced woes. That means longer wait times and higher prices may be in the future and spot rates are already at multiples of pandemic and pre-pandemic pricing.
Floods in Germany and China exacerbated the difficulties in eliminating persistent supply chain bottlenecks for many importers. Goods trying to move to, from, and through affected regions were delayed and a complete restoration of inland transportation routes may be months away.
The Delta variant is causing a surge in COVID-19 cases around the world. While here in the United States 90% of new cases are linked to unvaccinated persons, the CDC has warned new evidence shows even vaccinated folks can transmit the variant. This may cause a reintroduction of mask mandates and interfere with the planned reopening of schools and offices around the country.
The US and China traded a new round of jabs, with the areas of disagreement continuing to expand. Its not just the global climate that seems to be getting hotter.