FTZ’ine November 2021
November 2, 2021
FTZ’ine January 2022
January 5, 2022
Omigoodness Another Variant
The World Health Organization announced a new "variant of concern" last week, right as America was preparing to celebrate Thanksgiving.
It felt like déjà vu all over again.
Britain responded immediately to the announcement by restricting flights from 6 African countries, and EU leaders recommended the same measure for its members. Those moves sparked fears of a new lockdown of the global economy, triggering a worldwide stock market selloff right after the holiday.
Since then, world markets have calmed as drug company executives downplayed the ability of the Omicron variant to completely evade treatment and prevention measures already in place. It looks like COVID-19 is going to continue to test the mettle of international traders as each unusual variant spawns a gut-wrenching global reaction.
Here in DC Congress should be fresh from their holiday break, and good thing; they must quickly get to work on an appropriations bill. There is little chance both sides will come to an agreement on a budget within the week, which means both houses will need to pass a Continuing Resolution (CR) by Friday to avoid a government shutdown.
Port congestion continues to bedevil traders. The Port of Oakland reported a significant drop in the volume it handled last month. The steamship lines blame the historic wait times in Southern California for the need to skip scheduled calls in Oakland, stranding U.S. exports on the docks. So even as the Ports of Los Angeles and Long Beach announced progress in processing import containers from their terminals, empty containers and containers for export continue to clog warehouses and yards across the country.
Top Story: Port Delays Slam Into Exports
The U.S. trade deficit hit an all-time high of $80.9 billion in September as American exports fell sharply. The September number topped the previous record of $73.2 billion set in June, the Commerce Department reported last month.
California is the nation's biggest grower of almonds, walnuts and pistachios. The majority are sold to other countries, with nut exports totaling more than $8.1 billion in 2019 according to the California Department of Food and Agriculture. Those exports primarily depart from Oakland, often the last west coast call before ocean vessels return across the Pacific.
Officials at the Port of Oakland announced that a 43% reduction in October vessel stops precipitated a 14 percent drop in import volume and a 27 percent export volume drop compared to 2020 totals. The figures were not surprising to west coast importers and exporters facing monumental hurdles in getting empties and exports to the terminals.
“We're at the mercy of foreign shipping companies,” said Roger Isom, president and CEO of the California Cotton Ginners and Growers Association and the Western Agricultural Processors Association. “We're in a game, somebody changed the rules on us and we have no way to correct it.”
Isom said more than 80% of scheduled shipments were canceled last month by the ocean carriers. Processors have resorted to paying much more to ship their products to other ports, sending pistachios and walnuts by train to Texas and Maryland and flying bales of cotton to Peru. Isom said they are losing money on these sales, but they have to do it or else risk losing their customers.
It's particularly a problem for walnuts, which are in high demand in Europe for the Christmas holiday. But Isom said California's orders are “now being filled by other countries.”
Danny Wan, executive director of the Port of Oakland and the president of the California Association of Port Authorities, said last week one of the port's container terminals was empty of both containers and ships.
“The operator tells me this is the first time in the history where they are operating in Oakland where they have not had one vessel call,” Wan said. “This is an example of the supply chain dictating this kind of market distortion.”
California exports accounted for more than 10% of all U.S. exports in 2020, and 16% of all U.S. agricultural exports.
“A great deal of attention is on imports and issues confronting these entities bringing in goods which are important,” said Assemblywoman Cecilia Aguiar-Curry, whose rural Northern California district includes lots of farmers. “However, California agriculture depends heavily on the exporting of its goods and — I cannot overstate this enough — we are in an urgent position.”
Part of the September export drop reflected a 15.5% reduction in U.S. petroleum exports resulting from Hurricane Ida rig closures in the Gulf of Mexico. Economists expect that decline to reverse in coming months with oil prices rising and petroleum production now back on line.
While importers are still battling historic shipping costs, the nation’s busiest port complex will delay imposing fines on carriers for containers awaiting pickup longer than 9 days.
The Executive Directors of the Ports of Los Angeles and Long Beach said in a joint statement that since the late October announcement of the new fee, the ports have seen a decline of 33% in aging cargo on the docks.
Tech Tip: CBP Gives e214 System Outage Visibility to the Trade
In CSMS #49904147, CBP announced a new ACE Availability Dashboard, publicly available here, where members of the trade and all CBP personnel could see in real-time the availability of various ACE modules. The first release of the portal, however, didn’t include the e214, and operators and port officers struggled to know if an odd error message or missing reply was due to filing error or a system outage.
In a recent update, however, e214 system status, along with that of in-bond, cargo release, entry summary and more, is now included in the Availability Dashboard. Now you can check ACE system status, including FTZ functionality, anytime.
If you have questions about the new ACE Availability Dashboard, or FTZ filings in general, please email us at Info@iscm.co.
Next Disaster: Shipper Credentials For Sale on Dark Web
Malware intelligence company Intel 471 recently announced that the dark web is flush with shipping company usernames and passwords.
The company says it has observed network access brokers selling credentials and other forms of access to shipping and logistics companies. The companies with their credentials being sold range from air, ground, and maritime cargo transport.
Intel 471 gave details of some recent observations:
Within the span of two weeks in July 2021, one new user and one well-known access broker claimed to have access to a network owned by a Japanese container transportation and shipping company. The new user included the company’s credentials in a dump of 50 other companies.
In August 2021, one user known to work with groups that have deployed Conti ransomware claimed access to corporate networks belonging to a US-based transportation management and trucking software supplier and a US-based transportation services company.
In September 2021, a user with ties to the FiveHands ransomware group claimed access to hundreds of companies, including a UK-based logistics company. Additionally, a new user claimed to have gained access to a Bangladesh-based shipping and logistics company.
In October 2021, a newcomer to a well-known cybercrime forum claimed access to the network of a US-based freight forwarding company, alleging that he had local administrator rights and could access 20 computers in the company’s network. Also in October, a newcomer on a different well-known cybercrime forum claimed access to a Malaysian logistics company.
May need to add supply chain cybersecurity to the 2022 to-do list.
Danes Dive Into Door-To-Door Delivery
Danish shipping giant Maersk is investing in e-commerce fulfillment in the United States.
Maersk, which moves nearly a fifth of the world's ocean freight, recently purchased Visible, a logistics company with nine US e-commerce fulfillment centers. With the acquisition, Maersk says, it can fill orders and get them to the doorsteps of 95% of all US households within two days.
Expanding in this arena squares Maersk up against e-commerce behemoths Amazon and Walmart.
Amazon, responsible for almost 40% of US e-commerce sales in 2020, has doubled its warehouse space since the start of the pandemic. It currently has more than 350 fulfillment centers, air hubs and other facilities.
Walmart is pouring billions to expand and automate local fulfillment centers to fill orders faster. Target, whose e-commerce business grew the fastest of the three, is plowing $4 billion into a strategy that includes building out its e-commerce capacity. Even FTZ user American Eagle Outfitters is getting into the e-commerce fulfillment business with its recently announced purchase of Quiet Logistics.
Maersk has one link in the international supply chain that these companies don’t: a fleet of 700 container ships. Linking all those pieces together, Maersk says, will lower costs for both retailers and customers by minimizing package handoffs to third parties.
Maersk also owns APM Terminals that operates 76 port terminals. It can leverage existing relationships with a big source of potential customers for Visible's fulfillment services.
On top of that Visible touts proprietary software that optimizes delivery through one of the company's five shipping partners: UPS, FedEx, USPS, DHL and Pitney Bowes. Amazon also optimizes deliveries.
But that link could point to a weakness in the new strategy. Maersk divested its U.S. trucking subsidiary Bridge Terminal Transport (BTT) in 2013, leaving it without a footprint from which to deliver final-mile services in the United States. That means it will have to rely on those shipping partners, who themselves are investing heavily in offering e-commerce fulfillment services. Maersk could then find itself competing with its own home delivery services, as Amazon did before investing in its own final-mile delivery network.
Maersk’s plan is to attract customers who sell from their own platforms and need help fulfilling orders, said Brian Bowers, Visible's chief operating officer. Amazon's multichannel fulfillment service also targets these sellers, and though the company didn't provide data on how many third-party sellers use it, it's not the largest part of its fulfillment business. Visible offers customized packaging, allowing retailers to maintain control of their branding through the delivery process.
Additionally, Visible customizes package size and branding. That can lower shipping costs for retailers, Bowers said. It can keep the company that made the product front of mind when you open the package, instead of making the Amazon, Target or Walmart logo the first thing you see when you receive it.
Amazon is also expanding its access to port terminals by 50%, increasing the speed with which it can unload goods for both itself and its third-party sellers, and doubled its capacity to load and unload shipping containers at its warehouses as it tries to address global shipping delays for the holidays. That doesn’t give Amazon vessels, but it already has planes. Are ships next?
EU Refugee Crisis May Revive LNG FTZ Projects
Tension in Europe initiated by the refugee crisis, and fueled by other issues from there, may add life to Gulf Coast FTZ projects for the export of liquefied natural gas (LNG). Exploding electricity costs in Europe have already forced some power-intensive industries such as steel and aluminum production to curtail production, and European consumers are now paying more for home heating with winter approaching rapidly.
European gas prices surged as much as 700% by October versus last year, as reopening global economies restored gas usage to previous levels, particularly in Asia.
Prices then eased when President Vladimir Putin said in October that Russia would boost gas supplies to record levels, raising hopes that bumper flows would ward off supply shortages.
Then the disagreements began and supply problems quickly mushroomed.
Flow through the Yamal pipeline which runs to Germany via Belarus and Poland, have not ramped up by Russia as expected. This may be in retaliation for Germay’s refusal to certify Nord Stream 2, a brand new undersea gas pipeline running from Russia to Germany.
Then a warning by Belarusian President Alexander Lukashenko that he could halt Russian gas flows through his country to Europe in a dispute with the European Union posed a new threat to the already tight European gas supply situation. Planes carrying migrants from Iraq, Syria and other countries began arriving in Belarus, and they soon headed for the borders with Poland, Lithuania and Latvia. Western leaders have refused access to the EU, stranding Belarus with a refugee crisis with winter looming.
This has improved prospects for several natural gas liquefaction projects that slowed when pandemic-induced price drops eliminated the economic benefits of the projects. Now, as gas prices rise, those projects may once again look attractive.
The news that Nord Stream 2 certification was delayed means that the recently completed pipeline will not begin supplying gas to Germany and the rest of Europe anytime soon.
Poland and other Eastern European countries have also argued against Nord Stream 2, fearing additional reliance on Russia. Ukrainian leaders have argued that the pipeline could cost the country $2 billion in annual transit revenue it earns from a pipeline from Russia that runs through its territory and would make it more susceptible to energy extortion by Russia.
Additional stress came when France told Russia that NATO would be prepared to defend the sovereignty of Ukraine, near where NATO says Moscow has been staging a troop buildup.
Speaking by telephone to Russian President Vladimir Putin as part of a flurry of conversations between Western leaders and Russia, Belarus and Ukraine, the French leader spoke of his strong concern over the situation on Ukraine's borders.
"Our willingness to defend Ukraine's sovereignty and territorial integrity was reiterated by the president," an adviser to Macron told reporters of the conversation Macron initiated.
Japan Next For Section 232 Reprieve?
Japan’s economy shrank at a 3% annual rate in the July-September quarter, as efforts to curb the coronavirus pandemic impacted domestic industry. This has put pressure on newly elected Prime Minister Fumio Kishida to search for economic drivers to lift the country out of its slump.
Japan’s gross domestic product, which measures the value of a nation’s products and services, declined 0.8% from the previous quarter, the Japanese Cabinet Office said.
The world’s third largest economy grew 0.4% in April-June and shrank 1.1% in January-March.
As part of the recovery effort, Japan's Ministry of Economy, Trade and Industry announced that U.S. Trade Representative Katharine Tai has agreed to try and resolve U.S. tariffs on Japanese steel and aluminum imports, as the U.S. has already done with the European Union.
U.S. Ambassador Tai and Japan’s Minister of Economy, Trade and Industry (METI) Koichi Hagiuda held talks last month after an earlier visit by Commerce Secretary Gina Raimondo. The effort comes as prices for steel have surged as economies try to shift into shift into high gear.
Japan has never instituted a complete lockdown, but it has periodically asked businesses to close or limit hours under “states of emergency.”
That has crimped domestic consumption which sank 1.1% in July-September from the previous quarter.
METI said in a statement that the two sides had confirmed plans for negotiations on resolving the tariffs issue and addressing global excess production capacity.
US Reopens Canada and Mexico Borders
In the middle of last month President Biden convened a summit with the heads of state of Canada and Mexico; the first in five years. The White House conclave came just ten days after the three countries reopened their mutual borders to tourist travel.
There were fewer crossings at the Mexico-United States border than expected on the first day of the reopening, Monday, November 8th, with residents possibly expecting chaos after the border had been closed to nonessential travel for over 20 months.
"In the morning, there was no line," Tijuana resident Claudia Hernandez said as she prepared to enter the United States to go shopping ahead of the Thanksgiving holiday.
"Next week we'll see the massive lines that always form."
The northern border was a different story. Traffic was heavy at times at border posts such as Bluewater Bridge, Michigan near Sarnia, Ontario, and Champlain, New York, near Quebec. But lines overall appeared to be moving steadily.
Since the reopening, the flow of tourists across the Canadian border has been less than either side expected.
Most travelers are required to show proof of vaccination in both directions. Some U.S. states also require a negative COVID-19 test. Canada requires a negative PCR test, which is more time-consuming and costly to get. That makes day trips across the northern border almost impossible.
Further, inoculated visitors will be prevented from entering the United States if they received vaccines that have not been approved by the World Health Organization, such as China's CanSino and Russia's Sputnik V.
FTZ Staff Activity
FTZ Board Activity
- Valbruna Stainless, Inc. submitted an application for subzone status for is facility within FTZ 49 in Pompton Lakes, New Jersey. MORE
- Innovusion, Inc. submitted a notification of proposed production activity for light detection and ranging systems within FTZ 18 in Sunnyvale, California. MORE
- The City of Tampa submitted an application for the expansion of FTZ 79 under the Alternative Site Framework in Tampa, Florida. MORE
- Lam Research Corporation submitted a notification of proposed production activity for additional components of wafer fabrication equipment, subassemblies, and related parts within FTZ 18 in Fremont, Livermore, Newark, Tracy and Hayward, California. MORE
- Gulf Coast Growth Ventures LLC submitted a notification of proposed production activity for ethylene, polyethylene, monoethylene glycol and related co-products within FTZ 122 in San Patricio County, Texas. MORE
- GXO Logistics submitted a notification of proposed production activity for thermal transfer printers, data transmission devices and accessories kitting within FTZ 41 in Kenosha, Wisconsin. MORE
- AbbVie, Inc. received authorization of production activity for additional components of pharmaceutical products within FTZ 22 in North Chicago and Lake County, Illinois. MORE
- Avaya, Inc. submitted a notification of proposed production activity for kitting of audio/video conferencing equipment within FTZ 262 in Olive Branch, Mississippi. MORE
- The Huntsville-Madison County Airport Authority submitted an application for reorganizing FTZ 83 under the Alternative Site Framework in Huntsville, Alabama. MORE
- Nikola Corporation received authorization of production activity for electric road tractors and motor vehicles within FTZ 75 in Coolidge, Arizona. MORE
- BrightView Technologies, Inc. submitted a notification of proposed production activity for plastic film within FTZ 93 in Durham, North Carolina. MORE
- Swafford Warehousing, Inc. submitted a notification of proposed production activity for medical kits within FTZ 38 in Greer, South Carolina. MORE
- The Tyler Economic Development Council submitted an application for a new Foreign-Trade Zone under the Alternative Site Framework in Smith County, Texas. MORE
- Aker Solutions, Inc. submitted a notification of proposed production activity for subsea oil and gas systems within FTZ 82 in Mobile, Alabama. MORE
- Schlumberger Technology Corporation, Reslink Product Center received authorization of production activity for sand screens and related accessories within FTZ 84 in Baytown and Houston, Texas. MORE
- Galdisa USA received authorization of export-only production activity for peanut products within FTZ 265 in Conroe, Texas. MORE
- Liebel-Flarsheim Company, LLC received authorization of production activity for diagnostic imaging contrast media within FTZ 93 in Raleigh, North Carolina. MORE
- Fluvitex USA, Inc. submitted a notification of proposed production activity for quilts, comforters and cushions within FTZ 138 in Groveport, Ohio. MORE
Omigoodness Another Variant –
The World Health Organization announced a new “variant of concern” last week, right as America was preparing to celebrate Thanksgiving.
It felt like déjà vu all over again.
Britain responded immediately to the announcement by restricting flights from 6 African countries, and EU leaders recommended the same measure for its members. Those moves sparked fears of a new lockdown of the global economy, triggering a worldwide stock market selloff right after the holiday.
Since then world markets have calmed as drug company executives downplayed the ability of the Omicron variant to completely evade treatment and prevention measures already in place. It looks like COVID-19 is going to continue to test the mettle of international traders as each unusual variant spawns a gut-wrenching global reaction.
Here in DC Congress should be fresh from their holiday break, and good thing; they must quickly get to work on an appropriations bill. There is little chance both sides will come to an agreement on a budget within the week, which means both houses will need to pass a Continuing Resolution (CR) by Friday to avoid a government shutdown.
Port congestion continues to bedevil traders. The Port of Oakland reported a significant drop in the volume it handled last month. The steamship lines blame the historic wait times in Southern California for the need to skip scheduled calls in Oakland, stranding U.S. exports on the docks. So even as the Ports of Los Angeles and Long Beach announced progress in processing import containers from their terminals, empty containers and containers for export continue to clog warehouses and yards across the country.