FTZ’ine March 2023

March 1, 2023

FTZ’ine May 2023

May 2, 2023

FTZ’ine April 2023

Food Fight

Well we know for sure the PMA and ILWU are discussing the west coast labor contract.

Because now they are fighting. ILWU Local 13 workers have shut down terminal operations in LA/LB during lunch and dinner breaks. Terminal operators want to stagger breaks so pickups and drop-offs can continue during meals. The lack of a contract makes such disputes harder to resolve.

TikTok may become the next victim of deteriorating U.S.-China relations. As the saber-rattling continues between the two countries, the CEO of TikTok testified in Washington to try and assuage Congress that TikTok is not a security risk for U.S. users.

Rising interest rates that were intended to quell inflation upended the operation of a number of banks in the United States and Europe. Markets have largely recovered from the initial shock but fears abound that additional increases in interest rates may cause more bank failures.

Another sign of economic uncertainty around the globe – pirate activity seems to be on the rise again.

Top Story: West Coast Negotiations Break Down

West Coast dockworkers have highlighted one risk of protracted contract negotiations: the dispute resolution procedures in the last contract no longer apply. So when ILWU Local 13 decided last month they didn’t want to stagger breaks anymore, terminal operations ground to a halt at the nation’s largest port complex in Los Angeles and Long Beach.

The Pacific Maritime Association (PMA) has accused the International Longshore and Warehouse Union (ILWU) of disrupting operations by taking their lunch break all at the same time between 12 and 1 p.m. on the first shift, and 10 p.m. and 11 p.m. on the second. The ‘agreement’ that provided for staggered lunch and dinner breaks to keep cargo moving expired almost two years ago, and without it there is no set method to resolve such matters.

That leaves importers wondering what other types of disruptive actions could interrupt cargo flow through the west coast until a contract is in place.

The PMA said the actions are causing “significant delays” in San Diego Bay. Yusen Terminals LLC CEO Alan McCorkle said the meal-time stoppage “causes a longer truck queue and delays to the trucking community.”

The ILWU has denied the accusations, stating that dockworkers are working every day, according to their agreements with the PMA, and that trucks can form lines for many reasons.

This disruption comes as cargo volumes dropped sharply at the Southern California ports from peak levels a year ago, and the threat of union unrest has spurred retailers, manufacturers, and other importers to avoid potential shipping snarls by diverting goods to East and Gulf Coasts.

Although only one chapter of the International Longshore and Warehouse Union is engaged in this particular action, the move, in the middle of negotiations, raised concerns of further port disruption.

Tech Tip: Intensive Exams for FTZ Weekly Estimates

After the recent implementation of CBP's Uyghur Forced Labor Prevention Act (UFLPA) Region Alert, ISCM is getting reports of an increased number of FTZ weekly estimates being flagged for intensive exam.

The new postal code validation for Chinese manufacturers is now performed on the 3461. All FTZ operators should check with their software provider or broker to see how the postal code is being reported on the 3461 to avoid filing rejections for missing zip codes.

To remove the hold on the estimate, FTZ operators must reach out to their Port. In some instances, corrective action is needed on the entry, either because a manufacturer from whom the zone is no longer sourcing is still on the estimate or goods that were long ago depleted from inventory are still appearing on the list of potential goods to be removed from the zone.

This is a good reminder for all FTZs to review their weekly estimates and templates used for the regular filing, including HTS/COO/MID combinations, to evaluate accuracy. If you have questions or comments about intensive hold procedures on weekly estimates, please send them to our Sr. Vice President, Melissa Irmen at Melissa.Irmen@iscm.co.

Clock Tiking on U.S. – China Relations

One of the most popular apps for younger Americans drew tough scrutiny last month in your Nation’s Capital.

Congress questioned the C.E.O. of TikTok for almost five hours. At the core of the questioning of course, was the video platform’s headquarters in China, and how much data about U.S. customers is shared with the Chinese government.

China opposes the request by the Biden administration for TikTok’s Chinese owner ByteDance to sell the company or face a ban. Imagine if the Chinese government insisted that American companies such as Apple and Tesla divest their Chinese subsidiaries.

The company became the latest fuel for the bonfire that is U.S.-China relations right now.

"Unfortunately for TikTok, they're the 'Chinese spy balloon' of March," Bryan Cunningham, former adviser to the White House National Security Council, told Axios.

It did not help matters that last month Chinese President Xi met with Russian President Vladimir Putin for the first time since last year's invasion of Ukraine. Then, China brokered a diplomatic deal between Saudi Arabia and Iran.

China, Russia and Iran also held a joint military drill in March, underscoring China's growing influence in the Middle East.

The intelligence community's annual worldwide threats report named China "the broadest, most active and persistent cyber espionage threat" to the U.S. government and private sector.

US Container Volumes Ease in First Quarter of 2023

U.S. container import volumes dropped to pre-pandemic levels in the first quarter of 2023, especially for ports on the west coast.

East coast ports also participated in the decline this time, however.

Despite the reduction, port transit delays increased for the top West, East and Gulf Coast ports. COVID continues to be a factor and the West Coast labor situation has still not been sorted out.

February 2023 U.S. container import volumes decreased 16.2% from January 2023 to 1,734,272 TEUs.

The overall U.S. container import volume for the Top 10 ports in February 2023 was down by 296,390 TEUs versus January with all but the Port of Tacoma experiencing declines. The Port of Los Angeles showed the greatest overall container volume decrease, representing 40% of the overall decrease in TEU quantities.

Overall port transit delays in February 2023 were slightly higher compared to January 2023. The major East and Gulf Coast ports saw a transit time increase of 0.4 to 1.1 days. For all major West Coast ports, transit times increased from 0.1 to 1.0 days.

According to Freightos data, container rates on the Asia to N. America lane have dropped 40% since the end of February, and are now on par with 2019 levels.

China is still seeing widespread COVID infections since it loosened its lock-down policies. According to a report from Descartes, the Chinese population has little-to-no immunity and the impact of COVID on manufacturing supply chains could continue for quite some time.

US and Japan Reach Limited Deal On EV Batteries, Congress Unhappy

The Inflation Reduction Act has generated a flurry of U.S. trade negotiations, as more and more countries look to capitalize on the new incentives for electric vehicle purchases.

Last month the Biden Administration announced a trade deal with Japan on the minerals used in EV batteries. The ‘free trade agreement’ will allow imports from Japan to qualify for the tax incentives in the Inflation Reduction Act.

Katherine Tai, the U.S. trade representative, signed the agreement last week.

But U.S. lawmakers had tough words for the agreement, saying that it should have been made available to Congress and the public for review and that it lacked important protections for the environment and workers.

The Inflation Reduction Act, which invests $370 billion to transition the United States to cleaner cars and energy sources, has angered some allies who were excluded from its benefits.

According to a fact sheet distributed by the Office of the United States Trade Representative late Monday, the United States and Japan promised to encourage higher labor and environmental standards for minerals that are key to powering electric vehicles, like lithium, cobalt and nickel. The countries said they would also promote more efficient use of resources and confer on how they reviewed investments from foreign entities in the sector, among other pledges.

The United States and Europe are separately negotiating a similar agreement.

The deal expands a key provision of the Inflation Reduction Act, which offers generous tax incentives for electric vehicles that are built in North America or source the material for their batteries from the United States or countries with which the United States has a free-trade agreement. The United States has free-trade agreements with 20 countries but not the European Union or Japan, and foreign allies have complained that the legislation will disadvantage their companies and lure investment away from them.

But since the Inflation Reduction Act does not technically define what constitutes a “free-trade agreement,” American officials have found what they believe to be a workaround. They are arguing that countries will be able to meet the requirement by signing a more limited trade deal instead. Later this week, the Treasury Department is expected to issue a proposed rule clarifying the law’s provisions.

President Biden and the European Commission president, Ursula von der Leyen, announced after a meeting earlier this month that their governments were pursuing a similar deal. But European officials said that arrangement could take more time to finalize, since the European Union must submit such agreements to its member states for their approval.

In a statement, Representative Richard E. Neal of Massachusetts, the Democratic ranking member of the House Ways and Means Committee, and Senator Ron Wyden, Democrat of Oregon and the chairman of the Senate Finance Committee, called the agreement “unacceptable.”

“Without enforceable environmental or labor protections, the administration abandons worker-centric trade policy and jeopardizes our climate work by opening the door for another environmental catastrophe,” wrote the lawmakers, who are the two most powerful Democrats in Congress on trade issues. Ouch.

“Agreements should be developed transparently and made available to the public for meaningful review well before signing,” they added, “not after the ink is already dry.”

Yarghh! Pirates Seize Dutch Frigate in Gulf of Guinea

Pirates have long been a risk in the Gulf of Guinea, a major west-African shipping lane stretching from Senegal to Angola.

But the region, which sees a lot of traffic from oil tankers, had seen a lull in activity recently.

According to a report by The Maritime Information Cooperation and Awareness Center (MICA), only three ships were attacked in 2022 compared to 26 in 2019.

However late last month pirates boarded a Danish-owned oil tanker there. The vessel has since been found abandoned, but several members of the 16-person crew of the 450-foot Monjasa Reformer remain missing.

The Liberian-flagged oil and chemicals tanker was boarded by five armed people 140 miles west of the Republic of Congo’s Port Pointe-Noire, the ship’s owner said.

The ship’s owner said the crew had sought refuge in the tanker's secure room when the pirates boarded, "in accordance with the onboard anti-piracy emergency protocol."

According to an official at the port of Pointe-Noire, the ship had arrived in Congolese waters on March 18th and left on March 22nd, and was in international waters when it was attacked.

The rescued crew members are all in good health, and no damage was reported to the ship or its cargo.

FTZ Staff Activity

FTZ Board Staff processed a Minor Boundary Modification (S-41-2023) in FTZ 127E on behalf of Constantia Blythewood, Richland County, SC on February 27, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-42-2023) in FTZ 25 on behalf of Air-Con International Inc., Pompano Beach, FL on March 6, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-43-2023) in FTZ 46 on behalf of Visible Supply Chain Management, LLC, West Chester, OH on March 7, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-44-2023) in FTZ 84 on behalf of Dixie Cullen Interests, Inc., Houston, TX on March 8, 2023
FTZ Board Staff processed a Subzone (S-45-2023) in FTZ 15E on behalf of Kawasaki Motors Manufacturing Corp., U.S.A., Boonville, MO on March 8, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-46-2023) in FTZ 145 on behalf of Thyssenkrupp Supply Chain Services, NA, Shreveport, LA on March 13, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-47-2023) in FTZ 226A on behalf of Jo-Ann Stores, LLC, Visalia, CA on March 15, 2023
FTZ Board Staff processed a Subzone (S-48-2023) in FTZ 44 on behalf of Givaudan Fragrances Corporation, Mount Olive, Flanders, Towaco, NJ on March 15, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-49-2023) in FTZ 104M on behalf of Port City Logistics, Savannah, GA on March 21, 2023
FTZ Board Staff processed a Minor Boundary (S-50-2023) in FTZ 281 on behalf of Athena Brands, LLC, Medley, FL on March 23, 2023
FTZ Board Staff processed a Subzone (S-51-2023) in FTZ 265 on behalf of Bollore Logistics USA, Inc., Conroe, TX on March 23, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-52-2023) in FTZ 281 on behalf of Venture Logistics, LLC, Miami, FL on March 23, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-53-2023) in FTZ 64G on behalf of Spectrum Logistics, Inc. dba Shoreside Logistics, Jacksonville, FL on March 23, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-54-2023) in FTZ 151E on behalf of Whirlpool Corporation, Fostoria, IL on March 23, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-55-2023) in FTZ 204 on behalf of GSM Engineered Fabrics, Kingsport, TN on March 27, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-56-2023) in FTZ 74 on behalf of HEVI Corp., White Marsh, MD on March 27, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-57-2023) in FTZ 3 on behalf of Aeroground, Inc. dba Menzies Aviation (USA) Inc., San Francisco, CA on March 27, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-58-2023) in FTZ 21 on behalf of Mercedes-Benz USA, LLC, Ladson, SC on March 28, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-59-2023) in FTZ 50 on behalf of IDC Logistics, Inc., Lynwood, CA on March 28, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-60-2023) in FTZ 50 on behalf of DSV Air and Sea, Inc., Torrance, CA on March 28, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-61-2023) in FTZ 182 on behalf of Solid Rocks, LLC, Fort Wayne, IN on March 30, 2023
FTZ Board Staff processed a Minor Boundary Modification (S-62-2023) in FTZ 33 on behalf of Steelite International USA, Inc., New Castle, PA on March 30, 2023

Foreign-Trade Zone Board Activity

The Dallas/Fort Worth International Airport Board received authorization for the reorganization and expansion of Foreign-Trade Zone 39 under the alternative site framework in Dallas/Fort Worth, Texas. MORE
Bollore Logistics USA, Inc. submitted an application for subzone status for its facility within Foreign-Trade Zone 265 in Conroe, Texas. MORE
Miami-Dade County submitted an application for reorganization(expansion of the service area) of Foreign-Trade Zone 281 under the alternative site framework in Miami, Florida. MORE
Barco Stamping Co. Inc. received authorization of production activity for stamped metal products within Foreign-Trade Zone 219 in Yuma, Arizona. MORE
Givaudan Fragrances Corporation submitted an application for subzone status for its facilities within Foreign-Trade Zone 44 in Mount Olive, Flanders and Towaco, New Jersey. MORE
REV Recreation Group, Inc. d/b/a Midwest Automotive Designs received authorization of production activity for passenger vehicles within Foreign-Trade Zone 125 in Elkhart, Indiana. MORE
Moly-Cop USA, LLC received authorization of production activity for forged steel grinding balls within Foreign-Trade Zone 15 in Kansas City, Missouri. MORE
Acushnet Company submitted an application for the expansion of subzone 28F within Foreign-Trade Zone 28 in Lakeville, Massachusetts. MORE
Prairie Industries Holdings, Inc. DBA Truvant received authorization of production activity for construction toy sets within Foreign-Trade Zone 196 in Haslet, Texas. MORE
Kawasaki Motors Manufacturing Corp., USA submitted an application for the expansion of subzone 15E within Foreign-Trade Zone 28 in Maryville, Missouri. MORE
Tesla, Inc. received authorization of production activity for battery products, electric motors, and energy storage products within Foreign-Trade Zone 126 in McCarren and Sparks, Nevada. MORE
Caterpillar Inc. submitted a notification of proposed production activity for additional components of construction and earth moving machines within Foreign-Trade Zone 155 in Victoria, Texas. MORE
Intel Corporation submitted a notification of proposed production activity for semiconductor products within Foreign-Trade Zone 138 in New Albany, Ohio. MORE
Phillips 66 Company submitted a notification of proposed production activity for renewable fuels and by-products within Foreign-Trade Zone 3 in Rodeo, California. MORE
Swagelok Company received approval for the expansion of Subzone 40I within FTZ 40 in Valley City, Ohio. MORE
Valero Refining-New Orleans, LLC submitted a notification of proposed production activity for renewable fuels and by-products within Foreign-Trade Zone 124 in Norco, Louisiana. MORE
Givaudan Fragrances Corporation submitted a notification of proposed production activity for additional components of fragrance compounds within Foreign-Trade Zone 44 in Mount Olive, Flanders, and Towaco, New Jersey. MORE
Cheniere Energy, Inc. submitted an application for the expansion of Subzone 122X within FTZ 122 in Portland, Texas. MORE
Flemish Master Weavers submitted an application for production authority for machine-made woven area rugs within Foreign-Trade Zone 186 in Sanford, Maine. MORE
Lam Research Corporation received approval for the expansion of Subzone 18F within FTZ 18 in Stockton, California. MORE
TTI, Inc. received approval for the expansion of Subzone 196A within FTZ 196 in Fort Worth, Texas. MORE
Teijin Carbon Fibers, Inc. has received an extension of the comment period on submission containing new evidence for their application for production authority for polyacrylonitrile-based carbon fiber within Foreign-Trade Zone 38. MORE
BMW Manufacturing Company, LLC submitted a notification of proposed production activity for additional components of passenger motor vehicles within Foreign-Trade Zone 38 in Spartanburg, South Carolina. MORE

Food Fight –

Well we know for sure the PMA and ILWU are discussing the west coast labor contract.

Tik Tok may become the next victim of deteriorating U.S.-China relations. As the saber-rattling continues between the two countries, the CEO of Tik-Tok testified in Washington to try and assuage Congress that Tik Tok is not a security risk for U.S. users.