FTZ’ine September 2021
September 1, 2021FTZ’ine November 2021
November 2, 2021Happy New Year!
Happy New Government Fiscal Year that is. FY 2022 starts today and while it does not have a budget, it does have temporary funding approved just hours ago by both chambers of Congress and the President. That postpones any concerns of a government shutdown . . . until December 3rd when the new spending authorization will expire.
The budget is not the only high-profile issue drowning out the conversation on international business here in your Nation's Capital. Treasury Secretary Yellen reported to Congress last week that the United States government will run out of cash if the country’s debt ceiling is not extended before October 18th. Add to that a stalled $1T infrastructure bill and it is easy to imagine that Washington DC is not focused on international trade problems at the moment.
On top of a driver shortage, container shortage, chassis shortage, WRO detentions, port backlogs, and skipped calls, hundreds of CBP Officers were reassigned to the border last month to help deal with a surge in immigration across the Rio Grande. Looks like it will be a tough journey from here until at least the end of the year for FTZs and other importers.
Don't forget: with the new fiscal year comes new MPF limits for FTZ users. The new maximum is $538.40 and the new minimum is $27.75. At the same time, CBP is changing the rules for ACE Portal passwords. Reach out here for the new password rules.
Top Story: Congestion Continues To Plague FTZ Supply Chains
International supply chains continue to be a drag on efforts to reverse the economic impact of COVID-19. And as import volumes have increased in anticipation of the U.S. holidays, importers may feel that only the finger-pointing has increased in response to the expanding delays.
"With the current work schedule you have two big ports operating at 60%-70% of their capacity," said Uffe Ostergaard, president of the North America region for steamship line Hapag-Lloyd AG . "That’s a huge operational disadvantage."
He was of course referring to the ports of Los Angeles and Long Beach, which are managed separately but together handle almost a third of all container imports into the U.S. Mario Cordero, the Executive Director of the Port of Long Beach,said the Port of Long Beach would try operating 24 hours a day from Monday to Thursday. Those hours are now in effect at POLB just as at major ports in Asia and Europe that have operated around-the-clock for years.
Just down the 710 Freeway though Gene Seroka, Executive Director of the larger Port of Los Angeles, said that extending his port's hours of operation will do little to fix the issue. He said about 30% of truck appointments go unused every day because the port needs full coordination with trucking companies and warehouses. "We've had longshore workers on the job six days a week since the pandemic started, but it's truck drivers and warehouse workers that we need to bolster," Seroka said.
Not everyone agrees with that approach.
"Congestion won’t be fixed until everyone steps up and does their part," said Frank Ponce De Leon, a coast committeeman at the ILWU. "The terminal operators have been underutilizing their option to hire us for the third shift," he said.
Few are more frustrated about the backlog at the two ports than truck drivers caught in the chaos. They say that a trucker shortage is not the problem, instead, the port needs to speed up wait times and have more dock help ready to offload.
All are struggling with a shortage of workers.
Federal safety regulations limit most commercial truck drivers to 11 hours of driving time in a 14-hour workday. Port truckers often prefer to start early in the morning so they can maximize the number of loads they move a day, said Tom Boyle, chief executive of Quik Pick Express LLC, a trucking and warehousing provider near the ports.
Night shifts are less popular. Drivers who pick up loads late at night don’t always have a place to deliver them. Truckers might have to park a box in their own yard, and then move it again when the destination warehouse is open.
Port truckers say some appointment slots go unused because of the lack of equipment, such as the chassis needed to haul containers, or because of restrictions on what drivers can do during that appointment, including returning empty containers.
"There is too much congestion from empty containers on terminals," said Matt Schrap, chief executive of the Harbor Trucking Association, which represents carriers at the ports of Los Angeles and Long Beach. The shipping lines aren’t moving the boxes out, "which is preventing us from returning empties that we are storing in our yards," he said.
In addition to empties the long delays are leading to abandoned cargo as expired merchandise or spiraling demurrage charges can make it less expensive to walk away than to pay the moving and storage costs of a container.
"If you work a gate 24/7 it will improve your velocity" only if all participants are involved, said Wim Lagaay, chief executive of APM Terminals North America, which operates a terminal in Los Angeles.
With scarce warehouse capacity, many truckers leave the boxes outside the facilities along with the chassis. Liner operators say that it normally takes three days to return the chassis to the port, but it now takes eight. Doubling the turn time means the number of chassis availble for moves is cut in half, just when import volume is peaking for the year.
John Porcari, the Biden administration official tasked with addressing port congestion, said that extending hours at the Southern California ports is an important step toward persuading trucking companies, freight railroads and importers to work longer hours, too. “One of the overall trends that we are seeing is the need to get closer to 24/7 operations as opposed to eight or 10 hours a day for the entire goods movement chain,” said Mr. Porcari, who was named the administration’s port envoy in late August.
CBP Resources Pulled To Border To Deal With Migrant Surge
The images have been striking. Tensions on both sides of the southern border are high. A new wave of immigrants, primarily from Haiti, have been crossing the Rio Grande River into Del Rio, Texas from Mexico. Some of the crossings are attempted in broad daylight with camera crews broadcasting.
Homeland Security Secretary Alejandro Mayorkas said during a news conference at the scene that Customs and Border Protection reassigned 600 agents, officers and DHS personnel "to enhance our operational capabilities".
Even with the increased manpower, overtime has become mandatory for some officers to help deal with the volume. CBP announced 208,887 migrant encounters in August, an increase of over 300% from the same time last year.
The trade already has enough shortages to deal with at the moment and the loss of CBP resources at ports around the country could further postpone progress in restoring the orderly flow of import and export cargo.
No one could have predicted the sudden immigration growth, particularly of Haitian immigrants coming from South America, not Haiti. There had been a steady increase in border crossings throughout 2021 but now an already stretched Customs and Border Protection force is being pulled from their posts around the country to go and deal with the issue.
The Pound Stages A Comeback
Now that the UK is out of the EU, the LB may be able to make a comeback.
The weight measure that is.
As an expression of their newfound independence from the Continent, British Prime Minister Boris Johnson is preparing to allow British retailers to drop the metric system and label their products in the ounces, pounds, and feet of the imperial system.
Its an exclusive club.
According to British Weights and Measures Inspector Pippa Musgrave “Only Myanmar and the USA currently use imperial measures (US measures are actually slightly different).”
Add Liberia to make that list of countries completely accurate. It’s still a short list.
Inspector Musgrave further pointed out on Twitter that the timing of the adoption of the metric system in Britain far predated any notion of a European Union: “The UK agreed, when it signed the OIML (International Organisation of Legal Metrology) in 1856 to move to a single system of measurement.”“Metric measures have been lawful in the UK since 1875.”
British exports to the 163 other members of the WTO, including the E.U. and U.S. would still require reporting in metric measures, possibly requiring relabelling or conversion by the U.K.’s trading partners.
The timing of the announcement may have something to do with the current uproar (see below) over Australia’s cancellation of a huge order for French submarines in favor of a combined bid from the UK and US. France responded with outrage that the UK continues to dismiss. It turns out that France was the first to introduce the metric system in 1795.
The UK Metric Association points out there isn't much about the imperial system that is truly British, calling arguments to the contrary "quite absurd."
"Some people regard it as patriotic to use imperial, because it was 'invented in Britain,' " the Association says. "However, most of these units originated elsewhere in Europe and were imposed by invaders."
But at least it won’t be French.
Angela Merkel Will Be A Hard Act to Follow
German Chancellor Angela Merkel is preparing to step down after 16 years as the head of the German government. In 2004, a year before she was first elected Chancellor, The Economist branded Germany the "sick man of Europe." Germany has prospered greatly since then compared to other world economies, including Germany's European neighbors.
The country’s first woman leader and the first from formerly communist East Germany has won four straight German elections as head of the center-right Christian Democratic Union (CDU). If negotiations following Germany's recent national elections extend past Christmas, she’ll become Germany’s longest-serving postwar chancellor.
Merkel's CDU party will have a difficult time keeping that momemtum as it lost too many seats in the elections to claim a majority, and was beat by Germany's left-leaning Social Democratic Party (SPD). SPD will now try to form a ruling coalition through negotiations with smaller parties.
The tight voting result means that the third and fourth place parties, the Green Party, which took only 14.8% of the votes, and the liberal Free Democratic Party (FDP), with 11.5%, could end up being kingmakers. This is an odd parallel with the U.S. government where just two Senators hold an outsize influence on policy in a closely divided federal government.
TPP Takes Unexpected Turn As Both China And Taiwan Apply To Join
China and Taiwan have each applied to join the 11-nation Asia-Pacific free trade group once championed by the United States.
The original treaty, known as the Trans-Pacific Partnership (TPP), was seen as an important economic counterweight to China's growing military and economic influence in the region. That original purpose would be quite complicated if mainland China were to join.
Taiwan had already been in informal discussions to apply for admittance and Economy Minister Wang Mei-hua voiced concern about China's "sudden" decision to apply. She said she hoped it would not affect Taiwan's application to join the trading bloc.
Chinese Commerce Minister Wang Wentao submitted an application to the trade minister of New Zealand as a representative of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Taiwan followed with its formal application less than a week later
The current members of to CPTPP are Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, Peru, Singapore and Vietnam. If China joins, that would quadruple the population covered by the trade agreement to over 2 billion people.
Britain is negotiating to join as well. President Biden recently downplayed the prospect of a separate free trade agreement with the UK, and this may be an alternate path to that goal should the U.S. engage the CPTPP to counterbalance this new move by China.
Taiwan is excluded from many international bodies because of the mainland's insistence that Taiwan is part of "one-China" rather than a separate country, but Taiwan is a member of both the World Trade Organization and the Asia-Pacific Economic Cooperation (APEC) group.
What’s A Nuclear Submarine Between Friends?
Apparently quite a lot.
Late last month Australia cancelled a deal with France's Naval Group to build a fleet of conventional submarines and will instead build at least eight nuclear-powered submarines with U.S. and British technology.
The new three-way deal came after months of secret talks. The cancellation represented a sudden and unexpected $40 billion loss to the French defense industry. The secrecy deeply angered France, which blasted both Australia and the United States for the treachery and recalled its ambassadors from down under and from Washington, D.C. French Foreign Minister Jean-Yves Le Drian accused President Biden's administration of "unilateralism, unpredictability, brutality and not respecting your partner."
Germany later joined France in berating the United States for negotiating a security pact in secret. The depth of anger was clear at the United Nations in New York when a senior EU lawmaker dispelled with normal pleasantries when speaking to Australia's Prime Minister Scott Morrison: "For us transparency and loyalty are fundamental principles in order to build stronger partnerships and stronger alliances," European Council President Charles Michel said.
"One of our member states has been treated in a way that is not acceptable, so we need to know what happened and why," European Commission President Ursula von der Leyen said in defense of France.
Australia says the United States' offer of access to U.S. nuclear technology to build nuclear-propelled submarines was too good to refuse. Australia will be only the second country after Britain in 1958 to be given such technology as a means to help the U.S. prevent China from gaining military supremacy in the region. The original order for submarines from France called for conventional, diesel-electric powered models.
USTR Gains Deputy
The U.S. Senate has confirmed longtime Senate lawyer Jayme White as Deputy U.S. Trade Representative.
The Senate voted 80-18 to confirm White, a strong bipartisan majority for an experienced trade attorney.
White, who served as the chief trade adviser to the Senate Finance Committee, has worked on nearly every major trade issue and legislation for two decades.
In his confirmation hearing, White had vowed to carry out "robust monitoring" of compliance to the U.S.-EU agreement on aircraft subsidies.
FTZ Staff Activity
FTZ Board Activity
- St. Lucie County, Florida submitted an application to reorganize FTZ 218 under the Alternative Site Framework in St. Lucie, Florida. MORE
- AbbVie Ltd. received authorization of production activity for pharmaceutical products within FTZ 7 in Barceloneta, Puerto Rico. MORE
- The Greater Kansas City Foreign-Trade Zone, Inc. submitted an application to reorganize FTZ 15 under the Alternative Site Framework in Kansas City, Missouri. MORE
- Lilly del Caribe, Inc. submitted a notification of proposed production activity for pharmaceutical products within FTZ 7 in Carolina, Puerto Rico. MORE
- Getinge Group Logistics Americas LLC submitted an application for subzone status for its facility within FTZ 49 in Dayton, New Jersey. MORE
- Volkswagen Group of America Chattanooga Operations, LLC received authorization of production activity for passenger motor vehicles within FTZ 134 in Chattanooga, Tennessee. MORE
- Avant Organics LLC submitted a notification of proposed production activity for specialty chemicals within FTZ 261 in Alexandria, Louisiana. MORE
- STIHL, Incorporated received authorization of production activity for handheld outdoor power equipment within FTZ 20 in Virginia Beach, Virginia. MORE
- CCZJV-GPX submitted a notification of proposed production activity for pipe spools and valves within FTZ 171 in Baytown, Texas. MORE
- Teijin Carbon Fibers, Inc. has received an extension of the rebuttal comment period for its application for production activity for polyacrylonitrile-based carbon fiber within FTZ 38 in Spartanburg, South Carolina. MORE
- VF Outdoor, LLC received approval for the expansion of subzone 50R in Ontario, California. MORE
- Cycle Force Group, LLC received authorization of production activity for electric and non-electric cycles within FTZ 107 in Ames, Iowa. MORE
- Wyeth Pharmaceuticals, LLC received authorization of production activity for mRNA bulk drug substance within FTZ 27 in Andover, Massachusetts. MORE
- Airbus OneWeb Satellites North America LLC received authorization of production activity for satellites and satellite systems within FTZ 136 in Merritt Island, Florida. MORE
- Mitsubishi Logisnext Americas (Houston) Inc. submitted a notification of proposed production activity for forklifts/work trucks and related subassemblies/kits within FTZ 84 in Houston, Texas. MORE
- OBlockz LLC submitted an application for subzone status for its facility within FTZ 27 in Lawrence, Massachusetts. MORE
Happy New Year! –
Happy New Government Fiscal Year that is. FY 2022 starts today and while it does not have a budget, it does have temporary funding approved just hours ago by both chambers of Congress and the President. That postpones concerns of a government shutdown . . . until December 3rd when the new spending authorization will expire.
The budget is not the only high-profile issue drowning out the conversation on international business here in your Nation’s Capital. Treasury Secretary Yellen reported to Congress last week that the United States government will run out of cash if the country’s debt ceiling is not extended before October 18th. Add to that a stalled $1T infrastructure bill and it is easy to imagine that Washington DC is not focused on international trade problems at the moment.
On top of a driver shortage, container shortage, chassis shortage, WRO detentions, port backlogs, and skipped calls, hundreds of CBP Officers were reassigned to the border last month to help deal with a surge in immigration across the Rio Grande. Looks like it will be a tough journey from here until at least the end of the year for FTZs and other importers.
Don’t forget: with the new fiscal year comes new MPF limits for FTZ users. The new maximum is $538.40 and the new minimum is $27.75. At the same time, CBP is changing the rules for ACE Portal passwords.