What's Brewing in Week 38

Top Stories ILA Negotiations 

Ongoing negotiations have centered around pay, marine terminal automation, and healthcare and retirement benefits. If the ILA and the USMX fail to finalize a new master contract by the end of the day on September 30, 2024—when ILA workers’ existing contracts expire—the union intends to proceed with a work stoppage at 12:01 a.m. on October 1.

Some shippers may have already factored in the potential work stoppage: container volumes from Southeast Asia to North America reached a record-breaking 500,000 TEUs in June, suggesting an early peak season The U.S. East Coast and Gulf Coast are home to five of the busiest ports in North America. After the ports of Los Angeles and Long Beach, the busiest ports in the U.S. are New York/New Jersey, Savannah, Virginia, Houston, and Charleston. The economic impact of a potential work stoppage could be massive: U.S. East Coast ports—all of which are covered by the ILA/USMX labor contract—would handle 2.3 million twenty-foot equivalent units (TEUs) in October. This freight would exceed $3.7 billion each day, based on MDS Transmodal's estimate of $50,000 per container.

Lars Jensen writes "The question is how close to 1st October we get before we see some of the carriers announce alterations to their service patterns, redirecting vessels inbound for USEC to for example ports in Canada. 

Another consideration for the carriers would be to unload all USEC cargo in the last port of call in the USEC prior to October 1st, hence ensuring the vessel in question does not get caught waiting outside the next USEC port(s) during the strike. Shippers should be prepared to tackle such an eventuality for the import cargo being discharged at an alternate port."

White House Executive Order

On the whole, the executive order contains portions of multiple legislative proposals, including the Import Security and Fairness Act (H.R. 4148 and S. 2004), the End China’s De Minimis Abuse Act (H.R. 7979), and the FIGHTING for America Act (not yet formally introduced in Congress).

Additionally, the executive order asks Congress to quickly pass legislation to limit de minimis from China, along with import-sensitive commodities (such as apparel) from any country. It will be up to Congress to flesh out the final language.

Flexport is closely monitoring new developments and sharing updates with all our clients to mitigate the impact of this new regulatory change.

In general, we anticipate additional duty costs and increased documentation requirements for all businesses currently using the de minimis exemption, should the executive order go into effect.

In the short term, businesses will be required to start providing HTS classifications down to the 10-digit level for all products if they hadn’t done so before. So, the most immediate step for businesses today is to start classifying 10-digit HTS codes.

Air Freight enters Peak Season

Speaking of e-commerce, while the White House works toward regulating certain entries, the rest of D2C brands should brace for impact, as we head into the strongest peak season ever, according to an article by the Journal of Commerce .  

House Blend

You are invited to listen into a conversation with Hapag-Lloyd AG CEO, Rolf Habben Jansen and Flexport CEO, Ryan Petersen on Thursday, September 19.   Registration LINK