Supply Chain Updates from M.E. Dey & Co.

Each week, M.E. Dey shares important stories related to trade and the supply chain. Here are the headlines…

How the Russia-Ukraine war is worsening shipping snarls and pushing up freight rates (CNBC)‘Prepare for Turmoil’: China’s virus lockdowns ramp up supply-chain risks (SCMP)FMC Meeting Scheduled for March 16th Discussing Enforcement Activities (FMC)Weekly Supply Chain Disruption Roundup (NCBFAA)
Be Sure to Monitor Tariff Treatment of Russian Imports Staged or En Route for Transport and Entry into the U.S. (via NCBFAA) 

With the recent announcement that the U.S. will revoke Russia’s Most Favored Nation Duty Status, NCBFAA urges its members to monitor Customs and Border Protection’s CSMS and other trade-facing announcements as to when goods originating from Russia for U.S. consumption will be subject to exponentially higher column two duty rates. While such tariff rate changes typically track the date of entry for consumption or withdrawal from warehouse, it is possible that they may track the date of export from Russia, in this latter case where goods already exported, but not yet entered, may not carry the higher duty rates.
China Tariff Refund Litigation Still Open to Importers (via ST&R)

The U.S. has assessed additional tariffs on hundreds of billions of dollars worth of Chinese goods over the years pursuant to Section 301 of the Trade Act of 1974. Almost all previous exclusions have expired, reinstatements have been slow, and the Biden administration has given no indication of any intent to remove or revise the tariffs.

Litigation currently before the Court of International Trade, first filed in 2020, and since joined by thousands of importers, is continuing to challenge the Section 301 tariffs on List 3 and 4A goods from China. Importers can still preserve their rights to possible refunds of these tariffs by joining the case.

Sandler, Travis & Rosenberg, P.A. (ST&R) can assist in helping you file a claim by contacting attorneys Larry Ordet, Lenny Feldman, Rob DeCamp, or David Cohen at 301Litigation@strtrade.com.
Ports of Los Angeles and Long Beach Reconsidering Dwell Fee on March 18th (via NCBFAA)

The ports of Los Angeles and Long Beach have continued to postpone their “Container Dwell Fee,” and said they will reconsider its possible imposition on Feb. 25. 

The executive directors of both ports will reassess fee implementation after monitoring data over the next week. Fee implementation has been postponed by both ports since it was announced on Oct. 25, but it remains a threat to the industry. Under the temporary policy approved Oct. 29 by the Harbor Commissions of both ports, ocean carriers can be charged for each import container that falls into one of two categories: In the case of containers scheduled to move by truck, ocean carriers could be charged for every container dwelling nine days or more. For containers moving by rail, ocean carriers could be charged if a container has dwelled for six days or more. The fee has been set at $100 per container, increasing in $100 increments per container per day of excess dwell time beyond the prescribed period.

Thinking about joining MITA? Let Beth from Milwaukee Tool tell you why she joined this year

In this Spotlight story you’ll hear from Beth Amestica, Trade Compliance Analyst with Milwaukee Tool.  As a new member, we talked to Beth about why she joined MITA and what she’s already gained from her membership.  Read on to hear what she has to say.

Why did you decide to join MITA?
A friend, who has been a member of MITA, invited me to join a webinar series back in February of 2021. I was so impressed with the quality of the programming:  from the moderators, to the seasoned and well-experienced speakers and panelists, to the relevant and impactful content. I made a decision that day that this is something that I can’t afford to miss and that becoming a member will avail me of such great programming and much more.
 
What value has MITA provided to you since you have become a member?
Since I’ve been a member, I was able to join MITA’s webinars and hear from top-notch speakers and panelists. I learned from their expertise and experiences in trade compliance, logistics, supply chain, and trade regulations, which I find highly valuable being new to this industry. My network has also grown immensely.  I’ve had the opportunity to meet great leaders and key players from the biggest organizations as well as from promising young companies in Wisconsin.
 
What benefits do you find the most valuable?
It’s absolutely a true total package! The benefits I am receiving as a member of this prestigious organization is invaluable.
 
How has being part of MITA impacted you personally and professionally?
I have only been in the industry for a couple of years and what I have learned from each webinar, from each roundtable discussion, and from each member of this organization has accelerated my growth professionally as I navigate through the world of trade compliance.  Being a member has amplified my self-confidence as I surround myself with the sharpest and most knowledgeable people in this industry.
 

In the News: Chinese lockdowns are a serious threat to American supply chains

With nearly 400 million people in China under full or partial lockdown, the ripple effects of this disruption will have serious implications for America’s supply chain. The lockdowns represent roughly 40% of China’s gross domestic product and in effect could prove the most significant logistics disruption since the start of the pandemic.

While ports like the Port of Shanghai remain open, cargo has been stacking up due to a shortage in trucks and complicated permitting. Since April 6, container volumes out of China have dropped 31%. The scariest element in all of this is the fact that when China does decide to return to normal, we have no idea how backed up the domestic supply chains will be and how far of an impact this will have globally.

Shanghai and other major Chinese cities have imposed lengthy, stringent lockdowns to try to control Covid outbreaks. Previous interruptions in the supply of goods from Chinese factories to buyers around the world mainly involved the temporary closure of shipping ports, including in Shenzhen in southeastern China in May and June last year and then near Shanghai last summer.

“The problem is not ships — it’s that there’s no cargo coming because there are no trucks,” said Jarrod Ward, the chief East Asia business development officer in the Shanghai office of Yusen Logistics, a large Japanese supply chain management company.

The testing of truck drivers has been held up because some cities are doing mass testing of residents. Shanghai tested essentially all 25 million people within its borders in a single day on Monday and detected another 21,000 cases on Thursday.

Now, there is an acute shortage of truck drivers in Shanghai and in nearby cities like Kunshan, a center of electronics production. Many electronics components manufacturers are shutting down in Kunshan.

“The key electronics suppliers to Apple, to Tesla, they’re all based there,” said Julie Gerdeman, the chief executive of Everstream, a supply chain risk management affiliate of DHL that is based in San Marcos, Calif.

Apple declined to comment, and Tesla had no immediate reply to questions.

Many factories have tried to stay open by having workers stay on site instead of going home. Employees have been sleeping on mats on the floor for as long as four weeks in some cities in northeastern China. Companies have been storing goods in nearby warehouses while waiting for normal truck traffic to resume.

But as lockdowns stretch on in cities like Shanghai, Changchun and Shenyang, factories are starting to run out of materials to assemble. Some are sending their workers home until further notice.

For companies, any additional disruptions to the global supply chain would come at a particularly fraught moment, on top of rising prices for raw materials and shipping, along with extended delivery times and worker shortages.

Talking Trade with guest Jay Nash

Jay Nash, President of MITA and principal of Nash Global Trade Services, was a recent guest on WisBusiness’s Talking Trade podcast.  Ian Coxhead from UW Madison and Sandi Segal, President of M.E. Dey, talk with Jay on the hot topic of Export Controls and why they’re important.  Gain insight on US export controls, the increased utilization of controls by foreign markets and economies, and how they no longer just apply to physical products. To view the video podcast, go to: https://www.youtube.com/watch?v=wC1TbVN5aB4

Meet MITA’s September Event Speaker, Dr. William Hauptman, Medical Director at International SOS

International SOS is in the business of saving lives and protecting global workforces from health and security threats. We deliver customized health and security risk management as well as well-being solutions to fuel growth and productivity around the world.

When the global coronavirus pandemic hit in March 2020, business travel tumbled and organizations rapidly pulled back their people, closed their offices and went virtual. International SOS quickly pivoted to programs that provide the same benefits to travelers but for domestic employees as well.

MITA interviewed Dr. William Hauptman to learn what he and International SOS have done to supporting their clients to normal operations and future travels. 

MITA:  How are current events affecting your business and international trade?

International SOS:

Right now, our clients remain primarily concerned with the global COVID-19 pandemic. We continue to address their challenges and help them navigate through this uncertain time by keeping them up to date on the latest news, information, and travel restrictions. On top of that, we are supporting their return to normal operations and future travels. 

MITA:  What have been your biggest challenges over the past year and how are you handling them?

International SOS:

The Covid-19 pandemic has changed the world as we know it, bringing a laser-focus to the fact that employees are an organization’s biggest asset. At International SOS we assist our clients in meeting their Duty of Care for their employees and the past year has created some additional challenges in assisting in even routine cases. While many businesses were unprepared for this pandemic, International SOS has vast experience in assisting during pandemics (SARS, Ebola, zika, etc.). Additionally, our medical, security, and global team has always ensured that we have network providers to be able to set up and help our clients during a crisis, even on a massive scale as we have seen over the past year.

For example, prior to COVID-19 most medical evacuations were done to the closest center for medical excellence, while today we typically have to bring a traveler or expatriate assignee back to their home country. That often means a longer flight, more legs, additional crews, paperwork and logistics. Additionally, we need to coordinate isolation chambers, proper PPE, receiving care, and back-up plans that are much more complex than they were in the past.

In the wake of COVID-19 international business travel dropped off; however, we have seen a steady rise in cases over the past 12 months due to increased health and security threats. There is no longer a “routine” business trip and we have seen a 10-fold increase utilization of our services from clients. In 2020 we received over 4 million assistance calls. We assisted with over 73,000 COVID-19 related cases, performed 246 air ambulance movements for COVID-19 patients & 631 for other patients. We operated 32 charter flights with 2,000 passengers.

Our clients came to us with new requests daily and our unique business model allowed us to respond quickly. We augmented our assistance network with 1,108 COVID-19 testing facilities across 135 countries. Through 1,100 health & security consulting engagements we provided bespoke advice on how to address health & security challenges and how to keep clients’ workforce productive.

MITA:  What motivated you to become a sponsor of our Sept event?

International SOS:

International SOS has been a constant supporter of education and giving industry leaders the tools they need to do business, especially during challenging times. We enjoy sharing our medical and security expertise with members of groups like Madison Trade Association.

MITA:  What is one thing (something) you would like people to know about your company? Or what is something unique that people wouldn’t normally know about your company?

International SOS:

International SOS is known for helping clients abroad, but we are also involved in helping numerous clients’ domestic employees.

During last year’s California wildfires International SOS supported clients by locating food, water and temporary housing for workers and their families who were affected.

Additionally, during the ice storm and power outages in Texas in February International SOS fielded requests for assistance that included receipt, coordination and delivery of food, water, emergency supplies; hotel reservations and ground transportation as well as coordination with clients on the identification and manner of distribution to individuals and locations. International SOS also provided advice on personal resilience measures, including how to stay healthy and safe during prolonged power outages in extreme cold weather, and security guidance on transportation and lodging.

Support of clients included assistance of 467 personnel and 6 animals supported, 12 requests for assistance specific to Texas (ie food, water, supplies) and same day and next-day missions that delivered to central points of distribution and/or individual households as requested.

Wisconsin First Quarter 2021 Trade Highlights by WEDC

March 2021 trade data reflect a full year’s impact of the COVID-10 pandemic. Disruption of supply chains, reduced airfreight capacity, and impacts on workforce all effecting Wisconsin’s international trade but exports are showing signs of strength.

Wisconsin businesses exported a total of $5,700,864,222 worth of products in the first quarter of 2021, 5.41% more than first quarter of 2020. The value of Wisconsin’s monthly March exports grew by 15.93% compared to February, the highest monthly total since March 2019. Five out of the last seven years, March has been the month with the largest dollar value of exports. Total U.S. exports grew by just 1.89% during the same period.

 Of Wisconsin’s top 10 export destinations, only the United Kingdom (#8) and Australia (#9) saw declines. Wisconsin’s exports to Canada grew to their highest monthly level since May of 2018, $669.9 million.

 Wisconsin’s top export categories as compared to 2020 saw industrial machinery down by 5.32%, medical and scientific instruments up by 3.66%, electrical machinery exports down by 2.99%, and vehicles and vehicle parts experienced the 2nd largest dollar volume increase of $53.9 million or 197.8%.

Data onagricultural and food products exports appear in multiple categories. Added together into a single super-category, they total $912 million in first quarter 2021. That places it right after the #1 export category of industrial machinery. This super-category grew by 13.89% between the first quarter of 2020 and the same period in 2021.

Wisconsin’s imports grew by 21.89% in the first quarter and totaled $7.6 billion The #1 category, industrial machinery, was up by 31.59% followed by pharmaceuticals, which grew by 55.71%.

Wisconsin Economic Development Corporation has more export data https://wedc.org/export/wisconsin-export-data/

Learn about target export markets from the Global Trade & Investment team at WEDC https://wedc.org/export/market-intelligence/

Meet MITA’s longstanding Sponsor, LR International and Paul Jarzombek!

When you think of human trafficking and what freight forwarding companies can do to help young women in faraway places, you think of donating money for the cause, perhaps. Well, our MITA sponsor, LR International (LRI), decided to go further, by teaming up and combining forces with a U.S.-based charity organization named “Free the Girls”.  

LR International, a freight forwarding company, uses its resources and knowledge to help the “Free the Girls” organization with the warehousing and shipping needs of donated goods. Donated goods are used by young women for resale, to help them start small businesses, and, as a result, learn new ways of living. LR international works with this charity to distribute goods today, to areas as far as Mozambique, El Salvador, Costa Rica and soon Mexico.

MITA is pleased to announce LR International as the Event Sponsor AND one of the two speakers of our April 13th event, entitled: Less Risk, More Rewards: Insuring against the Risk of International Trade.

LR International’s knowledge of international risk management, through offering a wide range of services over the years, will help anyone who attends the event, to grow their business with confidence.  LR International is the mid-west freight forwarding company, highly experienced in worldwide logistics and cargo management, warehousing and distribution, packing and crating, handling of hazardous material, cargo insurance, letter of credit negotiations, export financing, and consulting on all aspects of exporting and importing including compliance training, and more… For over 25 years they had partnered with the State of Illinois International Export Assistance Offices in providing pro-bono counseling for Illinois exporters. They have also been recognized by the federal government for efforts in promoting international trade, by being appointed to the Illinois District Export Council.

MITA interviewed Paul to see what he and the LR International (LRI) have learned as they adjusted to big demand changes coupled with big supply chain challenges.

MITA: So how are things going, Paul? How are current events affecting your business and international trade? 

LRI: The global trade picture in the area of logistics and supply chain which is our business has been quite a mess due to COVID. We have many challenges today we never thought were possible. The bad news is, we have to make our way through the mud. The good news is, this experience has taught us to plan with the attitude of literally ANYTHING can happen and that is making our organization even that much better for the future.

 MITA: What have been your biggest challenges over the past year and how are you handling them?

LRI: The past year has brought a combination of keeping employees safe and finding ways to keep doing our business even though the world changed almost overnight due to COVID. We have handled it the way we always handle challenges, double down on the effort and planning and get to work. Our organization is emerging from the COVID-era stronger and better prepared than we were before it.

MITA: What motivated LR International to become a sponsor?

LRI: We are committed to the MITA programming and believe MITA is an important source for guidance and help to Midwestern exporters and importers.

MITA: We are very grateful for LR International’s support! What are you hoping to gain from your MITA involvement in the year ahead? 

LRI: MITA is a fantastic Trade Organization. The learning content is very relevant to our business because “International” is what we do. Networking in the past and soon to be again in the future has been really valuable because the professionals who are members of MITA are the “roll up your sleeve” kind of people and that practical “get it done” mentality has helped my company on many occasion.

M.E. Dey provides Updates on Traffic Jam: What Port Congestion Means for Supply Chains in 2021

At this time last year, the world had come to a stand-still—streets were empty, lockdowns in place, and we were just beginning to get our arms wrapped around the impact of COVID-19. Few could have anticipated that staying at home would actually put more pressure on the global supply chain. Now, well into 2021, global trade has become more of a hot topic than it ever has been bringing to light the fragility of the supply chain and the challenges that lie ahead in our industry.

At M.E. Dey, a global view is always imperative for us when it comes to looking at the year ahead. Economies around the world are reopening at various speeds and even locking back down in the cases of Europe and India. These factors make the rest of this year almost as unpredictable as the Ever Given running aground in Suez. The port congestion we are seeing is an economic traffic jam. The ripple effect of a traffic jam takes time to recover and there is no exception to global trade. Here in the United States, the economy is reheating at a record rate and the demand for overseas goods isn’t slowing fueled by stimulus spending, factories in need of supplies, and the Peloton you ordered a whole two months ago.

Port of Los Angeles Director Gene Seroka said, “I have not witnessed a sustained import surge of this magnitude in all my years in the industry.” There is currently an average of 30 container ships stuck outside the Ports of Los Angeles and Long Beach waiting to dump their cargo. Some are saying the bottleneck might be the U.S. citing slow container offloading, jammed product warehouses, scarce availability on air/rail, and the lack of a 24/7 work environment like in parts of Asia. In addition, President Biden said in his March 31st infrastructure plan fact sheet, “Our ports and waterways need repair and reimagination.” While any of these may pose an issue, one weak link will always have an impact across the entire supply chain.

Outside of the U.S., delays caused by the Suez Canal blockage are actually forcing carriers to skip port calls. According to the South China Morning Post, “in Europe, carriers have begun skipping port calls to avoid congestion and loading only empty containers before heading back to Asia, where containers are in high demand for exports and business is most lucrative because of record freight rates.” Because of this, container capacity has been greatly reduced—ships aren’t stopping where they should be stopping, which includes picking up empties onshore.

So, we clearly realize that there is a slowdown. What does this mean for supply chains now and for the rest of this year? We can anticipate that global trade congestion will last through 2021 around the globe. One item to keep an eye out for is the start of the new contract year in May for annual freight negotiations, which could be priced significantly higher. On a lighter note, there may be some easing with the mass vaccine rollout and consumers willing to spend more on services rather than goods. That said, businesses should plan accordingly accounting for delays and higher freight rates due to container and space availability. M.E. Dey is working around the clock with our freight vendors shopping for the best rates for our clients. In addition, we have implemented new technology through our ediWebTracker allowing clients to keep track of their freight in real-time.

While the current port congestion around the globe is unprecedented and challenging, we hope it serves as an opportunity to assess the fragility of the global supply chain and work to improve efficiency in every corner of our industry.

On The Road with Chad Hoffman and the Wisconsin District Export Council

The Wisconsin District Export Council is a 2021 Annual Sponsor of MITA. We interviewed the Council’s President, Chad Hoffman, and asked him to share who DEC is and how the synergies between DEC and MITA can be accelerated.

The Wisconsin District Export Council (DEC) contributes and supports MITA and others by educating the “export” community within the U.S. DEC encourages, teaches and supports individual companies in their journey to start or grow exports of their goods or services. Taking advantage of the DEC’s FREE resources (yes, FREE!) and DEC’s volunteer trade professionals allows many US companies develop export sales that stimulate U.S. economic growth.

MITA:  We often ask our sponsors what values and benefits MITA brings to their organizations. With DEC, however, the better question may be, “What benefits does DEC bring to MITA’s members?”

DEC:  Three numbers come to mind – 665, 27, and 37. Wisconsin District Export Council members bring a total of 665 years of international experience to the group, averaging 26.8 years each, with much of that time in International Sales and Marketing. With nearly every member claiming at least one additional language in addition to English, DEC members also have direct experience in an average of 36.8 countries. The benefit to MITA members having [FREE!] access to this experience is immeasurable. 

MITA:  How are current events affecting business and international trade?

DEC:  “Distraction” more than anything. There are so many issues coming at people both at work and at home that being able to stay focused is a skill in itself. 

MITA:  What have been your biggest challenges and how are you handling them?

DEC:  We continue to repeat the message that trade = opportunity. Sometimes we are cheerleaders, sometimes educators, but always, we help companies fight the fear of the unknown. Even while the number and percentage of companies that export grows, data also shows that companies often export only a few times, stopping after encountering shipment delays, or payment and other unforeseen issues when exporting their goods. Creating an export program will take time and persistence, but the reward can be greater than anyone can predict.

MITA:  What motivated DEC to become a sponsor?

DEC:  It is core to our members’ beliefs that the United States can be competitive in the global marketplace, bringing innovation and quality to people who are seeking high quality goods and services anywhere. DEC’s free resources and training are available to anyone, at anytime and at no cost! Each DEC professional has been recognized for their real world expertise in international trade, and their areas of focus can provide an extended list of resources for any exporting company within the United States.

MITA:  What are you looking forward to when some semblance of “normal” returns? What’s on your bucket list?

DEC:  I’d like to walk on the Great Wall of China with my wife, whom I met in Spain during my extensive travel experiences. I’d also highly recommend that your readers consider visiting the Cíes Islands, an archipelago off the western coast of Spain, just north of Portugal. They are known for their fine white sandy beaches and clear waters. Be warned, though – you will find no cars, hotels nor nightlife there, just gorgeous views and total relaxation.