Responding to Trump Tariffs with a Compliance Program

JOC.com — For US importers, 2018 has brought a rollercoaster of regulations – and that wild ride shows no signs of slowing down.

In June, President Trump officially announced that the U.S. would impose tariffs on more than 1,100 Chinese exports, affecting importers of everything from flat-screen TVs and medical devices to aircraft parts and batteries. The tariffs impact $50 billion in goods, representing nearly 7 percent of U.S.-China container trade and 2.5 percent of total U.S. container volume. A 25 percent tariff on 800 of the items takes effect in July, while a second phase of tariffs will be announced at a later date. With retailers rushing to get merchandise in hand before these tariffs kick in, containerized import volume for the first half of 2018 is expected to rise 3.8 percent year-over-year.

Meanwhile, many importers are still waiting to see how hefty steel and aluminum tariffs announced earlier this year will impact their bottom lines. While businesses filed more than 20,000 tariff exemption requests through the end of June, the US government has only processed 98 of those requests, with just 42 of them being approved. US Customs and Border Protection (CBP) is also increasingly scrutinizing imports as global trade tensions brew, meaning businesses must be hyper-viligant about every shipment.

Amid this uncertain political and regulatory environment, businesses are rightfully concerned about the potential impact of increased tariff rates on their supply chains. The U.S. government processes more than $6.5 billion in imported goods daily, making many organizations vulnerable to the steady stream of evolving regulations. Importers not only have to consider the economic impact of tariffs, but also the time and resources required to decipher and comply with the latest changes. Those who are unprepared face potential delays, penalties and fines, compromising their competitiveness. In 2016 alone, CBP collected $57 million in penalties, a 10 percent increase from the previous year.

Compliance meets efficiency

How can you keep your own supply chain running smoothly in a constantly changing customs environment? While recent advancements like the Automated Commercial Environment (ACE) are designed to help companies improve efficiency, the customs process remains notoriously difficult and time-consuming to navigate. An ongoing drumbeat of regulatory changes is complicating matters further, making a strong customs compliance program a must-have for today’s importers.

By coupling a technology-driven supply chain with customs brokerage expertise, businesses can better prepare themselves to manage the regulatory rollercoaster, reduce the potential for errors and penalties, and minimize strain on their internal resources. Whether your business has a full in-house brokerage team or is just establishing a customs program, these strategies can help you stay on the right side of customs compliance.

  • Centralize your customs data. With more than 1,100 products subject to new tariffs, businesses need to work quickly to determine which of their goods are affected and find alternatives if needed. By establishing a single technology platform for all supply chain data, organizations can pull historical reports with a few clicks to review harmonized tariff classifications and ensure compliance.
  • Vet your vendors. Customs compliance isn’t just about your organization, but all the companies you do business with, too. The US government ultimately holds importers accountable for their goods, so another vendor’s actions could result in fines and penalties. A technology platform that captures data on all vendors allows you to review documentation and classify item masters from a single location, making it simpler to stay compliant.
  • Stay ahead of regulations. Keeping current on import regulations can be a full-time job, particularly for sensitive goods that are subject to review by multiple agencies. A supply chain partner with specialized customs expertise can help ensure compliance and keep your goods moving freely. For example, when one tire manufacturer received a CBP notice that its goods were subject to anti-dumping duties, the company worked with its provider to prove that the tariff didn’t apply in its case, saving the manufacturer from significant expense.
  • Audit, audit, audit. As the US government cracks down on imports, a simple typo could result in delays and/or fines. Following strict auditing processes can help minimize the risk of errors as well as time spent on post summary corrections and petitions. For one furniture retailer, working with its supply chain partner to improve auditing helped to slash its error rate from 7 percent to 0.5 percent while freeing up additional time for its team.
  • Get C-TPAT certification. The Customs-Trade Partnership Against Terrorism (C-TPAT) aims to improve security for goods entering the United States. While achieving C-TPAT certification requires an upfront time investment, it can yield big efficiency benefits for importers. A supply chain partner can manage the necessary legwork, such as performing on-site analysis and training overseas factory workers, to help your business receive a higher level of C-TPAT certification. Taking that additional step not only improves your cargo security, but can help reduce cargo exams and other delays.

When it comes to the future of tariffs and other regulations, the only certainty is continued uncertainty. By building a solid customs compliance program, businesses can work proactively to minimize risk, streamline operations, and ensure their goods make it across the border.

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Article written by Lori Fox, Vice President, Customs Brokerage Services, merican Global Logistics

US Portal Success Hinges on Pushing Data to Users

JOC.com — US port information portals that are emerging across the country must provide true end-to-end shipment visibility via a common, secure platform, and they must proactively notify users of exceptions in the supply chain, or beneficial cargo owners (BCOs) will get the visibility they want from services already offered by freight forwarders, the CEO of American Global Logistics said Tuesday.

The true value of a port information portal is that it gives BCOs, ocean carriers, marine terminals, chassis providers, and non vessel operating common carriers (NVOs) a single point of contact for shipment visibility, and it proactively pushes information on supply chain delays to users rather than requiring that BCOs and vendors ping the portals, said Jon Slangerup, who formerly headed up FedEx Canada and served as executive director of the Port of Long Beach for two years.

From his experience with FedEx, Slangerup understood the importance of providing end-to-end shipment visibility, but when he served as executive director in Long Beach in 2015-16, Slangerup was not able to extend that concept to shipments over which the port had no custodial control. Therefore, his drive for supply chain optimization at the second largest US container port met with resistance from terminal operators, carriers, truckers, chassis providers, and BCOs because each participant considered its information to be proprietary. “Until that problem is addressed, it will be a big hurdle to participation,” he said.

Portal hurdle – the trust factor

If the trust factor is achieved, the ultimate step in the evolution of port portals will be to provide shipment data that will allow participants to engage in predictive analytics so they can plan ahead for precisely when their shipments will be available for delivery. However, Slangerup believes the industry is years away from a true predictive analytics product. “Now it’s just an estimate, which we [freight forwarders and NVOs] can do today,” he said.

Port executives from Long Beach, Los Angeles, Oakland, and the Northwest Seaport Alliance discussed efforts to establish common information portals at a technology summit June 27 sponsored by the Harbor Trucking Association in Long Beach. Each port wants to be a facilitator to work with private sector vendors to make the portals a reality, for the benefit of all supply chain participants. “We’ve got an opportunity to change the game,” said Gene Seroka, executive director of the Port of Los Angeles.

The Port of Los Angeles and GE Transportation more than a year ago began piloting an information portal at the APM terminal and this year is expanding it to all six container terminals in its harbor and to three in neighboring Long Beach. Advent/eModal is offering portal services in Oakland and New York-New Jersey.

Seroka noted that shipment information in various forms is already available 10 to 14 days before a vessel departing an Asia port arrives at a US gateway, but it is siloed within a number of supply chain participants, each guarding what it considers to be proprietary data that it uses for its own purposes. If that information is shared via a common, secure platform, each carrier, service provider, and BCO has plenty of time to marshall its labor and assets needs to prepare for arrival of the shipment, he said.

The water is muddied even further with the deluge of technology products that vendors are promoting to potential customers. Each product is geared to a single sector of the supply chain and oftentimes is not of use to or available to the other sectors in the supply chain. Slangerup noted that there are at least seven to eight hand-offs involved in each shipment, and that technology solutions are hitting the market at “almost dizzying speed.”

Customers want a secure portal that sees everything, end-to-end

Slangerup’s description of supply chain optimization called upon the adage of blind men with their hands on different parts of the elephant, with the need today being to build an end-to-end solution that has the entire elephant in its scope. “Customers want single access and true visibility end-to-end. A portal will enhance that,” he said. Also, customers do not want to have to change their systems in order to be able to use the platform, but rather they want to plug their system into the platform, he said.

The larger freight forwarders and NVOs already provide visibility solutions to their individual customers, and those customers are comfortable with the data security that is provided. Therefore, in order to incorporate those BCOs into the common portal, “it must have integrity and it has to be better than ours,” he said. Data must be validated and scrubbed in order to have integrity, which involves human intervention at times. Slangerup said AGL’s experience indicates 15 percent of its data requires manual intervention.

However, if the portal succeeds in providing a secure environment, it will certainly be preferable than today’s requirements for accessing dozens of websites in a harbor complex in order to get real-time status on shipments, and then manually reacting to the inevitable occurrence of late shipments, US Customs’ holds on cargo, traffic, and port congestion and other exceptions in the normal shipment pattern. The successful portal eliminates the reactive nature of today’s supply chain. “If there is a solution that can push that information to us, we’ll see an improved supply chain,” Slangerup said.

In order to achieve supply chain optimization, the information portal must truly be end to end, which means it must access data beginning not at the exit port in Asia, but rather the factory where the shipment originates, and the information trail must not stop when the shipment arrives at the US terminal, but rather it must extend to the receiving warehouse. Otherwise, Slangerup said, “it’s not a big deal.” Anything short of end-to-end visibility is already possible today, he said.

As the portals evolve, over the coming years, they must also achieve true predictive capability. “True predictive analytics will evolve and will go beyond guessing,” he said. “When it becomes available, it will be through machine learning at rapid speed,” he said.

Slangerup sees the port and private sector efforts so far in developing and promoting information portals as a good start. The fact that nine of the 12 container terminals in Los Angeles-Long Beach are committed to participating in the information portal indicates that progress is being made. “That’s a critical mass,” he said.

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AGL’s Partnership with Bassett Furniture Honored as one of the Top Supply Chain Projects for 2018

07.10.18—Atlanta, GA: American Global Logistics (AGL) has been named to the 2018 Supply & Demand Chain Executive (SDCE) 100 for the company’s work with Bassett Furniture. The SDCE 100 is an annual list of “great supply chain projects” featured in the June issue of the publication, showing how supply chain solution and service providers help their customers and clients achieve excellence and prepare their supply chains for success.

Bassett Furniture is a leading manufacturer, distributor and retailer of premium home furnishings, selling nearly 1,500 products, including wooden furniture, upholstered items and accessories. Bassett’s supply chain is driven through its partnership with AGL, which leverages its proprietary technology and high-touch customer service model to manage all aspects of Bassett’s global supply chain efficiently and effectively.

“Bassett isn’t just a retailer—they are also a manufacturer and a wholesaler, which requires a precise, efficient and agile supply chain operation to uphold their sterling reputation and brand promise to its customers,” said Jon Slangerup, AGL Chairman and CEO. “We’re certainly proud of our work with Bassett, and look forward to finding more efficiencies and innovations for their supply chain in the years to come.”

AGL oversees all logistics activity for Bassett, regardless of which carrier is moving the cargo. In Bassett’s case, AGL configured its technology platform to show each shipment’s movement through the supply chain, beginning with the initial purchase order.

AGL’s cloud-based technology and guidance has helped Bassett to trim costs while ensuring the prompt movement of its goods. For example, AGL works closely with Bassett’s distribution centers and domestic trucking operations to minimize accessorial fees and shipping delays. With AGL’s support, Bassett has also earned beneficial cargo owner status, helping it gain more attractive pricing on ocean freight. As Bassett’s sole customs broker, AGL also helps to ensure customs compliance and timeliness while keeping the company updated on best practices, such as accessing shipping data from the new Automated Commercial Environment (ACE) portal.

“American Global Logistics is an extension of Bassett Furniture. We are a part of the same team,” said Jeb Bassett, Senior Vice President for Bassett Furniture. “They know our business, and they’re dependable, reliable and predictable.”

Based in Atlanta, American Global Logistics (AGL) is one of the fastest-growing and most respected international supply chain and logistics solutions companies in the world. AGL’s technology solutions extend beyond the walls of ocean, air, and domestic transportation services for customers across the globe.

About American Global Logistics
Founded in 2007, American Global Logistics is a specialized supply chain software and services company that provides end-to-end multi-modal transportation solutions, customs brokerage, compliance consultation, carrier allocation management, warehousing, distribution, and advanced purchase order management to select customers. Its proprietary cloud-based technology provides real-time shipment visibility and forecasting and an accountability-based customer service model allow customers to deliver a consistent experience to their end-users. AGL’s client base represents a broad range of industries including automotive, food, household goods and furniture, and represents some of the US’s largest importers and exporters.

Media Inquiries:
Will Haraway Backbeat Marketing
william@backbeatmarketing.com
404.593.8320

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Trump Tariffs Unlikely to Radically Alter Supply Chains in Short Term

JOC.com — If the United States implements tariffs on China, interest groups have suggested some dire scenarios such as inflation on everything from cars to homes and an economic recession, but supply chain experts do not share those same fears.

President Donald Trump has said he isn’t opposed to free trade, but he wants fair trade too. The president plans to impose tariffs on $50 billion worth of Chinese goods and threatened up to $400 billion more if China retaliates. The US Treasury Department is expected to also announce restrictions on Chinese investments in the United States, and China plans to respond with tariffs that will likely hurt US producers of cotton, soybean, live animals, and animal products.

Automakers, retailer, farmers, others want Trump admin to rethink its policy

Automakers, retailers, homebuilders, and many others want the president to rethink his stance because they are worried about how trade wars will make products much more expensive. Eventually, consumer spending could slow when prices reach a breaking point and less freight would then move on trucks, planes, and trains.

Transportation rates would fall and shippers might rely less upon third-party logistics providers because the pressure would ease on finding trucks and becoming a shipper of choice. But John Wiehoff, chairman and CEO of C.H. Robinson Worldwide, told attendees at the SMC3 Connections 2018 conference these policies won’t derail the long-term trend of globalization. “The trends towards globalization and global optimization are too compelling, there’s too much capital invested that it is not going away. It’s going to continue,” he said. “But there is probably room for arguing about when we’re inventing technology, producing it in other parts of the world, and then importing it, how do you settle up financially around it?”

Jon Slangerup, chairman and CEO of American Global Logistics, said there are other ways to address intellectual property theft. But from a macroeconomic perspective, he believes that the hit would be small because the United States trades nearly $5 trillion in goods each year, according to the Bureau of Economic Analysis.

“Is it going to hurt what is a very robust trade economy? It may have a little impact, but I don’t think it will have a big impact,” Slangerup said.

In the short term, Wiehoff and Slangerup believe importers will pay the tariffs. But they are skeptical about whether tariffs will radically alter supply chains. Shippers discussing the annual State of Logistics report in mid-June also said they would take a long-term view of their supply chains rather than have a knee-jerk reaction.

“I don’t think there is panic. Be vigilant, be aware about understanding the impact on the business, and we run models all the time. We make sure our voices are heard and we are expressing our concern. But there are things you can control and things you cannot control. So we’re staying the course because we are in it for the long haul,” said Sylvia Fouhy, vice president of customer experience, Johnson & Johnson.

Inventory building before tariffs are enacted

One thing shippers are doing, Slangerup said, is stocking up on inventory before the tariffs are enacted, which can occur as soon as July 6 on $34 billion worth of Chinese goods. “Some of our customers seem to be accelerating their sourcing to try to get in front of any short-term impacts from tariffs [on earnings]. That may drive an earlier increase in volume than we typically anticipate,” he said. “This is especially true on the e-commerce side where customers are repositioning ahead of a potential disruption. That is how agile supply chains are becoming. [Shippers] anticipate some global impact and they can move quickly to adjust.”

Could this have been responsible for a recent uptick in drayage? Maybe. But there might be no connection whatsoever between the two because the surge in drayage was momentary. Jason Hilsenbeck, founder of Loadmatch and Drayage.com, said the number of clicks in his directory have leveled off in Chicago, Dallas, and Memphis, Tennessee, after a two week surge earlier in June, although they do remain elevated on a historical basis. More information in the coming weeks could shed light on tariffs and drayage when ports release their June volumes and the Intermodal Association of North America calculates containerized traffic counts.

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AGL and Bassett Furniture Named One of SDCE 100 Best Supply Chain Projects for 2018

Supply & Demand Chain Executive — There are many challenges companies face when trying to manage their supply chain capabilities. A crucial activity for a company is to continue to pursue, develop and implement best practices that leverage well-organized projects that are relevant to strategic objectives. The outcome of these projects provide further insight into the innovation and opportunity for improved operations within supply chains.

The 2018 Supply & Demand Chain Executive 100 shines the spotlight on the industry’s most successful and transformative projects that deliver value to enterprises across a range of supply chain functions. The projects featured in this awards program offer a forward-looking perspective for the industry on new opportunities designed to drive operational success.

American Global Logistics was named as one of SDCE 100 award recipients for the partnership with Bassett Furniture. American Global Logistics worked closely with Basset Furniture’s distribution centers and domestic trucking operations to minimize accessorial fees and shipping delays. With AGL, Bassett earned cargo-owner status, helping it gain better prices on ocean freight. As the company’s sole customs broker, AGL helps ensure customs compliance and timeliness while keeping the company updated on best practices. AGL’s 4PL approach allows Bassett to gain transparency into new suppliers and endpoints while developing creative transportation solutions to meet its high service standards.

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Dig Into Digital: What CEOs Need to Know Before Implementing a Supply Chain Software Solution

Global Trade Magazine — For businesses that rely on their supply chains to operate efficiently, a supply chain technology platform is no longer optional. Driven by rapid IT innovation, an always-on omnichannel environment and global trade uncertainties, CEOs across the spectrum are deploying the latest logistics systems to keep their organizations competitive.

Businesses spent an estimated $13 billion on supply chain management software in 2017, an 11 percent year-over-year increase, according to Gartner. That number is expected to climb even higher in the next few years, with total software revenues in the supply chain management market reaching $19 billion by 2021.

At the same time, businesses have more software options than ever at their fingertips as more third-party logistics providers go digital. A growing number of 3PLs are developing platforms to strengthen customer relationships and improve operational efficiency. In a 2017 survey, 58 percent of 3PL respondents said they believe digitization of all services will be the most common improvement among freight forwarders in the next five years.

Easing Supply Chain Pains

For many shippers, improving supply chain visibility is the No. 1 reason for technology adoption. Two-thirds of businesses say they lack end-to-end visibility into their supply chains, yet that visibility is increasingly critical as shipping becomes more complex.

Most businesses today spread logistics spending among multiple carriers, which can reduce risks and costs, but that also means more to juggle. In addition, companies across every industry are working to keep up with the demands of e-commerce. Gone are the days of products moving directly from factory to warehouse to store: Goods now take countless routes from production to final destination, which means countless opportunities for something to go astray. And with an “everything anywhere instantly” mentality ingrained into customers, any hiccups or delays in the chain can quickly compromise customer relationships.

Choosing the Right Supply Chain Software

A robust technology platform is the backbone of a high-functioning supply chain. But with tech startups and 3PLs alike promising the latest and greatest solutions, the number of platforms available can make a CEO’s head spin.

So where should you start? The ideal logistics software solution is one that adapts to your business’ unique workflows, allowing you to see every step in the supply chain and spot problems when (or before) they arise. Pairing that platform with a knowledgeable partner can make your supply chain even more agile, helping you source capacity, adjust routes and ensure your goods make it across the globe–even when things don’t go exactly as planned.

When evaluating logistics software for your business, here are six key considerations for any CEO.

  • Can I customize it for my business? Bells and whistles are nice, but does that shiny new solution align with the modes and processes your business uses? To get the most value out of your investment, work with your solution provider to map out the players and handoff points in your current supply chain, and then configure the technology around them. Going through this exercise can also shed light on any inconsistencies and areas for improvement.
  • Can I see every step of my supply chain? From purchase order to customer doorstep, a platform that tracks every product move can help you stay on top of shipping milestones, spot trends and plan lead times more accurately. One important, but often overlooked, area is the actual manufacturing process. Many platforms don’t offer progress updates during production, leaving companies in the dark if delays occur. For one manufacturer, the solution was building each step of its five-step production process into its logistics software. As a result, the company had visibility it needed to head off problems earlier, estimate lead times and ultimately improve customer service.
  • Can I access all my supply chain information in one place? Logging into multiple carrier systems to check delivery times or shipment status is not only time-consuming, it leaves businesses with a fragmented, and sometimes inaccurate, view of operations. While a technology platform can pull in real-time data from various carriers, you also need the assurance that the data is correct. Look for a supply chain provider who can scrub data in near-real-time, using algorithmic intelligence to determine whether it’s correct and reconciling errors directly with carriers when it’s not.
  • Can I manage by exception? For businesses with large global supply chains, keeping tabs on every single shipment just isn’t realistic. An effective logistics platform knows this and provides the right people with the right information at the right time. Consider systems you can build around your business rules, from required documentation to delivery milestones for each buyer or location. By automating approvals based on those requirements, you can focus your attention on anything that doesn’t look right.
  • Can my team access it from anywhere? Say goodbye to lengthy installations and application upgrades–SaaS-based solutions are quickly becoming the norm for supply chain management. By 2021, cloud technology will make up an estimated 35 percent of all supply chain technology deployments, with on premise solutions declining to less than 20 percent of total spending. For businesses with suppliers, factories and distribution points scattered around the globe, a web-based platform with user-based permissions can help keep stakeholders informed while also keeping sensitive details secure.
  • Can I measure the KPIs that are important to my business? How long does it take for your ocean shipments to travel from the South China Sea? Which of your domestic trucking carriers has the highest on-time percentage? A supply chain platform that can turn raw data into these kinds of insights drives greater value for your organization. Look for a solution with custom reporting tools, so you can establish and monitor the trends that matter to you.

Implementing a new logistics platform is a significant investment, but the right solution can yield even greater ROI. By combining powerful technology with an experienced team, businesses can position themselves to keep up with an ever-changing supply chain landscape.

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Article written by Jon Slangerup. Jon Slangerup is the chairman and CEO of American Global Logistics, one of the fastest-growing and most respected international supply chain and logistics solutions companies in the world. AGL’s technology solutions extend beyond the walls of ocean, air and domestic transportation services for customers across the globe. Previously, Jon was CEO of the Port of Long Beach, and prior to that he served as president of FedEx Canada.

Trade Battle Lines Drawn

American Shipper — As the Trump administration continues to draft tariffs against what it deems to be unfair trade from China, American shippers and importers are entering a new landscape that will govern the flow of international commerce for years to come. The last two weeks of May, in particular, brought a furious volley of trade shots fired between the United States and China, both in the form of immediate and broader measures that could impact goods flowing across the Pacific Ocean, including automobiles and auto parts.

The Trump administration on May 29 announced plans to impose 25 percent tariffs on about $50 billion worth of goods in yearly import value from China, just over one week after putting that tariff proposal on hold. The tariffs are aimed at “industrially significant technology” imports from China, including those related to the “Made in China 2025” program, and are set to be announced by Friday, with tariffs taking effect “shortly thereafter,” according to a White House statement. This comes after a Chinese government delegation visit to Washington on May 17-18 that ended with the United States temporarily dropping its tariff threat in place since March, as stated by Treasury Secretary Steven Mnuchin on cable news.

The Trump administration first proposed the tariffs following an investigation of China’s business practices under Section 301 of the 1974 Trade Act completed by the executive branch in March. That statute provides for trade remedies to be imposed in response to unfair business practices maintained by another nation. After the U.S. renewed its call for Section 301 China tariffs, the China Ministry of Commerce (MOFCOM) expressed disappointment in the Trump administration’s position. “We are both surprised and unsurprised at the statement, which is obviously contrary to the consensus reached between China and the U.S. in Washington not long ago,” a MOFCOM spokesperson said in a statement. “The Chinese side has confidence, capability and experience to defend the interests of our country and her people. We urge the U.S. to act in the spirits of the joint statement,” issued after the Chinese delegation visited Washington.

Responding to the Trumpf administration’s original March tariff threat, the Chinese government proposed 25 percent retaliatory tariffs against an equivalent amount of U.S. goods, to cover more than 100 items, including soybeans, cigarettes, beef, passenger vehicles and chemical products.

Supply Chain Panic. The turbulent environment is causing U.S.-based importers that source from China to consider potential alternative options, according to Lori Fox, vice president of customs brokerage services for American Global Logistics. Importers “literally panic” during the rollout of huge tariff changes, especially since there was little time to react to the May 29 White House announcement as many containerized goods were slated to arrive in U.S. ports after the June 15 implementation date, Fox said in an interview. “To adjust their supply chain that quickly takes some doing,” she said.

National Foreign Trade Council (NFTC) member companies generally believe the Trump administration acted too quickly to impose tariffs pursuant to its Section 301 investigation and would have preferred a negotiated settlement between China and the U.S. over the uneasiness of the bilateral trade landscape now in place, NFTC President Rufus Yerxa said in an interview. “Two things they hate: One is the uncertainty of the ‘on again, off again, on again, off again’ [tariff threats], and then secondly, the potential impact of these tariffs on the supply chain,” Yerxa said. “These are companies that have problems with some of the things China is doing, and some of it quite serious in the tech transfer and IP [intellectual property] area.”

The reauthorization of the Generalized System of Preferences (GSP) helps to provide alternate sourcing options for many importers willing to do business with vendors in less-developed countries, Fox said. “Obviously, other countries are not being taxed as China [could be], so it’s very likely that importers will look to other vendors in other countries to try to avoid long-term tariff increases,” Fox said. Foreign-trade zones potentially could offer an additional layer of flexibility for goods imported from China, as several companies use the zones to limit their exposure to antidumping and countervailing duties, especially in cases where potential rate changes are expected, Fox said.

Several attendees at a U.S. International Trade Commission hearing on the proposed tariffs in May cited China’s strong transportation and port infrastructure as one factor that could serve to prevent companies from diverting their sourcing to another country. Even considering the soundness of China’s infrastructure, Fox said some of her clients that import wooden bedroom furniture have found it more beneficial to import from Thailand or Vietnam. Wooden bedroom furniture imported from China is subject to AD and CV duties, which can present several complicating factors once goods are formally entered into U.S. commerce, such as retroactive changes to tariff rates and slow liquidation, Fox said, pointing out that the duty savings and fewer complications associated with sourcing elsewhere have helped those importers to remain competitive.

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US East Coast Dockworkers Finally Settle Bitter Dispute Over New Employment Contract

The Load Star — Shippers are breathing a sigh of relief after US east and Gulf coast dock workers reached “tentative” agreement on a new six-year master contract, following years of tough negotiations.

The International Longshoremen’s Association (ILA) announced the news yesterday, adding that the agreement with the US Maritime Alliance (USMX) now needed to be ratified by its members. In a joint broadcast, ILA president Harold Daggett and USMX chairman David Adam said: “We have reached a tentative agreement on a six-year master contract that is beneficial to both sides.”

Animosity between the two parties came to a head in December, when they ended negotiations over differences surrounding automation. Last year, Mr Daggett expressed his concerns over port automation, issuing a letter to members that fired a warning shot across the bows of ports and terminals looking to increase automation levels.

“I predict the issue of automation will dominate our contract talks,” he wrote, adding that he would not allow his members to be subject to the same forces that had hit the steel industry. “The ILA will not allow automation to rip apart our livelihoods and destroy our jobs and families, and the ILA intends to let management know that we are totally opposed to fully automated terminals.” But the agreement appears to have resolved the issue, and it looks likely that dockworkers will have a new contract in place before the existing agreement expires in September. Both Mr Daggett and Mr Adam have encouraged local chapters of the ILA to finalise local agreements by 10 July, in the lead-up to the full ratification process.

Pressure had been mounting over the past 12 months for a deal to be finalised after dockworkers on the west coast extended their master deal until July 2022. Chief executive of US-based forwarder American Global Logistics, Jon Slangerup, was quoted in The Wall Street Journal as saying neither side had any choice but to reach an agreement. Mr Slangerup said: “Given an agreement was reached on the west coast, the east really didn’t have a choice but reach the same kind of agreement or they would really be risking jobs and business.”

Figures from Logistics Trends & Insights suggest a mixed start to the year, with New York and New Jersey seeing volumes up 7.3% in the first four months, while Savannah’s volumes increased 6.5%. However, the port of Virginia’s  Norfolk International Terminal saw figures remain flat, year on year, over the same period, while Charleston recorded a drop of 1.4%.

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Dockworkers, East and Gulf Coast Ports Reach Tentative Labor Agreement

The Wall Street Journal — Dockworkers at U.S. East and Gulf Coast seaports reached a tentative six-year contract agreement with the port operators, the two sides said Wednesday, beating the September expiration of the current pact and setting the stage for several years of labor peace at the country’s trade gateways.

In a statement Wednesday, the International Longshoremen’s Association and the United States Maritime Alliance Ltd., which represents port associations and marine terminal companies from Maine to Texas, said in a statement that terms of the agreement were unanimously approved by 200 delegates of the ILA’s 65,000 maritime-worker membership after months of on-again, off-again negotiations.

Discussions between the ILA and the employers’ group, known as USMX, had broken off in December over disagreements on how ports define automation, but the parties returned to the table in March.

The new contract carries through mid-2024. ILA President Harold J. Daggett, and David F. Adam, chairman of USMX, called it, “beneficial to both sides.” In a statement the parties said they hoped to have local agreements that go along with the broader master contract ironed out by July 10, 2018. A ratification vote by members will come after that.

A ratified agreement, along with an existing contract between the separate West Coast dockworkers’ union and port employers there, would leave all ports across the U.S. covered under labor deals through at least the middle of 2022, easing concerns by retailers and manufacturers over a sector marked by labor strife in recent years.

In late 2014, a labor contract between the West Coast’s International Longshore and Warehouse Union and port employers ran out while the parties were negotiating, leading to widespread delays in cargo handling at major gateways. Dozens of ships sat offshore outside the nation’s largest port complex in Los Angeles and Long Beach, Calif., waiting to unload, and businesses across the country faced inventory shortages for months during and after the negotiations finally concluded in February 2015.

“That all had an impact on the bottom line for companies and on the economy as a whole,” said Jonathan Gold, vice president for supply chain for the National Retail Federation. The new East and Gulf coast agreement provides retailers, manufacturers and exporters with long-term stability, Mr. Gold said.

The current contract between ILA and USMX was set to expire Sept. 30, 2018, and pressure for a new deal grew last year after the Pacific Maritime Association, which represents West Coast port operators, reached a pact with the union there to extend their 2015 agreement until July 1, 2022.

“Given the agreements that were reached on the West Coast, the East Coast really didn’t have a choice but to reach the same kind of agreement or they would really be risking jobs and business,” said Jon Slangerup, chief executive of American Global Logistics LLC, an Atlanta-based freight forwarder and logistics provider. Mr. Slangerup was chief executive of the Port of Long Beach from 2014 to 2016.

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Feature Image Source: The Wall Street Journal

US Slaps 25% Tariff on $50B of Chinese Imports

Supply Chain Dive — The Trump administration announced that it would levy $50 billion of tariffs on certain Chinese tech imports, implement investment restrictions, and enhance export controls on Chinese tech on the basis of national security.

Dive Brief

  • The United States will slap a 25% tariff on $50 billion of Chinese imports in June, as the country seeks to punish China for alleged intellectual property abuses.
  • The full list of tariffs will not be announced until June 15, but the White House alluded it would cover goods containing “industrially significant technology, including those related to the ‘Made in China 2025’ program.”
  • As further action, the U.S. also pledged to continue its World Trade Organization case against China over technology licensing, and restricting investments and exports by Chinese entities seeking to acquire “industrially significant technology.”

Dive Insight

The Chinese Ministry of Commerce’s reaction to the tariffs may be the best summary of the most recent trade action.
“We are surprised by the strategic statement released by the White House, but at the same time, it is somewhat expected,” the Ministry said in a statement (translation h/t Eunice Yoon, CNBC).

Prior to this week, the trade war appeared to be on hold after both countries publicly agreed to suspend threats of tariffs as they negotiated a new deal. The action, China said, “is obviously against the consensus reached by the U.S. and China recently.”

Despite the new tariffs, however, China called for the U.S. to “meet us halfway” while boasting its “confidence, capability” and experience to “defend the core interests of its nation.”

The new tariffs may well be another ploy by the U.S. administration to leverage more concessions from its trading rival.

A fact sheet published by the White House lists the trade practices deemed unfair by the U.S. — suggesting the highest risk for tariffs once the full list is released — and includes: China’s ban on certain agricultural exports; steel dumping; forced technology transfers on New Energy Vehicles; state-directed acquisitions; and cyber theft.

But in the meantime, supply chain managers are in a bit of a waiting game, preparing for the wide-ranging effects tariffs may have, Lori Fox, vice president of Customs Brokerage Services at American Global Logistics, told Supply Chain Dive in an interview.

“Obviously for items that are already in transit there is nothing you can do about that,” she said. But for the rest, supply chain managers should make sure they are speaking with their vendors and customs brokers to avoid delays when the time comes. Shippers should be prepared to face increased inspections from Customs and Border Protection officials, which will have to ensure new trade laws are followed when the tariffs enter into force.

At the end of the day, however, most supply chain managers will just try to protect their bottom line. “Compliance in times like this is extremely important to maintain the trade and flow of goods,” Fox said. The cost of non-compliance, after all, could extend from fines and penalties, to a loss of the ability to do trade.

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Feature Image Source: Supply Chain Dive