New CBP Regulations for Customs in North America
US Customs and Border Protection (CBP) has come out with new broker regulations effective December 19, 2022. The new rules are the Modernization of the Customs Broker Regulations (87 FR 63267) and the Elimination of the Customs Broker District Permit Fee (87 FR 63262).
Codifying the “customs business” in an impactful way
Updating and modernizing the customs broker regulations, the new compliances are directed to optimize the resources for both the shipping industry and CBP. It aims to align the CBP with contemporary business practices in this digital age while strengthening its knowledge about importers and protecting the state’s revenue.
The new regulations codify the customs clearance process — by restricting the classification of imported goods beyond six digits by freight forwarders or other intermediaries. From now on, an authorized customs broker inside the United States is required for customs clearance unless done by the importer of record themselves. Other significant changes include:
Set firm standards for security breaches
Transition of local trade permits to national permits
Need for direct power of attorney and communication with the importers
Create new measures for “Responsible Supervision” and “Control Requirements”
Ocean Updates: Freight & Container Status in North America
Here are the latest happenings in the ocean freight industry of North America:
1. Port Houston announces the implementation of a “Sustained Import Dwell Fee”
To curb long-term container dwellings on terminals and maintain the fluidity of cargo movement at the Bay Port and Barbours Cut container terminals, the port of Houston has announced the execution of a Sustained Import Dwell Fee.
This fee doesn’t replace demurrage costs and is in addition to the existing charges for loaded import containers. The cargo owner (consignor or shipper) will be directly responsible for paying this shipping surcharge to allow cargo release.
It goes into effect from February 1, 2023, as follows:
All loaded imports will have a Sustained Import Dwell Fee of USD 45 per day beginning on the 8th day after the expiration of the allocated free days.
To encourage faster container movement and reduce congestion, an Excessive Import Dwell Fee would be effective following a 30-day public notice and remain in effect for at least 60 days, as per the following tariff scheme:
Source: Port Houston
Twill recommends its customers to pick up their cargo within free time to avoid paying this surcharge.
2. Decrease in cargo transit time with higher inventory levels in China
As per the General Administration of Customs in China,
“Exports from China dropped significantly in the last quarter [2022 Q4] as compared to the previous year due to fluctuating global demands, shifting consumer sentiments, and covid disruptions.”
This decrease in cargo transit times led to higher inventory levels, and thus, shorter supply chain planning periods. We expect this pattern to reduce costs, increase supply chain productivity, and improve consumer satisfaction — because the right product is moving at a faster pace in the final mile delivery.
On the downside, low order volumes caused some factories to shut down earlier than usual for the Chinese New Year holiday period. Customer sentiments reflect that most factories in China will likely reopen between Feb 6-12 after the Lantern festival culminates on Feb 5. This will be supported by increased landside trucking capacity to support the movement of goods.
3. Cargo volumes continue to decline at the US ports
As a domino effect from China, the US ports handled just under 2 million inbound 20-feet containers in December 2022 (down 1.3% from November), as per Descartes Datamyne.
Year-on-year volume for December was down by 19.3%, matching the December 2019 levels when early COVID lockdowns had just begun. During the pandemic, peak activity periods limited our supply chain planner’s abilities to adjust network schedules due to overextended capacity. Until now.
4. Key focus in 2023 on ocean network optimization
Due to the recent decline in cargo volumes, our supply chain planners completed a significant analysis of consumer booking trends.
This enabled them to proactively plan, adjust, and optimize the existing ocean network.
For the same, there were many service changes on the North Europe and North America corridors and the Mediterranean region. We’re working on optimizing vessel schedules in the Transpacific region along with some blank sailings to re-establish schedule stability.
For small and medium businesses (SMBs), this means improvement of reliability and stability of our services with a vessel timetable you can count on! This will enable you to predict, plan, and deliver to your customers more effectively.
5. Lower congestion and cargo volumes lead to active container repositioning
As a direct effect of reduced cargo volumes, we also noticed less congestion in US ports with lower container dwell times at major depots and terminals.
We also had some deficit locations in Ohio Valley and Houston. We're actively working on repositioning empty containers within the US and Canada to cover the demands. Existing rail and truck networks also showed lower congestion, allowing easy repositioning of empties.
Due to this, there is little to no waiting time at some major North American ports, with many terminals now operating at zero waiting time.
Vessel Waiting Times at Key Shipping Locations in North America
Note: Wait times can change quickly based on local conditions.
Winter weather significantly impacted operations at Port Vancouver, with an average of 6-day vessel delays. Rain dwell also rose to an average of 8 days with 90% yard utilization.
Due to low container and cargo volume, the terminal at Seattle has decided to remain closed on Fridays every week. As the current capacity is 50%, yard space is available at the container terminals. The port of Seattle also plans to bring back on-dock rail services, including NWCS express trains from/to Portland by late January.
Ports at Oakland, Los Angeles, and Long Beach endured a series of extreme storms with heavy rain and winds reducing productivity massively. Due to low cargo volumes at LA, gates now close on the 1st and 2nd shifts on Fridays and 1st shifts on Saturdays every week.
Delays at Port Baltimore continue due to the unavailability of reefer plugs. It is currently using 2-4 power packs to support the scarcity and plans to install 70 new reefer plugs by mid-February, bringing operations to normal levels. The current 8-day waiting time has also improved due to the availability of labor, yard space at terminals, and reduced reefer volumes.
As of mid-January, the average wait time at the port of Savannah was between 3-7 days. For port Houston, it was 3 days at Barbours Cut and 8 days at the Bay Port terminal. Import dwell fee is effective from February 1, 2023.
Inland Updates: Sustainability and Warehousing Key Focuses for Businesses
Here are the latest updates about North America’s landside supply chain market:
1. California Senate bill bans pre-2010 diesel vehicles effective Feb 1
The California Air Resource Board (CARB) recently implemented the ‘clean air regulations’. It states that all diesel vehicles built before 2010 and weighing over 14,000 lbs will be banned from operating on California roads.
The move will affect 70,000 vehicles responsible for mid-mile and last-mile delivery – directly affecting the inland supply chain. Terminal operators in Los Angeles, Long Beach, and Oakland will ensure smooth compliance with the new regulations.
For Twill, the ban has negligible effects on inland transportation services as we’re already using newer vehicles.
2. Consumer sentiments inclining towards sustainability in 2023
A 2022 Global Sustainability Study by Simon Kucher & Partners says:
“71% of consumers globally are making conscious choices to live more sustainably and buy more sustainable products.”
Here’s what Twill (by Maersk) is currently doing:
We’ve deployed EV trucks in limited markets, with the first battery-electric trucks operating at distribution centers in Santa Fe Springs and Commerce, CA.
Our zero-tailpipe emission trucks are used for drayage in and out of Los Angeles and Long Beach. We plan to launch it for wider applications in the near future.
Charging stations for trucks are established at both the Santa Fe and Commerce locations and are powered by non-fossil fuels.
Here’s what we’ve planned for the near future to enhance our sustainable operations:
By this February, our landside transportation team will begin operating EV trucks at CenterPoint Intermodal Center (Chicago), one of the largest inland ports in North America. We plan to introduce EV trucking by May at New York and New Jersey ports.
We’re working on a pilot program by testing the effectiveness of hydrogen-powered trucks out of the Oakland port with other sustainably-focused companies.
Applying US EPA SmartWay principles, we have employed modern fleet solutions to improve freight transportation efficiency for our customers. This technology would help save fuel and reduce emissions.
Businesses are naturally aligning their strategies to become more sustainable as per the consumer sentiments in 2023 — by leveraging technology and better equipment for more sustainable practices in the freight & logistics industry.
3. Time to prepare for peak warehousing & distribution season
It’s not even March yet, and already time to prepare for peak warehousing season in 2023.
Reversing a near 2-year trend, the inventories of goods moved past the peak in 2022 Q4. Warehouse professionals are working tirelessly to prepare for the 2023 peak season — with more than 66% through an annual planning cycle and achieving most of their yearly goals early.
With seasonal pressure expected to build by 2023 Q3, supply chain managers are taking time in Febraury to implement a new warehousing plan for the May/June “go-live” date.
For SMBs, this indicates availing a structured, more robust storage & warehousing system, thus, improving their operational efficiencies.
4. eCommerce stress test results are out!
Following the business boom of the Thanksgiving weekend (Black Friday and Cyber Monday), annual peak performance reflections are out.
Major questions businesses were asking in the US were:
Were all eCommerce orders fulfilled? Were the customer promises met?
Were the warehouses all caught up, or still two weeks behind?
What was the warehouse condition, and how did the staff hold up?
These questions helped business owners decide whether they wanted to make warehousing & distribution a core competency in their operations — or outsource the task to a 3PL provider and focus their organizational assets and resources more on production, sales, and marketing.
5. Businesses analyzed costs and reviewed supply chain operational budgets
It’s the start of the year. And companies are reviewing their finances to analyze the total costs of last year’s supply chain operations and this year’s available budgets.
Three charges under scrutiny and major consideration for SMBs in 2023 are:
Inbound freight costs to position the shipments
Real estate costs for warehouses and storing the goods
Outbound couriers or fulfillment costs to distribute the goods to the end user
For an accurate customer cost analysis, businesses are considering three primary factors. While the Cost Per Unit (CPU) is easier to calculate, the Customer Happiness Quotient is slightly more complicated to estimate. Facility locations (warehouses and storage units) are also a significant budget-weighing component.
Businesses are also planning to implement new warehousing strategies in 2023 — building on expert advice across multiple disciplines and redirecting activities with continual testing.
Logistics Trends: Addressing Consumer Behavior and Tech Innovations at the Core of Supply Chain Strategy 2023
Here are the ongoing logistics trends in North America:
1. Shifting consumer behaviors despite upward holiday spends
2022 Q4’s thanksgiving weekend saw the consumer spending market opening up despite inflated prices and higher borrowing costs. According to Mastercard, retail sales were up by 11%, with a 12.5% boost in eCommerce compared to 2021.
Matthew Shay, President & CEO of the National Retail Federation (NRF), had predicted:
“2022 holiday shopping season would return to more traditional norms with easing of COVID lockdowns and supply chain challenges.”
The NRF had also forecasted that the 2022 holiday shopping season would outperform 2021 by 6-8%. Instead, Shay reported:
“An outright boom with 196 million Thanksgiving weekend shoppers, 20 million more than a year ago. [This was] 30 consecutive months of year-over-year retail sales growth since March of 2020.”
Personal incomes rose by 0.7% due to a strong labor market and fiscal stimulus. With increasing consumption, customer spending was higher due to pandemic-era savings.
But, reports say consumer behaviors may soon shift.
A Survey of Consumers report by the University of Michigan observes:
“September data indicated that American saving rates were only half of what they were before the pandemic. In October , consumer sentiment fell by 5%. More than 60% of consumers reported plans to scale back their spending in the future.”
Credit card balance also increased by 15% in 2022 Q3, reports the Federal Reserve Bank of New York — the largest increase in two decades. As consumer spending accounts for 70% of US economic growth, any slowdowns in consumer activities indicate strong economic opposition and a financial crunch for small and medium businesses in 2023.
2. Innovating supply chain operations with technology
In 2021, Maersk launched the North American Innovation Center to build new products, service solutions, and business models — leveraging advanced technology, data, and analytics.
The present vision is to go beyond simple continuous improvements and do something groundbreaking for customer success.
To accelerate the innovation efforts, Maersk has established a complete ecosystem of stakeholders. They’ve partnered with customers, investors, start-ups, research facilities, governments, and strategic innovation partners.
This would help identify supply chain challenges and enable advancement towards development and commercialization through unique technology (like AI robots) and numerous process improvements — to solve old problems in a new way for better results.
We’re aligning and expanding these efforts globally to benefit our customers.
3. Introducing Ocean + Transload Product Solution for SMBs
For faster logistics processes and container movements across the supply chain, Maersk has also innovated with its “Ocean + Transload” service offering (soon to be launched on Twill).
Here’s an example of how the process looks like:
Three 40ft containers from Asia are shipped across the ocean and reach the destination port. We dray the containers to a nearby transload facility.
Instead of transporting 40ft containers through intermodal rail, goods from three 40ft containers are shifted into two 53ft truck trailers.
This cuts down the total moves by 33%, thus, reducing costs, increasing speed, and boosting supply chain efficiency.
Our solution includes real-time visibility with critical data points monitoring, including temperature, humidity, location, and motion. We studied the aggregated data for pattern analysis. The test reports inferred a significant reduction in transit times with little to no variation in performance.
This innovation will improve inventory planning for small and medium enterprises across the North American region.
Looking Ahead: Preparing the Supply Chain for 2023
Amid all the innovations, Maersk also announced a new executive team and organizational structure targeting 15 key areas of responsibilities and roles. The new team will expand Maersk’s innovator & integrator strategy — addressing and aligning various consumer bases to increase ownership, accountability, and efficiency.
To assist our consumers and extend our supply chain capabilities, our top focus areas for the coming year will be:
Improving end-to-end supply chain transparency
Building more solutions to support and expand supply chain resiliency
Ease labor restrictions with augmentation and innovative solutions
And that’s a wrap! Stay informed about the latest ongoing in the supply chain industry and get regular market updates in North America with Twill.