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Issue 1 2019 - FBJNA


two largest economies. “A lot of


importers are going back to Compliance 101,” said Bidwell. “They are making sure they are using the correct classification numbers on imports” because U.S. Customs has arrayed significant resources toward tariff enforcement,


“and are


also looking into changing customs numbers” to avoid the Section 301 tariffs. But


changing classification numbers


from the ones


used by importers for years is no simple matter, Bidwell suggested.


Quick Moves


Importers are also looking to import products before new


or higher tariffs kick in. The applicability of higher Section 301 tariffs—25% as opposed to 10%—to a third list of products has been pushed back from January 1 to March 1, 2019. “Some importers with cargo subject to List 3 are trying to beat the clock,” said Bidwell. Ikeda pointed to mixed


“Rates and capacity issues


continue to plague ocean carriers.” -- Sri Laxmana, CH Robinson


results for MOL and its new Ocean Network Express alliance with K Line and NYK, which started operations in April 2018. “Unfortunately, the


new business venture


set sail in choppier waters than we had expected,” he said, “as it did not reach its projected liftings. However, the cost savings derived from integrating the containership operations have surpassed estimates.”


///OUTLOOK 2019


“By having earlier notice of potential delays, we are able to notify our


customers more quickly of changes in schedules so that they have


timely information to better manage their supply chains.” -- Steve Siu, OOCL


Shippers need to be on top


of the new ocean alliance configurations to preserve the flexibility of their logistics, according to Sri Laxmana, vice president for global ocean services at CH Robinson. “They need to be cognizant of which carriers and alliances call at which terminals,” he said. “This has an impact on terminal congestion and available rail and dray capacity.” Shippers able to stay true


to their forecasts will be in


the best position when


negotiating with carriers, according to Laxmana. “Rates and capacity issues continue to plague ocean carriers,” he said. “Predictable shippers will receive high levels of service from carriers.” For all of the carriers’ efforts,


they have not been able to turn the corner on rates. According to a recent report from Drewry, rates for cargoes moving under contracts on major east-west routes decreased by seven% in the fourth quarter of 2018. That’s “the largest quarterly fall since the end


carrier supply-and-demand prognosis. Drewry once predicted the industry would approach equilibrium in 2022, but new forecasts suggest that ocean carriers “now face being stuck with the current over- supplied situation for several more years.” One bright spot for the industry, according to the report, is the expansion of global seaborne reefer trade, a development that could see continued rate increases for refrigerated boxes this year.


Technology’s Role


Technology promises to introduce efficiencies into trade processes to reduce costs and facilitate information and cargo flows. Ocean pricing volatility is among the issues that “negatively impact supply chain integrity and delivery to customers, resulting in added costs and the inability to effectively plan freight costs,” said Gordon Downes, CEO of the New York Shipping Exchange (NYSHEX). “Technology solutions that address the industry’s current


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CROSSING THE BORDER: A more complex customs picture is adding to the costs of that process. (CH Robinson photo)


of 2016,” noted Philip Damas, director of Drewry Supply Chain Advisors. “Shippers who negotiate well with carriers can reduce their multi-million freight spend on most east- west routes.” Another Drewry


report


pointed to “a gloomier world economic outlook and rising trade tensions” for a deteriorating long-term


pain points are being adopted.” NYSHEX’s platform allows carrier members like Hyundai, Maersk, CMA CGM, Hapag Lloyd, OOCL, and COSCO to negotiate digital forward freight contracts for global container shipping with shippers. Some ocean carriers have


proven to be global leaders in implementing di gi tal


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