Although the shortage of air cargo capacity matters, and the requirements for payment upfront are hurting too, attendees of a Flexport webinar on the challenges of importing personal protective equipment said their No. 1 concern is navigating import and export regulations. It's easy to see why: When Tom Gould, head of global customs for Flexport, described the Food and Drug Administration's ever-changing exceptions to its usual rules about importing medical masks, he said that they’ve “been updated a couple of times; if you looked at them a week or two ago, look again.”
Container volumes through the Port of Los Angeles fell 30.9% year-on-year in March, marking the lowest amount of cargo moving through the port in a month since February 2009, said the Port of Los Angeles in a recent news release. The deep decline comes as a result not only of the COVID-19 pandemic, but also the ongoing trade war between the U.S. and China, said Gene Seroka, executive director of the port. “With U.S. retailers and cargo owners scaling back orders, volumes are soft even though factories in China are beginning to produce more. Amidst this public health crisis, there will be uncertain months ahead in the global supply chain,” Seroka said. Imports for the month decreased by 25.9% compared with March 2019, and exports by 23.8%. Empty containers declined by 44.5%, the release said.
The Border Trade Alliance is urging Mexico to align its guidelines on essential industries allowed to stay open during the COVID-19 pandemic with similar directives from the U.S. and Canada. In an April 9 letter to Mexican Health Minister Jorge Alcocer Varela, the trade group voiced concern that “a lack of clarity and alignment over what private sector industries and services are deemed by Mexico as ‘essential’ is proving increasing[ly] problematic for firms whose manufacturing operations and supply chains are partially or wholly dependent on output from Mexico. Discrepancies between countries in the identification of essential services and industries are likely to cause increased disruptions to cross-border supply chains at a time when ensuring and preserving efficient cross-border trade and commerce is more important than ever,” it said. Mexico should adopt “guidelines aligned to the extent possible with the U.S. Department of Homeland Security guidelines for critical infrastructure industries and the newly issued federal guidelines from the Canadian federal government,” the letter said.
The World Trade Organization is forecasting a huge hit to trade around the world, but how bad it will be depends on how long the lockdowns persist, the organization said April 8. In an optimistic scenario, restrictions on movement are lifted after three months. In a pessimistic scenario, they're lifted (or partially lifted) after six months. And in the worst-case scenario, the stay-at-home orders last for a year, and even after they're over, a lot of the people who lost their jobs do not get back to work, so big-ticket purchases like cars and major appliances continue to be depressed in 2021.
The U.S. Chamber of Commerce pointed to the Homeland Security Department's guidance on essential workforce as a model, and asked that other countries consult with companies to form their lockdown orders. While the Chamber recognized that various geographies may need different levels of lockdowns, it said, “a patchwork approach in which state, provincial, and local governments adopt divergent or unclear guidance of their own may inadvertently complicate pandemic response.” In a call with reporters April 7, Chamber officials couldn't point to any business closures abroad that led to supply chain disruptions at American manufacturers during the crisis. John Murphy, senior vice president for international affairs, said that when Mexico's Sonora state had a lockdown before the rest of the country, some companies called the Chamber with concerns. “The typical ventilator has products from a half a dozen countries, and trade barriers only make it more difficult to surge the production of those essential products,” he said.
U.S. importers sourced 5.81 million Chinese smartphones in February, according to Census Bureau data accessed April 5 through the International Trade Commission’s DataWeb tool. It was the lowest monthly volume from China since customs began tracking smartphone imports in 2007, and vivid evidence of the COVID-19 pandemic's upending of the Chinese supply chain after the world’s first outbreak in Hubei province in January.
The National Customs Brokers & Forwarders Association of America plans to combine its annual conference and the government affairs conference that already had been set for Sept. 13-15, in Washington, D.C., the NCBFAA said in an email. The NCBFAA annual conference was previously planned for this month in Las Vegas. The Western Cargo Conference was also rescheduled, according to its website. That event is now planned for Oct. 1-4 in Coronado, California.
About 35% of air cargo capacity worldwide has disappeared with the sharp drop in international passenger flights, according to Randy Stanley, UPS vice president for supply chain operations. Stanley and other UPS executives held a webinar April 3 on how the COVID-19 pandemic response is affecting cargo shipments. “Demand has significantly exceeded available capacity, especially on the trans-Pacific trade lane,” said Vito Losurdo, vice president of procurement, referring to air cargo. He referred to the Federal Emergency Management Agency's “air bridge” efforts to rush personal protective equipment to the New York region.
As countries seek to acquire needed supplies of ventilators, masks and other protective gear, the deputy director for trade and agriculture at the Organization for Economic Cooperation and Development said that nationalizing production of these goods is not the answer for the next pandemic. Julia Nielson, who was speaking on a Washington International Trade Association webinar April 2, said, “I don’t think nationalization of supply has ever meant security of supply.” She said that countries may need to consider the inventories they hold, and redundancies in where they get goods, but that given the way this pandemic is spreading in waves, relying on one country, even your own, could be risky.
After 47,000 stores in the U.S. closed in a week, Flexport says that so many companies can't take shipments arriving at East Coast ports that those ports are now shopping for more warehouse space. Because importing companies' warehouses are either full or closed, they tell the ports they'll pay demurrage charges for the goods to stay there. “The ports are actually worried now they won’t have enough space,” said Chandrakant Kanoria, Flexport's head of network operations, during a webinar March 31. He said Savannah is hoping to almost double its warehouse space, and the New York and New Jersey terminals are talking with warehouse providers to try to make room, as well. There are problems in the warehouse logistics ecosystem, as well, because Amazon warehouses stopped accepting any goods other than essentials.