11/2/2020

Corona Virus and Other Business Updates

To our Valued Customers

Shippers Feel Capacity Crunches Due to the Coronavirus

Shippers will begin to feel the disruption to their supply chains with delays and decreased capacity as carriers are reducing the number of vessels in an effort to stop the spread of the Coronavirus.

Home to several of the busiest container ports and airports, a lockdown on China factories and workers is having a rippling effect in consumer supply chains.

The shutdown means that some ships are note able to berth into Chinese ports, others are stuck in dock waiting for workers to return to ports. Further, some vessels are idling in "floating quarantined zones," as several countries have refused to allow ships that have called Chinese ports to enter until the crew has been declared virus-free.

In Hong Kong, Local Port Authorities have also declared that vessels which have called China ports may be subject to a 14-15 day quarantine period before entering the Port Zone, which will only further delay the carriers' schedules.

For shippers hoping to turn to airfreight, many carriers have cancelled or reduced the number of flights to China citing the move as a prevention measure or due to the lack of demand. The majority of carriers that remain are freighters, whose airfreight services come at a higher cost as the rate is not offset by a passenger ticket.

The below is an update on logistics operations in affected countries:

China:

•             Manufacturing – Delayed due to the Chinese New Year extension. Further delays may occur due to quarantine of labour if Coronavirus symptoms are present.

•             Ports - Wuhan/Wenzhou ports remain closed until further notice, although it is believed the ports might be operational again on February 17. All other ports are open and operational. Some carriers are also allowing online submission to avoid unnecessary traveling for shipping documents.

•             Sailings – Carriers continue to blank sailings to balance the lack of demand for cargo moving. Once cargo is moving again, we expect there will be limited space on vessels and cargo scheduled to move may be rolled in favour of cargo that is already ready to move. It is also worth noting that several carriers are mitigating detention and demurrage charges due to the holiday extension.

•             Airfreight – Most passenger airlines have cancelled flights in/out of China for the immediate future. Airfreight is still moving on freighters, but at a higher cost than airfreight that moves in the belly of a passenger plane.

Outside of China, the logistics conditions are as follows:

Malaysia:

•             Manufacturing – Delayed due to the Chinese New Year holiday, but not due to Coronavirus.
•             Ports – Operational as usual.

•             Sailings – Space is tight for U.S. East Coast bound freight due to freight that was rolled before Chinese New Year. For U.S. West Coast bound freight, space is tight for those carriers that offer direct service.

•             Airfreight – Operational as usual.

Indonesia:  

•             Ports – Operational as usual.

•             Sailings – Space is tight, and cargo is currently being rolled for both the U.S. East Coast and U.S. West Coast due to carriers blanking sailings for the Coronavirus.

•             Airfreight – Operational as usual.

Vietnam:

•             Ports – Operational as usual.
•             Sailings – Operational as usual.
•             Airfreight – Operational as usual.

Thailand:

•             Ports – Operational as usual.

•             Sailings – Space is tight for most carriers due to freight that was not shipped before Chinese New Year.

•             Airfreight – Operational as usual.

Hong Kong Tightens Restrictions Under Government Response Plan

In light of Hong Kong reporting its first death related to the Coronavirus, the country has announced a Government Response Plan.

Under this plan, it was announced that additional borders will be closed, and they are severing all but three transportation links to mainland China.

The Hong Kong Airport, Shenzhen Bay Border and Hong Kong-Zhuhai-Macau bridge remain open at this time.  

The current logistics conditions in Hong Kong are as follows:

•             Ports – Operational as usual; however, Hong Kong did shut down two cruise terminals after passengers tested positive for the Coronavirus.

•             Sailings – All vessels are currently full or close to full as the result of the carriers' cargo rolled previously or pre-planned arrangements.

•             Airfreight – Several airlines including United, American, Cathay Pacific, etc., have suspended flights to/from Hong Kong until mid-February. Most carriers are citing lack of demand as the reason for the cancellation.

 

 

 

USA Port Arrival Procedures Announced

As reported before, please remember that the U.S. Coast Guard announced U.S. port arrival procedures immediately for vessels that have called Chinese ports (excluding Hong Kong and Macau).

The incoming vessel must report to the U.S. Coast Guard Captain of the Port on the crew's health.

As long as there are no sick crew members on board, vessels will be allowed to berth normally. Currently no vessels calling the Port of Los Angeles or the Northwest Seaport Alliance of Seattle and Tacoma have not been delayed in arriving at berth.

British Scientist Makes Breakthrough in Coronavirus Vaccine

A leading British scientist has made a significant breakthrough in the race for a coronavirus vaccine by reducing a part of the normal development time from “two to three years to just 14 days.

The scientist states that they will be ready to start testing the vaccine on animals as early as next week. While the vaccine will be too late for the current outbreak, it will be crucial for prevention in the future.  

China Cuts Tariffs on $75 Billion of U.S. Imports

China cut tariffs on $75 billion of U.S. imports including soybeans, pork and auto parts Thursday in a trade truce with Washington while Beijing struggles with a costly virus outbreak.

The cuts follow last month's signing of a “Phase 1” agreement toward ending a long-running tariff war over Beijing's technology and trade surplus. The tax rate on some 916 items including soybeans, pork and fish was cut from 10 percent to 5 percent, effective Feb. 14, the ministry said. The rate for 801 items including auto parts will be cut from 5 percent to 2.5 percent.

Section 301 Update - New Exclusions & Reductions Announced.

USTR have approved product exclusions!

The exclusions will apply as of September 24, 2018 to August 7, 2020 and will be retroactive to the date the original exclusions were published. The provisional HTS code for these exclusions is 903.88.38. Included in these exclusions are certain fabrics, upholstery, rugs and furniture parts; various automotive glass and parts, lamps and LED lighting, etc.

 

The tool has also been updated to reflect the reduction of the Section 301 tariffs for List 4A from 15% to 7.5%, effective 2/14/20. Since the reduced duty amount is based upon the entry date of 2/14/20 or later, be mindful of the hierarchy of dates that impact the entry date:

 

•             IT date (If the IT date is before 2/14/20, the item(s) will not qualify for the reduced duty rate.).

•             Entry date as determined by CBP.

•             Estimated entry date (optional date input on the first page of the declaration).

•             Release date (If the release date is before 2/14/20, the item(s) will not qualify for the reduced duty rate.).

•             Preliminary statement print date.

•             Estimated date of arrival.

 

Please contact your BRi Customer Solutions Representative if you have questions in relation to the above or in relation to specific shipments and/or orders currently in progress.

As always, we thank you for your support.

Keeping You Informed!

BR International 

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