Insights

Supply chain bottlenecks continue to escalate with little optimism that conditions will improve through the remainder of the year. Congestion at the Shenzhen port of Yantian has created a chaotic situation as ocean carriers had no choice but to wait out the berthing delays or bypass the port further impacting the lack of capacity. Port operations are now back near 100% yet, residual effects remain as evidenced by the 15 blank sailings announced for July.

Along with MTB and GSP, there were provisions in ‘The China Package’ for the USTR to reinstate the Section 301 exclusion process. This would once again allow for more widespread use of exclusions importers could utilize to avoid paying additional duty on certain goods with China as the Country of Origin. As of now, almost all existing exclusions have expired – with only 108 active exclusions remaining of the thousands which were granted. There has not been much public facing discussion about the Section 301 tariffs on China goods being lifted, so the possibility of additional exclusions is the only glimmer of hope toward relief for US importers. Many importers found the first iteration of the exclusion process cumbersome and hard to manage but welcomed the relief from high duty payments.

The June 15th GRI was implemented across the marketplace as expected, with ocean carrier’s significantly increasing inland rail destinations by over $1,000 per 40’. West Coast and East Coast base port increases varied considerably by carrier. The FAK rate increases can largely be considered insignificant since premium rates are the only ones moving the freight in today’s market. Premium rates continue to increase across the board. Carriers such as MSC are increasing their Diamond service rates by $3,000 per 40’.