Important Update: Current Market Challenges

At Noatum Logistics, we are committed to keeping you informed about the latest developments that may impact your business operations. We want to address the recent regulatory and transportation challenges affecting international trade and logistics in North America.

Regulatory Impacts

Proposed Section 301 Tariff Increases: Several products are slated for significant duty increases starting in Q2 2024, impacting various industries:

Once the Federal Register issues notices with the effective dates and HTS numbers, we will promptly notify affected clients.

Antidumping/Countervailing Duties: A new case targets aluminum extrusions from 15 countries, including China, Indonesia, Turkey, Colombia, Dominican Republic, Ecuador, Italy, Korea, Malaysia, Taiwan, Thailand, UAE, Vietnam, India, and Mexico. This measure aims to protect domestic industries from unfair pricing but will increase costs for importers relying on these materials.

Mexico Tariffs: An increase from 5% to 50% on 544 products will affect a broad range of imports. However, this does not impact Free Trade Agreement countries or the IMMEX (Maquiladora) program, which provides some relief for certain businesses.

Canada’s CARM System Implementation: The implementation delay until October 2024 affects compliance processes, giving businesses more time to adapt but also prolonging uncertainty.

Transportation Impacts

Transpacific Eastbound from Asia to USA: Rates are increasing bi-weekly, and space remains tight due to high demand and limited vessel availability. This situation is driving up shipping costs and leading to longer lead times for imports from Asia.

Middle East Routes: Carriers are avoiding the Red Sea due to regional security concerns and are instead taking longer routes around the Cape of Good Hope. This change increases transit times and costs, affecting delivery schedules.

Panama Canal: A drought has led to the Panama Canal Authority reducing the number of transits, causing significant delays. This bottleneck is affecting global shipping schedules and increasing transit times.

North China Container Shortage: There is an imbalance of containers due to disruptions in other areas, leading to shortages and higher costs for shippers needing to move goods from North China.

Carrier Blank Sailings: Carriers are implementing blank sailings to reposition ships for longer transits, which disrupts shipping schedules and reduces available capacity for cargo.

East/Gulf Coast Labor Contract Talks: The labor contract expiring in September could lead to disruptions if a strike occurs. This potential for labor unrest is prompting early container shipping to mitigate risks but it also increases demand and costs.

Canada Rail and Customs Strikes: Potential rail strikes starting May 22nd could disrupt port operations and inland logistics, causing delays in cargo movement. Additionally, a potential customs strike, despite 90% of staff being deemed essential, could lead to delays in customs processing.

Asia to Europe and Middle East Routes: Rates are increasing sharply due to vessel capacity shortages and longer transit times around Africa. This situation is driving up costs and causing delays in shipments to Europe and the Middle East.

North American and European Trade: North American trade with Europe continues to exhibit stability as both demand and capacity are well-balanced. This equilibrium ensures consistent and reliable logistics operations, allowing businesses to effectively plan and manage their transatlantic shipments without significant disruptions or fluctuations in service levels.

Many carriers are reinstating guaranteed premium services to ensure cargo movement, but these come at a higher cost. Additionally, carriers are often not honoring contract rates and allocations, opting instead for high-spot market and premium service rates. This is likely to affect trade throughout the summer.

Noatum’s recommendations are as follows:

1.         Book as early as possible, 4-8 weeks in advance.
2.         Identify urgent cargo and utilize premium guaranteed services where needed.
3.         Utilize airfreight as needed but sparingly as rates and fuel are increasing.

We understand the complexities and challenges these issues present and are here to assist you in navigating them. Should you have any questions or need further information, please do not hesitate to contact your Noatum Logistics representative.

Thank you for your continued partnership and understanding.

If you have any questions, please contact your local Noatum Logistics representative.