Supply Chain Global Update

Spain: Last Friday, an agreement was reached between the government and the truckers’ employers; however, despite the explanations given by the ministry of transport to the representatives of the independent truckers during their meeting, the conflict on land transportation in Spain continues… after their meeting, it was determined the agreement does not provide immediate solutions to transport contracts, and a new meeting has been requested. Today some transport companies have started their operations, but the independent truckers remain on strike and holding demonstrations. The main problem now is that terminals are severely congested by import containers discharged from vessels during the last two weeks, and, as a contingency measure, main port terminals are only admitting trucks for import container retrieval. This contingency situation will last for as long as is necessary until space has been freed at each terminal. We will keep following the last news on this conflict and will keep you posted of any developments.

LA/LB Clean Truck Fund: The Ports of Los Angeles and Long Beach have each adopted spending plans for the Clean Truck Fund (CTF) rate program, a key component of the ports’ Clean Air Action Plan (CAAP). The plans target the development and deployment of zero-emission (ZE) trucks and infrastructure, the ultimate goal being that the ports will be serviced by a 100% zero-emission drayage truck fleet by 2035. Starting April 1st the ports will begin collecting a rate of $10 per twenty-foot equivalent unit on loaded drayage trucks entering or leaving their container terminals. Exemptions to the CTF rate will be provided for containers hauled by zero-emission trucks. Several incentive programs will also be put into place to incentivize trucking companies to adopt zero emission fleets. The ports will host stakeholder engagement activities in the coming months to answer questions and help truckers gain access to these programs. We will continue to monitor the progress and update as needed.

Shanghai: China’s biggest COVID-19 lockdown in two years started today and will lock down in two stages over nine days for mass testing of the population of 25 million people. The eastern side of the city will be first, with restrictions from Monday, March 28th to April 1st, followed by the western side of the city from April 1-5. The Port of Shanghai has announced that it will maintain normal operations, but it is likely the landside operations will be disrupted. Truck drivers will have to provide a negative COVID test within 48 hours, and certain roadways and access to the city of Shanghai will be restricted, as well as closures of factories and workers forced to stay home. Shenzhen and Yantian ports have recently suffered from COVID related lockdowns that created significant disruptions and we expect the Shanghai event to create further havoc in the supply chain mess. 

ILWU/Labor Relations: A group of Senators have sent a letter to President Biden requesting that the administration intervene where possible to make sure the ILWU (International Longshore and Warehouse Union) and the PMA (Pacific Maritime Association—the ocean carriers and terminal owners) complete the upcoming negotiation for the June 30th contract expiration without disruption to the supply chain.  There is a great deal of concern about this upcoming negotiation, as the ILWU is fully aware of the massive profits reported by the ocean carriers. Should a work slowdown or strike occur,  the results could be devastating to an already strained supply chain. We will monitor this situation closely in the coming months.

Oceania Emergency Operational Surcharge: Announcements have been published for an April 10th surcharge due to the continued operational constraints in the ports of Australia and New Zealand and severe carrier network disruption.   This comes on top of significant rate increases levied from this area, bringing rates from Oceania considerably higher from many carriers.

Russian Sanctions: An Executive Order was issued on March 11 by the White House restricting only goods from the Russian Federation (not Belarus) and it targets “Russian Federation origin.” This means goods produced, manufactured, extracted, or processed there. You can find the complete Executive Order here for reference. Below are notes on what the prohibition means for Russian imports.

• CBP is putting a hold on all goods covered by the prohibition. If goods are being held, CBP will release the goods under the OFAC general license 17 upon receipt of proof that the shipment was under contract prior to March 11, 2022, as long as goods have been received prior to March 25.
• Importers can avoid the hold by submitting that proof to CBP ahead of time. Contact the port where arriving, submit proof of contract and submit via fax, in person or even via DIS (other doc) when filing entry. 
• All of the goods covered by the restriction will be refused entry beginning on March 25 (even if they were under contract in time). Suggested that people should look at diverting the cargo elsewhere if it is not going to be here in time.
• Here is the list of HTS codes covering the prohibited goods