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Study Shows Global Trade Represents 1 out of 5 jobs in California

global trade

Study Shows Global Trade Represents 1 out of 5 jobs in California

The Golden State makes news headlines once again boasting its impressive job market. The latest numbers from a study released by Business Roundtable and prepared by Trade Partnership Worldwide confirms a whopping 4,710,600 jobs are supported by global trade in California. The study gathered the most recent information available reflecting employment data from 2017.

“The CEO members of Business Roundtable, who lead companies with more than 15 million employees, strongly support congressional passage of USMCA implementing legislation this year. We stand united to preserve and modernize North American trade, which supports over 12 million jobs and a strong U.S. economy,” said Tom Linebarger, Chairman and CEO of Cummins Inc. and Chair of the Business Roundtable Trade & International Committee.

In addition to the massive employment numbers supported by global trade, California’s export market is also revealing impressive numbers. The same study also revealed goods and services exports made up 11.2 percent of the state’s overall GDP as it exported up to $59.5 billion in goods and services to Mexico and Canada in 2017.

The study in its entirety can be found here.

Auto Tariffs Spark Lawsuit Against Department of Commerce

Once again, auto tariffs have made the news. This time, it involves the Cause of Action Institute (CoA), the Department of Commerce , and a lawsuit. The lawsuit, at the request of the CoA, is in response to an information request that the Department of Commerce did not release. Originally, the CoA requested a copy of Commerce Secretary’s final report to the President regarding the Section 232 investigation.

Commerce claims that the information contained in their report justifies the proposed auto-tariffs, but the government refuses to release this report. The public should not have to take the government’s word that the report supports tariffs when the administration withholds the document it claims support its position. The tariffs will harm American consumers and businesses, and the public has a right to see the information contained in the report. We are dedicated to placing this vital information into the public sphere, ensuring that the government complies with its statutory obligations, and we look forward to a robust debate about the merits of the report,” said James Valvo, counsel and senior policy advisor at Cause of Action Institute.

This request occurred on two occasions, with the Department of Commerce stating it wouldn’t release the report to the public. Now the CoA is fighting in the name of transparency by holding the Department of Commerce accountable for not releasing the report within the statutory time-frame.

What to Consider when Planning for the Post-Brexit Period

The past weeks have seen a flurry of parliamentary activity in London, none of which has yielded any more clarity regarding the status of the UK’s membership in or relationship with the European Union. At time of writing, British lawmakers have twice voted down a proposed Brexit deal that EU officials have said is non-negotiable, and subsequently voted against leaving the EU without a deal.

Even in the likely event the EU agrees to delay the Brexit deadline, the future of Brexit remains very much in question, as Britain’s divided Parliament won’t be any more likely in the coming months to reach consensus than European officials are likely to re-open negotiations.

The innocent bystanders, of course, are the countless businesses on both sides of the English Channel, which have hitherto relied on seamless trade between the two entities, and which are increasingly reconsidering their relationships with suppliers and vendors across what has the potential to become a hard border.

Unprepared for Brexit

While the impending Brexit deadline has generated expected urgency in Britain’s parliament, the inevitability of Brexit has been known for nearly three years. Yet, as it stands today, many businesses are unprepared for the very real possibility of a hard Brexit. In fact, a recent report in the Wall Street Journal, citing a study by the Chartered Institute of Procurement & Supply (CIPS), notes only 40 percent of British businesses would be prepared to comply with a new customs compliance regime.

That’s a daunting number and serves as a call to action for those who have yet to prepare for Brexit’s rapid approach. Should a hard Brexit occur, it will serve as much more than a milestone; it will turn Britain’s customs regime on its head, sowing confusion and uncertainty that will inevitably result in disruption to supply chains, administrative headaches and unexpected costs. Industries heavily integrated with European supply chains, such as aerospace, pharma, food manufacturing and autos will face acute disruption.

Increasing Landed Costs

Perhaps the most urgent consideration for those who engage in trade will be the spike in associated landed costs. In the event of a hard Brexit, the current European customs regime will cease to apply to imports. The immediate effect will be the application of tariffs and Value-Added Taxes (VATs). Those tariffs will be based on Most Favored Nation (MFN) rates, which will vary by product and could be quite substantial. While the British government has already stated that, in the event of a hard Brexit, it plans to waive seven percent more tariffs than which  currently exist, VATs will still apply as will tariffs on virtually all imports from non-EU origins. That includes countries with which the EU currently maintains free trade deals, such as the Comprehensive and Economic Trade Agreement (CETA) recently signed between the EU and Canada.

Compliance (New customs regime)

While tariffs for EU imports may be reduced for the most part, customs declarations will still be required. This is a critical development. Given that approximately half of the UK’s imports come from the EU, and the EU has several trade agreements with key trading partners, there’s been little need for customs declarations in the UK to this point. However, after Brexit, the number of customs declarations is estimated to increase almost 400 percent (from 55 million to 205 million) at a cost of approximately £6.5billion or USD $9.1 billion to businesses. In addition, there will be 180,000 British business who will be filing a customs declaration for the first time, while those who have already been filing declarations will need to adjust to a new regime of customs classification.

The importance of correctly classifying these cross border movements cannot be overstated. In a best-case scenario, such as declarations with missing information, importers will face delays at UK border crossings, which are already anticipated to be backlogged. In a worst-case scenario in which goods are misclassified, importers may face retroactive payments on top of financial penalties and – in extreme cases – lose their authorizations to import.

Border Delays

According to CIPS, 10 percent of UK businesses could lose EU business if there are delays at the border, and about 20 percent will see their EU buyers demand discounts for delays of more than a day.

The organization notes 38 percent of EU businesses have already changed suppliers because of Brexit and up to 60 percent of EU businesses would look to switch suppliers if border delays were to extend to two weeks or more.

Delays are almost inevitable given the more robust customs administration requirements. Today, tractor trailers pass through the UK-EU border without stopping. At the Port of Dover, the UK’s busiest and closest port to mainland Europe, some 17,000 tractor trailers pass through on a daily basis with only about two percent being stopped. After Brexit, almost all of them are likely to be stopped. Even if that stop is only for a few minutes, it’s going to result in a significant backlog of transports.

In short, importers into the UK and exporters out of the UK will need to factor in additional time in transit and set expectations with their trade partners on the other side of the English Channel.

Preparation is Key

Given the shrinking time window for preparation, businesses that haven’t done so already should be working with their trade services partners – carriers, freight forwarders, trade lawyers and consultants and customs brokers – to ensure they’re able to minimize the negative impact of Brexit on their trade activity.

The UK’s official leave from the EU may very well be imminent, or potentially months or even more than a year away, but given the consequences of inaction, getting prepared late is still better than not being prepared at all.

Mike Wilder is vice president of Managed Services at trade services firm Livingston International. He has 30 years of experience in trade compliance. He can be reached at mwilder@livingstonintl.com.

David Merritt is a director in the Global Trade Consulting division of trade services firm Livingston International. He can be reached at dmerritt@livingstonintl.com.

 

 

5 Key Logistics Trends and Technology Implications for 2019

What an exciting year 2018 was in logistics and transportation management! Many companies started to reach beyond traditional strategies and approaches to take their logistics and transportation capabilities to new levels. Ecommerce continued to grow at record levels and there didn’t appear to be the slowdown that many were predicting. There was considerable global trade instability and the focus of many companies was to determine what strategies they needed to put in place to mitigate the brewing trade wars and Brexit uncertainty. Market hype was also at an all-time high, making it harder to identify the best opportunities for technology investments. The question now for logistics and transportation professionals is what will drive 2019 strategies and investments to meet the market challenges and provide the greatest returns.
Here are my thoughts on five key trends for 2019.

Collaborative Transportation Management

The concept has been discussed, but never realized on a large scale. With the capacity shortage continuing for the perceived future, shippers and LSPs are looking for ways to expand their network. Real-time visibility solutions can identify the capacity that is trapped in a given network. New solutions have been developed to allow companies to share capacity and cover a greater percentage of the loads. Work in 2018 has shown that, as the number of participants expand, the ability to dramatically increase available capacity rises. Collaborative transportation management will be the fastest way in 2019 for shippers and LSPs to meet their transportation capacity challenges.
 

The Global Trade Scramble

For many shippers and LSPs, there is no choice but to spend a lot of time and effort on strategies and tactics to mitigate the impacts of the current US administration, the affected countries and Brexit. The uncertainty that exists in the market is what is most disconcerting and driving this high level of focus. In North America, changing duties and quotas are driving companies to develop new sourcing strategies, evaluate the impact of new duties on the bottom line and vet new suppliers. Brexit is even more problematic for Europe as companies try to understand the effects on their supply chains and logistics services if the seamless flow of goods stops between the UK and the rest of Europe. In 2019, companies will focus on global trade and customs solutions that can help them navigate the potential changes, glean clearer insight into alternative trade opportunities that exist and ensure compliance with much higher customs clearance requirements. 2018 was also a very active year in the area of sanctioned parties list expansions, stepped up enforcement actions especially on challenging rules like the OFAC 50%, and it is very likely the pace of sanctions and enforcement actions will ramp up in 2019.

Home Delivery Hangover

Again, another “no choice” for retailers as consumer expectations for home delivery continue to rise with, again, record online sales during the 2018 holidays. Retailers will be focused on getting costs in line and better understanding what customers want and are willing to accept for home delivery services. In 2018, companies started to get a better perspective on the different kinds of expectations customers had for delivery services, and that “as fast as possible” and “free” were more market hype than reality. In addition, leading retailers started to focus on understanding the balance between delivery service and the fees charged and—most importantly—understanding that allowing consumers to self-select their delivery options based upon speed and price could lower or recover delivery costs. In 2019, retailers will increasingly look for home delivery solutions that allow them to provide consumers with delivery choice, and even steer them to options that help the bottom line.

Parcel Power

As ecommerce grows, so does parcel shipping. In 2018, the rapid expansion of domestic and international parcel shipping continued. Carriers established more aggressive pricing and delivery strategies to keep pace with the increasing demand and improve profitability. Governments adopted more stringent tariff policies to make sure they were not missing an increasingly large revenue stream from ecommerce direct from Asia. As the cost and complexity of parcel shipping increases in 2019, companies will deploy solutions that can minimize their parcel shipping costs through more intelligent carrier and mode selection, and effectively address international requirements such as landed costs, restricted party checking and customs filings.

Technology – Some Hot & Some Not

There was not a day in 2018 when some organization or technology company was not announcing their AI, Machine Learning, Big Data or Blockchain solution or initiative. Even the business and trade press pointed to these technologies as ushering in a new era in logistics technology. As 2018 unfolded, however, there was a divergence in the value of some versus others that will carry into 2019. In 2019, there will be greater investment in—and results from—AI, Machine Learning and Big Data because of the ability of these technologies to significantly augment existing solutions and deliver business value in the near term. Unfortunately for Blockchain, it heads to the “trough of disillusionment” for the next year as pilots end and questions remain about the change and costs required to deploy it, its technological limitations and, most significantly, the lack of standards. For anyone who has been in the tech industry for 20 years, Blockchain should be a reminder of the hype that XML received in the late 90s. The question for the value of Blockchain isn’t if, just when.
The macro trends of ecommerce, global trade destabilization and the over-the-road transportation capacity shortage will continue to shape 2019 just as they have in 2018. Shippers and LSPs are realizing that they must act differently to survive or thrive and will more aggressively adopt new logistics and transportation technology solutions. It has been 20 years since the impact of technology was so prominent in the transformation of logistics and transportation. How will your company use logistics and transportation technology to impact performance in 2019? Let me know.
Chris Jones is the EVP of Marketing and Services for Descartes – The global leader in uniting logistics-intensive businesses in commerce.

How to Become a Freight Broker

Do you have an interest in the transportation and logistics industry? Maybe you’ve always been drawn to trucking or shipping but don’t know how to put that passion to good use? Becoming a licensed freight broker may be a smart career move for you if these are questions you have pondered over time. A freight broker works as an intermediary between manufacturers and shippers, helping move products and goods from one location to the next. Freight brokers can make a steady living working for themselves or as part of a team, and they have an opportunity to do the work they love from home or an office setting.
However, there are certain steps one must take to become a licensed freight broker, including getting the right training, developing a business plan, meeting legal requirements, and obtaining a bond or trust fund. Here’s what you need to know if becoming a freight broker is in your future.

Get the Right Training

One of the first steps in becoming a licensed freight broker is obtaining the right training. Industry experience, in trucking, shipping, or logistics, goes a long way in laying the groundwork for a successful career as a freight broker. However, there are also classes and courses that can and should be pursued in order to get a full understanding of the business. These training opportunities are not legally required to become a freight broker, but they do offer information about trends in the industry, best practices, technology tools, and operating a business in the field.
Several freight broker training schools offer classes and coursework to those who want to work as a freight broker. Some schools offer in-person classes that provide a more personalized curriculum while others are self-study classes completed online. You can use this resource to uncover the top freight broker training schools as well as the classes you might want to complete in order to get your brokerage up and running successfully from the start.

Develop a Business Plan

In addition to industry experience and formal training in the freight broker field, you will also want to develop a business plan to set yourself up for success. Having a strong business plan allows you to evaluate what you need to establish your brokerage now as well as what is required for a solid, profitable future. A business plan includes detailed information about revenue sources, customer acquisition, strengths and weaknesses of the business, and projected financial information that acts as a budget. You can utilize business plan templates like those found on the Small Business Administration’s website to tackle this task.

Meet the Legal Requirements

After developing your business plan, your next step is understanding the meeting the legal requirements to become a licensed freight broker. You will need to register as a motor carrier and receive your motor carrier number through the Federal Motor Carrier Safety Administration, or FMCSA. You will also need to secure your motor carrier authority which is done through an application submitted online. This application requires you to pay a non-refundable $300 fee, so be prepared for this cost when applying. The process of obtaining these legal requirements and submitting the application can take several weeks. Be sure to review the information needed as part of the application process beforehand, and gather the right documentation before submitting your application.

Obtain Your Bond or Trust Fund

In addition to the application process mentioned above, new freight brokers must also satisfy the bond or trust fund requirement. The license to become a freight broker requires you to have a freight broker bond or to establish a trust fund in the amount of $75,000. The bond or trust fund protects shippers and carriers against bad business practices of the licensed broker.
The good news is that if you select the bond option, you do not have the pay the full bond amount of $75,000 up front. Instead, your surety agency charges you a percentage of the total bond amount, with the out of pocket cost ranging from $500 to $2,000. The price you pay is heavily dependent on your financial standing, including your personal credit score and history, so be sure you have your financial ducks in a row before applying.

Have a Marketing Strategy

After you have developed a sound business plan, met the legal licensing requirements, and obtained your freight broker bond, you’re ready to start working with customers. However, you will need a marketing strategy to help you get off on the right foot as a newly licensed freight broker. Many brokers use a combination of business relationships and freight load boards to create potential business, while others use social media, e-mail marketing, and an online presence to generate interest. Any combination of these marketing strategies can be beneficial. Just be sure to budget for the marketing methods you plan to use, and be flexible in your approach if one seems not to work as well as you intended.
The steps to become a licensed freight broker may seem daunting, but following this order makes it easier to get up and running in the industry quickly.

Eric Weisbrot is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.

Freight Forwarders Defended by BIFA General Director

In response to HMRC’s Transitional Simplified Procedures  for Customs in a post-Brexit environment, BIFA General Director Robert Keen released the following comments stating his concern of the impact and fairness between freight forwarders and other players in global trade:
“As the trade association for freight forwarders, which are responsible for managing the supply chains that underpin the UK’s visible international trade, we have long campaigned for friction-less borders post Brexit.
We note the publication of these Transitional Simplified Procedures by HMRC in the event of a non-deal Brexit, and are led to believe that they are aimed at making importing easier by simplifying the declarations at the border and postponing the payment of import duties that would otherwise be due.
However, having reviewed the documentation that has been released, BIFA believes that they are aimed solely at those traders, which have not been previously engaged in international trade, giving an overview of the procedures available to those traders.
Whilst some of the easements that they contain regarding simplifications and special procedures may make it easier for new applicants to obtain these authorizations, there does not appear to be equivalent liberalization of the regimes for existing holders, such as freight forwarders.
In many ways the documentation appears skewed in favor of new applicants for authorizations and actually discriminates against existing holders, particularly relating to special procedures.
It appears to us that TSP allows traders without any customs expertise, and tried and tested systems, to by-pass the strict authorization requirements which otherwise apply to freight forwarders and customs agents.
If the above are the case this will be highly unpopular amongst freight forwarders and customs agents as they appear to be excluded from them and no-one seems willing to say why this is so. That is something on which we will be seeking clarification from HMRC. If this is a true picture of the situation, we question whether the preparations are far enough advanced and whether the systems that will be needed are fully tested.
It is all very well to write down these procedures, but the unanswered question is will they work when systems are largely untried, communication links between the parties involved on the processes are not established, many will be unaware of their responsibilities, and the freight forwarding companies that are at the heart of international trade movements appear to be excluded from them.
TSP should be for all involved in visible international trade movements, including freight forwarders.”
Source: Impress Communications

Rail Connections Vital for Global Trade and Transport Success

Integrating business operations with the best on-dock rail connections is critical to the continuation of trade and transport. In leveraging these connections, roadblocks are eliminated for both importers and exporters in situations where transportation options unexpectedly shift from ship to rail, as recently reported with Schweizerzug AG.

Luckily for Schweizerzug, the increased demand for train and rail capacity didn’t propose a problem but rather provide an opportunity to implement a solution and demonstrate to customers the company’s level of preparedness and flexibility. As a result of shallow water levels in the Rhine, frequencies were increased on the Antwerp route that provides direct access to the Antwerp Gateway 1700 terminal. Connections such as this provide full access options to every terminal at the port of Antwerp. The problem was quickly solved and customers were kept happy.

“We are excited about this next step in Schweizerzug’s ongoing expansion to offer our customers more connectivity and services between Switzerland and Antwerp,” comments Schweizerzug AG’s CEO Roman Mayer. “Shippers in both Switzerland and neighboring regions will profit from our reliable and time-saving rail services.”

He adds that “the events of the past few months have underscored yet again just how vital rail is–and will remain–for the transport of goods. Schweizerzug plans to continue further developing its range of transport products to meet market demand with the very best level of service available.”

Industry leaders aren’t wasting time in 2019 to create more opportunities to deliver the most variety to customers. And why should they? There’s no time like the present to expand what is proving successful.

Port of Wilmington Ships Ford Vehicles to Middle Eastern Regions

Following its very first shipment of Ford vehicle exports, the Port of Wilmington leveraged the capabilities of the specialized RoRo vessel, Alliance St. Louis, operated by Höegh Autoliners. As part of the vessel’s multiyear contract, this journey is one of between 3-4 per month outlined in the contract. The vessel was loaded on January 7 for it’s final destination in the Middle East.

“We are particularly thrilled to welcome Ford and its portfolio of outstanding vehicles to the Port of Wilmington in support of its direct distribution to global markets,” said Eric Casey, CEO of GT USA Wilmington.

The shipment, inclusive of the F150 pickup truck, Taurus, Edge, Explorer and Lincoln Continental, is headed to the Middle Eastern regions of Saudi Arabia, United Arab Emirates, Qatar, Bahrain and Kuwait.

About the Port of Wilmington, Delaware   

Founded in 1923, the Port of Wilmington is a full service Mid-Atlantic seaport on the Delaware River strategically located to provide overnight access to 200 million North American consumers. Wilmington ranks as North America’s top banana port and the nation’s leading gateway for imports of fresh fruit and juice concentrates. The Port was one of the originally certified ‘360 Quality’ marine terminals in the United States, underscoring its high-quality handling standards for perishable cargo. An economic engine for the State of Delaware and the region, business activity at the Port creates over 5,900 family sustaining jobs and annually generates $436 million in business revenue, $409 million in personal income and $41 million in local taxes. The Port is operated by GT USA Wilmington, LLC. For further information, visit www.gulftainer.com/US

 

About GT USA

GT USA is the U.S. division of Gulftainer, the world’s largest privately-owned independent port operator and logistics company with operations and business interests in the Middle East, the Mediterranean, Brazil and the United States. GT’s presence in North America expanded in 2018 with the signing of a 50-year concession agreement with the state of Delaware to manage and operate the Port of Wilmington, a deep-water port and marine terminal serving the Eastern Seaboard. The company’s first venture into the USA came in 2014 with the signing of a 35-year agreement to operate Canaveral Cargo Terminal, a multi-purpose cargo and container terminal in Florida.  For more information, visit www.gulftainer.com/US

About AutoPort

 AutoPort Inc., a privately held vehicle processing and handling company established in 1981, is an ISO 9001 Certified Company headquartered at the Port of Wilmington, Delaware. In its 30-plus years of operation, AutoPort has handled, processed and modified more than 2 million vehicles destined to market for leading U.S.-based automotive manufacturers. For more information, go towww.autoportinc.com

Air Cargo Exports Process Expedited with New Technology in Perth

Air cargo exports are now being processed faster and more efficiently following the investment of new screening technology for Tigers Australia Perth facility. This technology enables the company to perform export screenings internally, making the location the only one in Australia with internal screening capabilities. Tigers is a global organization that specializes in technology enabled supply chain solutions. Based in Hong Kong, the company has international locations including Perth, Adelaide, Melbourne, and Sydney.

The Perth location will continue staying one step ahead through Regulated Air Cargo Agent accreditation before the March 1 national date for the introduction of new policies for conducting air cargo inspections.

“Tigers Australia has purchased the equipment to support our customer base with the new legal requirements, which will impact all air cargo export commodities,” said Jason Radford, General Manager, Tigers Perth. “At the Perth facility, we operate 24 hours a day, seven days a week, so we will also offer the service to the entire Perth airfreight market.

“This will allow export cargo screening to be completed after-hours, therefore reducing the need for customers to deliver directly to the Cargo Terminal Operator (CTO) where wait times can be in excess of six hours. The investment in this equipment will ensure that Tigers Perth remains efficient and will be fully compliant with the Australian government’s air cargo security legislation in time for the implementation date.”

Additional features of the new technology include state-of-the-art X-ray equipment, two explosive trace detection units, and an electro-magnetic detection (EMD) machine.

Source: Tigers

Brexit: BIFA Responds to UK Parliament’s Deal Rejection

The most recent response from Director General of the British International Freight Association (BIFA), Robert Keen, makes a clear indication  the decision made  by the UK Parliament to reject a deal must be acknowledged and prepared for to keep importers and exporters in a good place for the sake of UK’s visible trade, come March 29.

“The decision taken by Parliament is historic and needs to be acknowledged.  With just a couple of months to go before the exit date, the rejection of the deal leads BIFA to recommend that our members, which are the companies that handle the processing of most of the UK’s visible trade, to prepare on the basis that there will be a hard Brexit,” commented Robert Keen. “Speculating about any other outcome is inadvisable until UK Government provides us with clear guidelines. A hard deal may well be very disruptive and damaging for the UK economy as a whole, but freight forwarders – many of whom are Authorised Economic Operator (AEO) accredited – will play a key role in tidying up the mess left by the politicians by ensuring UK importers and exporters can continue trading without undue disruption with the rest of Europe after March 29.”

The theme is proactivity and planning next steps as the deadline approaches. Implementing trade strategies earlier than later significantly reduces the risk of trade barriers making an appearance after the fact, while preparing the region for a major shift.

“BIFA has always stated its belief that a disorderly Brexit would be the worse outcome, as it is likely to increase trade barriers and impose significant restrictions on the exchange of goods between the EU and the UK.

“Whilst BIFA’s executive management has engaged with various government departments over the last two years in regards to issues that affect the movement of visible trade post March 29th, our members have also been discussing the possible impacts with their clients.

“Large and small, BIFA members have taken actions to review all options to overcome the disorder that a no-deal Brexit could bring to international trade in order to define sustainable solutions as the set of Brexit conditions becomes clearer,” Keen said. “BIFA will be renewing our appeals to the responsible bodies in London and Brussels to do the utmost to prevent this scenario. As far as we are concerned, our members are focused on ensuring the ongoing efficient flow of freight for our customers.”

Hew concludes:

“One thing is certain, our members are ready, willing and able, to clear up the mess that has been left by politicians.”

 

Source: Impress Communications