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MARAD Announces $4.8 Million Funding Opportunity for U.S. Marine Highway Program

Marine global trade

MARAD Announces $4.8 Million Funding Opportunity for U.S. Marine Highway Program

In a recent announcement, the U.S. Department of Transportation’s Maritime Administration (MARAD) unveiled a Notice of Funding Opportunity, making $4.8 million available for Fiscal Year 2024 through the United States Marine Highway Program (USMHP).

Read also: MARAD Announces Nearly $20 Million in Funding Available for Small Shipyard Grants

The USMHP aims to enhance the movement of freight via America’s navigable waterways, presenting an efficient, sustainable alternative to road and rail transport. This initiative not only strengthens national supply chains but also reduces emissions and alleviates congestion.

Since its inception, the Marine Highway Program has distributed over $103 million to public and private organizations, fostering maritime transport options and funding essential freight infrastructure to bolster supply chain resilience.

The program’s evaluation criteria include the impact on goods movement, non-federal funding investment levels, project readiness, climate change and sustainability considerations, equity, and workforce development.

Applications must be submitted through grants.gov by 11:59 p.m. EST on July 12, 2024. For additional information, visit the USMHP website here. Potential applicants may also contact the USMHP staff via email at mh@dot.gov or by phone at 202-366-1123.

 

Maersk global trade rate

Maersk Infuses $600 Million into Nigeria’s Port Infrastructure, Bolstering Maritime Trade Expansion

A.P. Moller-Maersk (Maersk) has unveiled a substantial $600 million investment geared towards enhancing Nigeria’s port infrastructure, marking a pivotal step towards fostering additional container shipping services within Nigerian ports. The announcement was made by Robert Maersk Uggla, Chairman of Maersk, during discussions with Nigerian President Bola Tinubu on the sidelines of the World Economic Forum Special Meeting on Global Collaboration, Growth, and Energy for Development in Riyadh, Saudi Arabia, on April 28th.

President Tinubu lauded the investment, emphasizing its synergistic alignment with the administration’s ongoing commitment to refurbishing Nigeria’s eastern and western seaports, already earmarked for a $1 billion investment. Furthermore, Tinubu reaffirmed his administration’s unwavering support for port modernization initiatives and the implementation of the national single window project aimed at streamlining port processes through automation.

Read also: Maersk Completes $3.6 Billion Acquisition of LF Logistics

Expressing gratitude for Maersk’s contribution to Nigeria’s economic landscape, Tinubu highlighted the nation’s receptivity to foreign investment, citing Nigeria as a prime destination for lucrative business ventures. He underscored the country’s potential for robust revenue expansion and emphasized the imperative to minimize trans-shipments from larger vessels to smaller ones.

Uggla echoed Tinubu’s sentiments, underscoring Nigeria’s strategic significance in accommodating larger containerships along the West African coast. Recognizing the burgeoning demand for expanded logistics services, particularly in Lagos, Uggla outlined Maersk’s commitment to fortifying port infrastructure and facilitating the seamless operation of larger vessels. He emphasized the immense growth potential inherent in Nigeria’s maritime sector and reiterated Maersk’s steadfast dedication to nurturing mutually beneficial partnerships with Nigerian authorities.

In light of recent developments, the West Africa Container Terminal (WACT), operated by APM Terminals (APMT), has inaugurated a state-of-the-art four-lane in-gate facility at Onne Port, Rivers State, Nigeria, further augmenting the region’s maritime infrastructure and paving the way for enhanced trade facilitation.

industry

Celebrating Maritime Excellence: AOTOS Honors Industry Leaders at 54th Annual Awards Gala

Mark W. Barker, George Pasha IV, and Adam Vokac were recently recognized at the 54th annual Admiral of the Ocean Sea (AOTOS) Awards hosted by the United Seamen’s Service (USS). This prestigious event, held at the Sheraton New York Times Square Hotel, celebrated their outstanding contributions to the maritime industry.

The trio received the traditional silver statuette of Christopher Columbus, acknowledging their significant impact on the industry. The ceremony, attended by nearly 600 individuals, also highlighted the bravery of American seafarers who demonstrated exceptional courage at sea.

LTG Kenneth R. Wykle, USA (Ret.) and Chairman of the USS AOTOS Committee, expressed admiration for the honorees, stating, “We honor the achievements of these deserving individuals whose worthy contributions to the industry have left an indelible mark. All three of our recipients are accomplished, well-known leaders, and it is our privilege to recognize them with AOTOS Awards this year.”

In their acceptance speeches, the awardees expressed gratitude to family, friends, mentors, and the USS, addressing challenges and opportunities within the logistics and supply chain industry.

Mark W. Barker highlighted the significance of the Great Lakes supply chain, emphasizing its critical role in the North American economy. He expressed gratitude to the United Seamen’s Service for recognizing the efforts of mariners and providing global support to the mariner community.

George Pasha IV tackled the maritime worker shortage issue, emphasizing the need for investment in training and education. He called for lowering barriers for entry into the profession and supporting the transition of service members into commercial roles. Pasha expressed deep respect for seafarers and commended the United Seamen’s Service for their tireless efforts.

Adam Vokac emphasized the opportunity to build a better maritime industry, asserting the commitment of the Marine Engineers’ Beneficial Association (M.E.B.A) and its members to face challenges head-on. He underscored the dedication of American mariners and longshoremen during national crises, emphasizing their unique role in upholding resilience.

The event’s proceeds contribute to USS community services abroad for the U.S. Merchant Marine, seafarers of all nations, and U.S. government and military overseas. USS President Edward R. Morgan and Executive Director Roger T. Korner lead the organization, with Barbara Spector Yeninas Associates serving as AOTOS Event Coordinator.

The AOTOS Awards Gala not only recognizes excellence in the maritime sector but also serves as a platform to address crucial issues affecting the industry’s future.

maritime

US Department of Transportation Bolsters Defense and Economic Supply Chain through Maritime Programs

The U.S. Department of Transportation’s Maritime Administration (MARAD) Enhances Maritime and Tanker Security Programs, Reinforcing U.S. National Defense and Economic Resilience.

Today, the U.S. Department of Transportation’s Maritime Administration (MARAD) has declared the full enrollment of its Maritime Security Program (MSP) and Tanker Security Program (TSP). These essential initiatives offer the Department of Defense (DoD) access to a fleet of U.S.-flagged sustainment sealift vessels and product tankers, ensuring readiness during times of armed conflict or national emergency. Simultaneously, these programs fortify the U.S. supply chain and contribute to job creation.

“In peacetime, our U.S.-flagged commercial fleet plays a vital role in our supply chain. In times of war and crisis, it supports military missions worldwide,” emphasized U.S. Transportation Secretary Pete Buttigieg. “In the years to come, these vessels will be instrumental in delivering critical goods, strengthening both our economy and national security, and providing quality employment for American mariners.”

The MSP has chosen the LIBERTY POWER and TULANE vessels, both operating under Liberty Global Logistics, LLC in Lake Success, N.Y., and Fidelio Limited Partnership in Ponte Vedra Beach, Fla., respectively. The U.S.-flagged LIBERTY POWER, a twelve-year-old roll-on roll-off vessel (RO/RO), offers a militarily useful cargo capacity of 220,586 square feet, while the eleven-year-old TULANE, also an RO/RO vessel, provides 194,665 square feet of militarily useful cargo capacity. The TULANE is set to reflag under U.S. registry by the end of the year and will be renamed the ARC HONOR.

The final product tanker selected for TSP is the PYXIS EPSILON, under U.S. Marine Management, LLC in Norfolk, VA. This eight-year-old vessel, with a 325,000 barrel capacity, is scheduled to reflag under U.S. registry by the end of this year and will be renamed the SHENANDOAH TRADER.

Maritime Administrator Ann Phillips highlighted the significance of MSP and TSP, emphasizing their dual role in growing the U.S.-flagged commercial fleet, benefiting the U.S. economy, and sustaining the ability to deliver vital supplies for global military missions. MSP, established in 1996, has been a cornerstone of the U.S. maritime industry for over 27 years, while the recently created TSP supports a fleet of ten commercial product tankers operating internationally, capable of loading, transporting, and storing bulk petroleum refined products to support national economic security and DoD contingency requirements.

“These vessels play a pivotal role in enhancing global readiness and safeguarding our nation’s supply chains. Both MSP and TSP underscore our steadfast commitment to national security and economic stability, exemplifying the indispensable partnership between MARAD and USTRANSCOM,” noted Commander of U.S. Transportation Command, Gen. Jacqueline Van Ovost. Both programs address the shortage of both U.S.-flag ships and U.S. Coast Guard-credentialed Mariners with unlimited licenses, further strengthening national defense and economic resilience.

usmhp

USDOT Announces more than $12 Million in Funding for the U.S. Marine Highway Program

The U.S. Department of Transportation’s Maritime Administration (MARAD) today announced a Notice of Funding Opportunity making $12,423,000 available in Fiscal Year 2023 funds through the United States Marine Highway Program (USMHP), previously named America’s Marine Highway Program.

The USMHP seeks to increase the use of America’s navigable waterways, especially where water-based transport is the most efficient, effective, and sustainable option. The USMHP helps to create maritime jobs, strengthen the nation’s supply chains, reduce emissions, and lower maintenance costs.

The Department will evaluate projects using criteria including the effect on movement of goods, level of non-federal funding investment, use of domestic preference, consideration of equity, and environmental justice. The Department will also consider geographic diversity when selecting grant recipients, as well as how the project addresses challenges faced by rural areas.

Applications must be submitted through Grants.gov by 11:59 p.m. EST on April 28, 2023.

For technical assistance, MARAD will host a series of webinars during the USMHP grant application process. For webinar registration details or for additional information regarding the USMHP click here or contact the USMHP staff via email at mh@dot.gov, or by phone at 202–366–1123.

nuvera shipyard smart pond

Nuvera Expands Maritime Industry Engagement

Nuvera Fuel Cells, LLC announces the sale of two Nuvera® E-60 Fuel Cell Engines to Nexus Energy, a sustainable innovation company based in the Netherlands that is developing modular zero emission solutions for maritime and on-shore applications. Nexus Energy will use the 60 kW hydrogen fuel cell engines in the development of a common modular powerpack for maritime and on-shore use, for both stationary and heavy-duty applications.

Nuvera fuel cell engines help maritime vessel and equipment manufacturers to comply with tightening emissions regulations and mandates and remain economically competitive by providing high-performance zero-emission power solutions fueled by clean hydrogen. The International Maritime Organization is targeting a 50% cut in greenhouse gas emissions by 2050. Many governments and maritime industry players believe 100% is the appropriate goal.

ABOUT NUVERA FUEL CELLS, LLC

Nuvera Fuel Cells, LLC is a manufacturer of heavy-duty, zero-emission engines for mobility applications. With teams located in the U.S., Europe, and Asia, Nuvera provides clean, safe, and efficient products designed to meet the rigorous needs of industrial vehicles and other transportation markets.

Nuvera is a subsidiary of Hyster-Yale Group, Inc., which designs, engineers, manufactures, sells, and services a comprehensive line of lift trucks and aftermarket parts marketed globally primarily under the Hyster® and Yale® brand names. Hyster-Yale Group is a wholly owned subsidiary of Hyster-Yale Materials Handling, Inc. (NYSE:HY). Hyster-Yale Materials Handling, Inc. and its subsidiaries, headquartered in Cleveland, Ohio, employ approximately 8,100 people worldwide.

What is a Smart Port?

What is a Smart Port?

A Smart Port is a port that uses automation and innovative technologies including Artificial Intelligence (AI), Big Data, Internet of Things (IoT) and Blockchain to improve its performance.

Although the industry of ports and container shipping is often regarded as conservative and resistant to change, there are new technologies, systems and solutions emerging that will alter this perception in the coming years, leading the entire sector to a brighter, more connected future.

The need to evolve and become “smart” is even more paramount today with the changing demands of global trade: ships are getting biggergoods are moving faster; and geopolitical issues are creating new challenges for ports all around the world.

In Edition 106 of the PTI Journal we examined some of the the most important digital trends and developments across the industry.

The industry has already embraced many emerging technologies such as Digital Twinscargo flow optimization and visualization – giving customers end-to-end transparency of their cargo’s journey through the supply – and the emergence of 5G’s low latency and faster connectivity to improve port operations.

Digitalization

The digitalization of industrial processes is turning the way we produce goods and services upside-down as we look for higher efficiencies and better management of resources. This transformation is the so called Industry 4.0, and the Internet of Things (IoT) can be considered its cornerstone due to the clear need to capture information from all industrial assets.

Digital Twin technologies in use at the Port of Antwerp

The maritime sector is not an exception in this transformation and the change is starting to accelerate.

The Port of Esbjerg, for example, is leveraging a Digital Twin data visualization platform to identify, monitor, and analyse the emissions outputs of not just its own carbon consumption, but eventually all actors using the port’s facility. The digitalization and measuring of the port’s assets has allowed the port to make significant strides in reducing its carbon output within the port community.

But digitalization is still a largely untapped resource in ports: reports found in February 2021 that of the 4,900 ports around the world, a staggering 80% continue to rely on legacy and paper-based processes to manage maritime services.

Smart Digital Ports of the Future Conference

Smart Digital Ports of the Future Conference is the only annual international event on the market that brings together the largest number of global ports, terminals, and the entire supply chain to debate, share best practices, latest developments and to successfully propel the industry forward with digitalization.

Click here for all of the news, insight, and analysis from #SDP

Ports aiming to become smarter must complement their physical operations with digital processes, according to the Port of Rotterdam.

What is a Smart Port? – Joyce Bliek, Port of Rotterdam

In 2019 the Port of Rotterdam’s Director of Digital Business Solutions Joyce Bliek outlined what it means to be a digital port.

As technology develops, and the global supply chain becomes increasingly digital, there is a necessity for ports to become a “digital node” within that infrastructure.

In this respect, Bliek echoes the thoughts of Kalmar’s Director of Terminal Automation Jari Hämäläinen, who argues that the “exponential growth” of digital technology is placing pressure on the port sector to adapt. Those which fail to do so could be left behind.

The benefits of adopting a dual-approach that encompasses both the physical and the digital, as Bliek explains, are considerable, especially for the testing and optimization of physical infrastructure.

Building a quay wall for instance, without the support of digital twin technology and predictive analysis, could be very costly, whereas testing the structure’s functionality before it is constructed offers a much clearer insight as to what impact a major investment like this could have.

Money saved through digitalization can be used elsewhere to fund key maintenance and infrastructure projects, allowing the port to hone its focus on improving the efficiency of its operations.

supply

HOW TO PREPARE FOR THIS YEAR’S CHALLENGES AND OPPORTUNITIES

Twenty twenty-one was a difficult year in global logistics due to ongoing volatility. We worked alongside customers navigating the Suez Canal block, hurricanes and cyclones, port and terminal closures due to COVID-19 outbreaks, customs and trade changes, labor shortages and more.

I’ve been in the industry since 1997 and I have never seen this level of continual disruption across the entire supply chain for this length of time. However, with this year’s volatility, I was also given a front-row seat to a new level of hyper collaboration–including individuals going out of their way to help each other, more strategy sessions between shippers and forwarders, and continually leaning into historical data and current market insights find smarter solutions.

As we begin another potentially volatile year, I wanted to provide key strategies for global shippers to consider.

SEEK CREATIVE SOLUTIONS ACROSS THE ENTIRE SUPPLY CHAIN

At year-end, we typically see a jump in demand as shippers meet quarter-end quotas and prepare for the upcoming Lunar New Year, during which many factories in China shut down. However, in early 2022, shippers are also juggling potential delays from the Winter Olympics in Beijing throughout February. All of this is amid a strained supply chain market, which will take time to ease.

As you prepare for the year ahead, consider what different modes, trade lanes or inland transportation strategies you can implement in your supply chain. For example, while it may not be feasible to transport 100% of your freight via air, air freight continues to be the fastest way to replenish inventory, so prioritizing specific freight can help keep cargo moving. In fact, C.H. Robinson is running on average 15-17 air charters a week globally for customers looking to avoid the congested ocean ports, and we don’t expect that number to decrease in the near future.

Additionally, as demand and rates will likely continue to stay elevated, less-than-container load (LCL) shipping is a strategy to consider. Typically, space for LCL shipments is easier to find especially in a constrained capacity market, since you are only looking for some container space versus an entire empty container. We also continue to see large cost savings with expedited LCL services compared to today’s airfreight environment.

Keep in mind, LCL shipments are not going to bypass congestion at the ports, so inland strategies need to be considered. Currently, many ocean carriers are looking to move more interior point intermodal cargo versus focusing on port-to-port. We were able to help increase the flow of cargo inland for our customers by sending more 53-foot containers so cargo on the smaller 40-foot ocean containers can be efficiently consolidated in the larger ones and loaded onto trucks or trains to be taken to inland destinations more quickly. Overall, this increased our container capacity by 25% in Southern California.

Indeed, looking at only one portion of the supply chain or one mode can only get you so far. It’s important to consider all areas to keep your cargo moving.

UTILIZE DATA AND TECHNOLOGY

Although 2021 rendered a lot of unique situations—and 2022 may do the same—historical data can still help us find solutions. Finding common trends and themes in your cyclical data can give you an information advantage to make smarter decisions for your supply chain.

Additionally, the right technology tools can give you the visibility and predictability you need to adjust. For example, with the ongoing port congestion and delays, C.H. Robinson enhanced the vessel routing and tracking features within our transportation management system, Navisphere, to increase the efficiency and accuracy of port ETAs and automatically send updates if changes were discovered. This is important because ocean shipping is only one piece of the equation. Having visibility to changes in real-time gives our team and customers a chance to react and adjust other tactics down the road.

LOOK TO GLOBAL TRADE OPPORTUNITIES

It’s unclear whether we’ll see a reinstatement of certain Section 301 China duty exclusions. At press time, the House and Senate had yet to reach consensus on the legislative proposals. If passed, it would be effective through the end of this year.

While congestion and shortages continue across transportation modes, one area where you may find opportunities for savings is in your global trade strategy. Since each country’s trade policies are unique and can change, it’s important to have regular meetings with your trade advisor to break through the complexity of your total landed costs, including understanding your costs to import, identifying duty recovery possibilities and reducing your duty exposure via trade agreements.

For example, our team has helped shippers identify thousands to millions of dollars in tariff refunds alone. If you import into the U.S., you can easily check for potential savings and refunds with our online Tariff Search Tool—www.chrobinson.com/en-us/resources/insights-and-advisories/trade-tariff-insights/hts-search/—and, if you’re sourcing from other countries, our team can create a customized sourcing report sharing potential cost savings or avoidance opportunities.

OCEAN FREIGHT UPDATE: GLOBAL

Forecasting remains essential. For this new year, we strongly encourage forecasting six to eight weeks minimum as a best practice. Considerations for staying consistent include:

-Prioritization

-Variability in SKUs/parts

-Smoothing volumes week-to-week

It’s important to be flexible in all facets of a shipment life cycle including:

-Carriers

-Equipment

-Modes

-Routing

OCEAN FREIGHT UPDATE: NORTH AMERICA

-Port congestion continues to strand vessels and equipment. In Los Angeles/Long Beach (LALB) there are more than 90 vessels with an average 18-30-day dwell. Seattle and Tacoma are experiencing an average of 12 days to berth, while Savannah still has more than 20 vessels waiting at anchor.

-South East Asia transshipment hub ports are also impacted, causing heavy delays on non-direct services via Asia.

-Overall capacity is affected by ongoing port congestion in many trade lanes. Vessels are oftentimes delayed back to their origin, missing scheduled port calls to unload empty equipment, and pick up new laden exports to the United States.

-Schedule reliability and operational constraints are forecasted to continue.

OCEAN FREIGHT UPDATE: OCEANIA

-The supply chain in Oceania continues to be negatively impacted by the global supply chain disruption. Terminal congestion and suspension of pro forma berthing windows are having an impact on shipping schedules.

-Our teams are exploring diverse options in moving longstanding containers to help customers mitigate significant delays.

-The impact of port delays around the world is likely to keep freight costs high on all outbound trades.

FINAL THOUGHTS

While there is no one-size-fits-all approach, the above options provide shippers with strategies to help mitigate delays and identify potential savings as we begin another potentially unpredictable year.

Shippers have had to become increasingly nimble and informed over the past year, and now in 2022, it’s critical to remain agile, be open to alternative solutions and stay informed on the latest market insights. 

________________________________________________________________

Mike Short is president of global forwarding at C.H. Robinson. The Eden Prairie, Minnesota-based company solves logistics problems for companies across the globe and across industries, from the simple to the most complex. With nearly $20 billion in freight under management and 18 million shipments annually, C.H. Robinson is one of the world’s largest logistics platforms. Their global suite of services accelerates trade to seamlessly deliver the products and goods that drive the world’s economy. With the combination of our multimodal transportation management system and expertise, they parlay an information advantage to deliver smarter solutions for more than 119,000 customers and 78,000 contract carriers. Learn more at www.chrobinson.com. 

global supply chain inequality

Supply Chain Predictions for 2022

After the numerous supply chain issues of the last two years, businesses are hoping for an improved logistics landscape in 2022. While there is somewhat smoother sailing on the horizon, international trade waters will remain choppy in 2022 as logistics issues and government actions continue. Some pressure on the logistics portion of the supply chain may ease, but the cost of shipping will continue to increase. Moreover, new issues are expected to arise in 2022 resulting from government action that will continue to put pressure on the supply chain.

Logistics Issues Will Remain

Logistics-related supply chain pressures may ease during 2022 as a result of lessons learned. During 2020 and 2021, the pandemic upended the logistics industry. Supply chain pressures stretched ports to maximum capacity, and there was (and continues to be) a shortage of truckers. Companies sought to side-step the delays by paying extra to take another company’s spot-on containerships and take other creative actions. Some logistics-related issues likely will ease in 2022 due to companies learning from their experiences during the pandemic. Companies have learned to adapt to the ‘new normal’ and will continue to do so. Recognizing that “just-in-time” supply chains will not return to their prior efficiency, companies will continue to adapt in 2022 by warehousing essential inventory (when possible), diversifying supply chains, and selecting to manufacture closer to the consumer base.

Diversification and relocation will be incentivized in 2022 by high logistics costs and governments (as discussed later). Trucking companies and other logistics companies are experiencing higher costs, such as higher salaries resulting from the tight labor market. Similarly, prices for ocean shipments are expected to reach record highs under annual contracts.  Logistics costs are expected to remain high through 2022 and likely 2023. However, many expect that more supply capacity will come on stream and the demand-side pressures should ease this year.

Congress seeks to address logistics issues with the Ocean Shipping Reform Act of 2021, which overhauls federal regulations for the global shipping industry. This bill seeks to ensure a more competitive global ocean shipping industry, protect American businesses and consumers from price gouging, and establish reciprocal trade to promote U.S. exports as part of the Federal Maritime Commission’s (FMC) mission.  It also prohibits ocean carriers from declining opportunities for U.S. exports unreasonably and provides additional enforcement tools to the FMC to address injurious ocean carrier practices.

Any ease in logistics supply chain pressures will be countered if there is a COVID-19 outbreak in China.  China’s zero COVID policy has kept most of the country operating under normal conditions.  However, more infectious variants such as Omicron could be a factor, and China’s domestic vaccines reportedly offer less protection than vaccines used in the West. An outbreak and the consequent shutdowns could cripple many companies that rely on goods from China.

Government Action Likely Will Cause Friction

Additional trade friction can be expected in 2022 as a result of action by Congress and the Biden Administration. The Uyghur Forced Labor Prevention Act (Forced Labor Act) will cause ripples through the supply chain once implemented in June 2022. A similar result will occur if the Biden Administration decides to initiate an investigation into China’s industrial subsidies under Section 301.

The Forced Labor Act prohibits the import of goods made with forced labor and implements a rebuttable presumption that all goods produced in China’s Xinjiang Uyghur Autonomous Region (XUAR) are made with forced labor. Although the focus is on the XUAR, the presumption of forced labor will extend to entities that are not located in XUAR. Moreover, the import ban extends upstream to capture finished goods that use inputs from the XUAR, regardless of where the finished good is completed.  Companies will be required to prove with “clear and convincing” evidence that forced labor was not used at any point in their supply chain. U.S. Customs and Border Protection is expected to issue compliance guidance.

In order to make changes to the Section 301 Intellectual Property tariffs (beyond eliminating them), USTR will need to conduct a new investigation. The potential Section 301 action on industrial subsides in China would authorize the Biden Administration to place tariffs on additional products from China, but also lower (or remove) tariffs on other items. Signals suggest that certain factions of the Biden administration want to impose additional tariffs, but USTR Katherine Tai wants to continue the dialog with her Chinese counterparts. While a breakthrough is possible, China has historically used a dialog to prevent action against it rather than take meaningful action in response to U.S. and other Western government’s requests. Moreover, outside of China, it is not disputed that the Chinese Government provides significant subsidies to a number of industries – including green energy, semiconductors, and automobiles. An investigation will demonstrate as much, relying on Chinese government documents. If action is taken under Section 301, it is likely that the tariffs will be targeted to assist the Administration’s supply-chain and re-shoring goals.

These actions, however, will cause additional disruption on goods from China. China likely will take retaliatory actions in response, including tariff and non-tariff actions on U.S. imports into China. China could also take action on exports leaving China.  It is unclear how China will react, and retaliation may occur in China’s domestic market. The Government could encourage a boycott of certain U.S. companies via Chinese press and netizens. Similarly, the Government of China could take unfounded regulatory action against U.S. and other western countries, as it has done in the past. Even if China does not take retaliatory action, recent regulatory upheaval in China suggests that additional restrictions could come, if China’s leaders think an industry is becoming too powerful or influential.

Business Leaders Should Brace For Higher Costs And Consider Taking Action

Business leaders should brace for higher costs in the near-term, even if goods begin to flow more easily. Inflation will continue to push input prices up, and compliance will add administrative costs and burdens. Nevertheless, supply chain due diligence – although costly – should be conducted to ensure there is no forced labor at any point in a company’s supply chain, because the cost of non-compliance will be far greater, particularly for companies operating in or purchasing goods from China and importing merchandise to the United States. Even if a company is not operating in or purchasing goods from China, due diligence should be conducted to ensure no part or input includes forced labor.

Given the increase in shipping costs and other frictions, business leaders may consider relocating their supply chains. The Biden Administration and Congress are incentivizing business leaders to do just that with two pieces of legislation currently moving through Congress: the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength (America COMPETES) Act in the House of Representatives, and the United States Innovation and Competition Act (USICA), in the Senate. The central component of these two bills is the funding for the Creating Helpful Incentives to Produce Semiconductors Act (CHIPS), which provides incentives for companies to build semiconductor production facilities in the United States. The bills also appropriate significant funds aimed at countering China’s influence domestically and abroad. These bills have bipartisan support and portions have been labeled as “must-pass” legislation. Included in these bills are proposals to expand the role for the federal government in “strategic sectors” – including semiconductors, drones, wireless broadband, and artificial intelligence – with increased funding, supervision, and regulation of various industries. Other components include tackling supply chain vulnerabilities to make more goods in America, turbocharging America’s scientific research and technological leadership, strengthening America’s economic and national security at home and abroad, and bolstering President Biden’s Buy American agenda. The Biden Administration also will use executive power to provide incentives to business seeking to relocate to the United States, and federal agencies have been directed to assist business in any way they can.

_______________________________________________________________

Lee Smith is the leader of law firm Baker Donelson’s International Trade and National Security practice. He advises clients on matters involving export controls, customs compliance, trade remedy investigations, trade policy, market access and free trade agreement interpretation. Smith can be reached at (202)326-5026 or leesmith@bakerdonelson.com.

jersey ports

BEST CARGO YEAR EVER AT SOUTH JERSEY PORTS

The South Jersey Port Corporation closed out 2021 with an all-time record-breaking cargo volume of 4,636,097 tons, a 54% increase over 2020, breaking the previous record by 6%.
“That’s the best in the history of the South Jersey Ports and we’re expecting 2022 to be a very strong year that may top 2021,” reported Andy Saporito, Executive Director and CEO of South Jersey Port Corporation at the monthly meeting of the Board of Directors. “This milestone is a testament to the skilled workers and partners who keep goods moving through the supply chain while our team seeks solutions to improve efficiency, attract business and build for the future. The ongoing collaboration with SJPC’s labor force and industry partners lifted the port to this extraordinary record during the challenging time of the Covid-19 pandemic,” said Saporito.
The dramatic increases in tonnage came from nearly all the SJPC’s prime cargo sectors: steel, plywood, recycled metals, cocoa beans, cement, and gypsum. The lone laggard, sand exports, is expected to increase as the national infrastructure plan is implemented. Rebounding steel imports led the way with 2,399,076 tons, a 141% increase over 2020. The majority of this increase occurred at the Paulsboro Marine Terminal which moved 1,760,018 tons of steel slabs. Plywood import tonnage increased by 98% totaling 220,812 tons demonstrating the Camden terminals as a premiere plywood portal on the East Coast. Cocoa beans totaled 76,108 tons, a 36% increase verses 2020 totals. Exports of recycled metals increased by 10% and cement increased by 8%.
The number of ship days was 960 days compared to 549 ship days in 2020, a 75% increase. “Ship days is the number of days a ship is loading or unloading at its terminal” explained Kevin Duffy, Assistant Executive Director / Chief Operating Officer. “We’ve worked hard to ensure we continue to operate safely and efficiently to move the increased cargo and have space to meet our customers’ needs”.
Brendan Dugan, Assistant Executive Director / Director of Business Development, expects the cargo activity at South Jersey Ports to remain strong for the foreseeable future due to the national infrastructure plan and New Jersey’s leadership role in the $109 billion offshore wind industry. EEW Group, which is building a $300 million manufacturing plant at the Paulsboro Marine Terminal to provide the massive steel monopiles for the offshore wind farms along the entire eastern seaboard, will ultimately require 150,000 tons of imported steel annually to meet their customers’ demand.  To build on this momentum, SJPC is conducting a study of the Port of Salem, which is a smaller port just down river from Paulsboro that could become an important supply port for the local offshore wind support services industry.
“The challenge is to build the infrastructure to grow the port while operating more efficiently to meet current demands,” said Dugan.  South Jersey Ports received a $6 million grant to upgrade the rail infrastructure at one of their Camden terminals and a $9 million grant for wharf infrastructure improvements at the Salem Terminal. “We identified an old building that we might refurbish to put another 40,000 square feet of storage space online and meet long-term customer demands.”
“We continue to focus on upgrading technology and automation to optimize the fluid movement of cargo through our terminals and to ensure our customers’ storage and inventory needs are met”, added COO Kevin Duffy.
The South Jersey Port Corporation was created in 1968 to operate marine shipping terminals in the South Jersey Port District, consisting of seven counties: Burlington, Camden, Gloucester, Salem, Cumberland, Mercer, and Cape May. The South Jersey Ports is a national leader in bulk and breakbulk cargo, shipping and receiving to and from Africa, Asia, Latin America and Europe. Their four international seaport facilities in South Jersey handle more than four million tons of bulk, breakbulk and containerized cargoes annually.