Freight Market Update: March 27, 2019
Ocean and air freight rates and trends; trucking and customs news for the week of March 27, 2019.
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Ocean Freight Market Updates
Maersk Joins Low-Carbon Alliance
A.P. Moller-Maersk joined the Global Industry Alliance to Support Low Carbon Shipping, further expanding the carrier’s sustainability initiatives. Maersk had already pledged to reach net zero carbon emissions by 2050. Their commitment to a lower carbon footprint is a reflection of the industry's overall move to sustainable shipping.
UK Main Ports Remain Congested
Quay side operations have improved, but a shortage of haulage capacity restricts movement. Haulage capacity in Germany remains a challenge, reducing intake of barges and increasing moves via rail and truck. There are no solid plans for Brexit yet from carriers.
Impact of New IMO ECA Regulations
The International Maritime Organization (IMO) has mandated under new Emission Control Area regulations that by 2020, all merchant vessels must reduce their sulfur emissions from 3.5% to 0.5%.
Whether they install scrubbers, build new vessels, or use higher-quality fuel, carriers will need to make significant changes to comply with the new regulations, and those changes will come at a cost to shippers. Freight rates may climb between now and 2020 as a result.
For an in-depth look at the regulation and how to prepare, read our blog post: IMO 2020: What Shippers Need to Know Now
Air Freight Market Updates
Trucking Market Updates
Driver Shortage Spreading Across Europe
Truck driver shortages are becoming a concern across Europe, not just the UK, reports the International Road Haulage Union (IRU). There’s an average driver shortage of 21% across Europe, which if left unresolved, “will have serious implications for the European economy.”
Midwest Flooding Continues
Midwest supply chains were severely impacted last week when melting snow and heavy rain caused floods in South Dakota, Iowa, Nebraska and Missouri. Both BNSF and Union Pacific railways are still experiencing service interruptions, and damage to infrastructure like roads and bridges will further exacerbate some delays.
Customs and Trade Updates
**Apple iPad Cases Ruled to Be Plastic Articles, not Accessories **
Customs and Border Protection (CBP) ruled in HQ H21396, published on March 19th, that a plastic Apple iPad 2 “smart cover” is not considered an accessory for an automatic data processing machine under HS heading 8473. Apple argued that because the case is specifically fitted, provides protection, and functions as a stand, that it should be considered an accessory under heading 8473. In an initial ruling Apple had disagreed with findings from the Port of Chicago to classify the item under heading 3926, and pushed for another ruling, which upheld the decision.
**U.S. and Brazil Announce Future Trade Commitments **
The presidents of the U.S. and Brazil met on March 19th and announced that they will work together on a trade program between the two countries. Per their press release, lowering tariffs on goods from both countries will help reduce costs for both American and Brazilian companies.
For a roundup of tariff-related news, read our Tariff Insider_. _