Struggling US importers granted 90-day duty deferment – FreightWaves

Under authority of the White House, Customs and Border Protection (CBP) will allow U.S. importers of certain goods to defer their payments of duties, taxes and fees for the next 90 days, starting April 20.

The temporary duty deferment was included in an executive order signed by President Trump on Friday, April 17, to help American businesses cope with the economic fallout from the COVID-19 pandemic.

“This payment flexibility will be available only for importers with a significant financial hardship and will apply to payments for goods imported in March and April,” CBP said in a press release on Sunday, April 19.

However, the deferment will not apply to imports currently subject to U.S. anti-dumping and countervailing duties or tariffs resulting from the Section 201, 232 and 301 trade remedies. Those duties must still be paid on time by importers, the agency said.

The nation’s customs brokers are expected to work with their importer clients in the coming days to determine which imports qualify for duty deferment.

“For those that are then able to benefit from the 90-day suspension, we will have to dot our ‘i’s’ and cross our ‘t’s’ to ensure that we schedule payments accordingly within the allotted time frames,” Grabriel Rodriguez, president of Doral, Florida-based A Customs Brokerage and an officer with the Florida Customs Brokers and Forwarders Association, told American Shipper.

“This moratorium will be a little bit of a burden administratively due to the conditions under which it is being applied and their short-term timeframe, but we know it is going to be a great financial benefit to our importers.”

“This is a big deal for everyone,” said Amy Magnus, president of the Washington, D.C.-based National Customs Brokers and Forwarders Association of America (NCBFAA). “As a broker, we will have to figure out how to push out the duty payments 90 days for those entries that can be delayed.”

Magnus, who also serves as director of customs affairs and compliance for Saint Albans, Vermont-based A.N. Deringer, said the deferment does not absolve qualifying importers from ultimately paying those duties.

CBP said it is still processing duties, taxes and fees on imports during the national health crisis, adding that it will not return deposits of estimated duties, taxes and fees that have already been paid.

The agency enforces about 500 U.S. trade laws and regulations on behalf of 49 government agencies and remains the second-largest source of revenue for the U.S. government behind income taxes.

CBP collected a total of $80.7 billion in duties, taxes and fees on imports during fiscal year 2019, which ended September 30.

Cargocast enables real-time, hands-free airfreight tracking in terminals – FreightWaves

Ground handlers sometimes misplace airfreight as it rapidly moves between airplanes and trucks that drop off and pick up. Individual shipments are often small and piled on pallets in nondescript cardboard boxes.

The lack of visibility into air cargo inventory, and where it can be found in a facility, causes costly delays and frustration for both airlines and freight forwarders. By some estimates, manual verification of this cargo adds 2 to 3 cents per kilogram in handling costs.

Technological solutions often promise more than they can deliver, are too expensive or are difficult to fully implement because of the rough-and-tumble logistics environment.

Atlanta-based Cargocast believes it has developed a product that overcomes these obstacles to airfreight visibility through radio frequency identification (RFID) technology. “We’re using the hands-free visibility data to automate as much of the process as possible,” said CEO Dan Diephouse.

Diephouse, who previously ran product strategy at software firm MuleSoft, launched the company two years ago with Mike Morey, former director of cargo for Air Canada.

The company, which received an investment from Tiger Global Management, incubated its cargo visibility technology at an IT laboratory in Atlanta, taking into consideration other technologies that have been applied to airfreight in recent years with varying degrees of success.

Cargocast’s research found that bar codes are labor-intensive due to their manual scanning requirement. Newer tracking technologies, such as Bluetooth low-energy (BLE) are still too expensive when it comes to tagging individual pieces of cargo, while robotics and vision cannot handle the ad-hoc nature of accepting and loading airfreight.  

RFID technology has matured in terms of its cost effectiveness and efficiency over the past decade, Diephouse said. In 2010, RFID tags cost 30 cents apiece and had a 90% accuracy rate. Today, the tags cost about 10 cents each and have 99%-plus accuracy.

A warehouse view of how Cargocast’s technology works. [Courtesy: Cargocast]

“We’ve developed proprietary processes and technology that leverage the latest advances in RFID to achieve levels of accuracy that were never before possible,” Diephouse said.

The shipper or forwarder applies the RFID tags to cargo on the front end. When the cargo arrives at the ground handler’s facility, detectors positioned at the dock doors read the tags. An overhead digital screen shows warehouse workers where the cargo is within the facility.

Morey said real-time cargo monitoring is essential inside an airfreight-handling facility, where cargo retrieval and delivery to flights are often done within several hours. Ground handlers cannot afford to fumble around for cargo. “These facilities are for throughput, not storage,” he said.

The system provides accurate piece counts, which is essential for compliance with customs manifests, Morey added.

Diephouse said Cargocast’s first customers include a European ground handler and a “top-five” forwarder, which he declined to name since they are in “phase one” of integrating the technology into their networks.

The benefit of Cargocast’s RFID software is that it can be integrated with most existing warehouse IT. “It’s completely packaged for the supply chain,” Diephouse said.

He estimates that a medium-size ground handler could save as much as $1 million a year in labor costs by managing its freight flows with Cargocast.

Besides ground handlers and airfreight forwarders, Cargocast executives say their hands-free visibility technology is suitable for trucking companies with cross-dock operations and other third-party logistics services providers.

Diephouse admits that Cargocast’s launch in late January was ill-timed with the supply chain upheaval caused by the COVID-19 pandemic. However, he believes that the company’s technology will become even more important to the airfreight sector.

“When things come back, quality control and enforcement will be more stringent in air cargo than in the past,” Morey said.

Air forwarders want financial relief in next federal aid package – FreightWaves

After being left out of a recent multibillion-dollar federal aid package for the domestic airlines, airfreight forwarders are now asking the U.S. government for aid to be set aside for their industry in the next economic stimulus legislation.

Specifically, the Airforwarders Association is requesting $1 billion in cash grants be available for the country’s estimated 3,500 air forwarders and their 6,500 trucking partners to help them stay in business through the economic downturn caused by the COVID-19 pandemic.

In addition, the association seeks $1 billion in zero-interest loans available for small and mid-sized air forwarders and related trucking businesses.

“Since forwarders are equally dependent on airline services and provide vital logistics services both ongoing and during the future recovery, we have approached Congress with a proposal designed to keep our industry viable,” Brandon Fried, executive director of the Airforwarders Association, told American Shipper.

The current wording in the airline carveout of the $2.2 trillion stimulus, which was signed by President Trump earlier this month, includes provisions for airline “contractors,” such as ground handlers and caterers, but not for forwarders, since they are viewed as “customers.”

This designation frustrates the forwarder industry, which views itself an integral part of the air cargo transportation process. Without the forwarders operating as the logistics linchpin between shippers and airlines, industry experts say, carriers would not have cargo to load on their airplanes.

“Pallet loads of goods ranging from manufacturing components to finished goods do not move themselves,” Fried said. “It’s a complicated process that requires expertise both in the physical movement but also dealing with myriad government regulations.”

Beating back layoffs

The Airforwarders Association recently polled its members earlier this month and 65% of the responding firms said layoffs are either imminent or underway. The survey also found that the respondents’ revenues are already down 50% or more.

Michelle Halkerson, president and CEO of Hassett Express [Photo Credit: Jim Allen/FreightWaves]

“The sudden reduction in the number of flights due to the pandemic, along with the severe downturn in the economy, have had a negative impact on many air freight forwarders,” said Michelle Halkerston, president and CEO of Chicago-based Hassett Express, who also serves as the Airforwarder Association’s chairman. “It’s a good business decision to help keep these companies healthy, so they can support the shipping needs of many industries as businesses and people get back to work.”

“Many air freight forwarders are financially hurting as their sales have fallen off a cliff because clients have pulled back,” Richard Fisher, executive vice president of BTX Global Logistics in Boston, told American Shipper. “That has happened because their clients have either cancelled or postponed orders.

“We keep asking our clients, ‘when do you see a positive change and ramp-up of orders?’” he added. “The simple answer is no one knows. We need help.”

Source: SONAR Freight Market Dashboard

Fisher said when his firm recently requested air transport service for personal protective equipment (PPE) from China, the all-cargo airlines that are still operating quote astronomical rates.

“To make matters worse, many of the cargo carriers are stipulating payment before the shipment is boarded on their aircraft,” he said. “The impact on cash flow is disastrous.”

The Airforwarders Association appreciated the recent economic stimulus legislation’s $350 billion Small-Business Paycheck Protection Program. According to news reports, the funding for this program is now tapped, but the association hopes the Congress will extend the program in the next stimulus bill. 

Even with the proposed re-opening of certain economic regions of the country in mid-May, most forwarders say the federal aid for the industry is still important since the air cargo market will likely be clawing its way back throughout the rest of the year.

“A common experience among most freight forwarders is that we are working even harder to get less volume moved right now,” Halkerston said. “I don’t see that work stopping in May.”

Ocean freight consolidators turn on LCL relief valve – FreightWaves

Ocean freight consolidators are riding a wave of less-than-containerloads (LCL) in recent months as the coronavirus pandemic leaves more freight forwarders beaching full containers.

Also known as neutral non-vessel-operating common carriers (NVOCCs), these logistics services providers resell container space to forwarding companies with cargo volumes from shippers which are too small to fill an entire 20-foot or 40-foot container on their own. While a consolidated container may include a multitude of forwarder cargoes, it is generally grouped according to destination.

LCL service is also attractive to forwarders who want to avoid subjecting their shippers to more costly airfreight transport for cargo that is not necessarily urgent.

Michael Troy II, chief development officer, Troy Container Line [Courtesy Photo]

“We have definitely seen a rise in LCL requests,” said Michael Troy II, chief development officer of Red Bank, New Jersey-based Troy Container Line, in an interview with American Shipper. “Many shippers that normally move cargo through FCL and air services are now looking to alternative solutions to meet deadlines and move cargo in these times.”

Klaus Jepsen, group CEO of Hoboken, New Jersey-based Shipco Transport, told American Shipper that his NVOCC is receiving increased interest in LCL service from forwarders.

“We are basing it on the fact that there is pressure on air cargo capacity due to the cancellation of pretty much all commercial passenger flights offering cargo capacity and since what cargo freighter capacity is available has become very expensive,” Jepsen said.

“We also sense that our customers — the freight forwarders and their customers, the BCOs [beneficial cargo owners] — are placing smaller orders to ship them at higher frequency,” albeit with an ocean container service, he said.

Troy said his NVOCC has witnessed an increase in requests for volume shipments, which would normally ship in a 20-foot or 40-foot container and are now being priced through an LCL alternative if the cargo needs to move the same week.

“We are working with our clients and vendors to be able to accommodate these shipments and provide sailing schedule opportunities that our freight forwarding clients are not able to access otherwise,” Troy said.

Another option

ECU Worldwide, one of the largest neutral NVOCCs, has experienced COVID-19’s ripple effect on ocean cargo volume shift since the pandemic’s emergence in China in December.

Tim Tudor, CEO of ECU Worldwide [Courtesy Photo]

“When China first extended their New Year celebration, volumes were already being affected as cargo departures from China were the first to drop off,” said Tim Tudor, CEO of ECU Worldwide.

“Throughout February, other countries actually saw volumes increase, somewhat offsetting the shortfall from China. So, we have seen this ebb and flow of cargo drop-offs and increases as the virus spread throughout the world.”

In recent weeks, ocean container carriers have announced a couple hundred canceled sailings over the next several months due to the diminished international freight traffic caused by the pandemic. Canceled sailings are used by these carriers to avoid a free fall in freight rates and reduce undue operations costs.

At the same time, the ocean carriers have announced incremental rate increases of $50 to $80 per TEU about every two weeks since mid-March, which industry experts say are sticking.

“I can see rates going up for 20-foot containers and driving more traffic to LCL,” said Joseph Saggese, executive managing director of the North Atlantic Alliance Association (NAAA), a forwarder-based shippers association.

The increased rates for 20-foot containers reduces their profitability for forwarders and pushes shipments of that size into 40-foot boxes in the form of LCL, Saggese said.

NVOCCs are immune neither to the impact of canceled sailings nor to rate increases, but are highly adept at finding reasonably priced space across liner services for their consolidated boxes.

“Our team works daily to find a recovery option in the weeks where our traditional schedule is not available from the carriers,” Troy said. “We are able to leverage our relationships across the industry, so we have contingency plans in place if the first option is not available.”

Troy Container Lines, for example, ordinarily books its LCL containers with the same carriers on a weekly basis. “We usually book our LCL freight up to six weeks ahead of time to give our carrier partners a clear indication of what volume we are expecting during certain times,” Troy said.

New LCL services

Both Troy and Shipco have announced new direct, weekly LCL services in recent weeks from the U.S. to various overseas destinations.

“We have successfully launched new services to Switzerland and Qatar since mid-March, and we are focused on continuing to grow to meet the demands of our client base,” Troy said.

Klaus Jepsen, group CEO of Shipco Transport, speaks to CFS employee. [Courtesy Photo]

Jepsen said Shipco has worked with its WorldWide Alliance partners to offer more direct services to destinations that previously passed through transshipment hubs. The NVOCC has also reduced cutoff times at origin and improved availability time at destinations, as well as promoting port pairs where Shipco offers two, three and four weekly departures as opposed to one.

“We are responding to the need for a faster service for freight that no longer can pay for airfreight by introducing express LCL services to and from the U.S.,” Jepsen said.

In late March, ECU Worldwide, one of the world’s largest neutral NVOCCs, started an LCL express service, XLERATE, in partnership with ocean carrier Matson Navigation from Shanghai to nine container freight stations (CFS) throughout the U.S. via the Port of Los Angeles.

“Since our XLERATE product is a CFS-to-CFS service, this allows our freight forwarding customers to avoid the requirement of clearing cargo in Los Angeles and arranging an expensive LTL [less-than-truckload] delivery from Los Angeles to the door of their customers located in the central and eastern part of the U.S.,” said Spencer Strader, ECU Worldwide’s director of U.S. imports.

“Given COVID-19’s impact on many importers’ warehouse receiving operations, having the final mile in local hands builds flexibility in cases where the normal delivery process has changed due to reduced hours at receiving locations,” he said.

Riding out the pandemic

“Time will tell if volumes will rebound when business starts getting back to normal,” said Vince Argenzio, ECU Worldwide’s U.S. CEO. “The expectation is that it will be a slow return and losses experienced in the early part of the year won’t be made up.”

He added, “There are definitely companies feeling the pain. Those that were quick to act and take measures to reduce their exposure will make it through these difficult times.”

Jepsen said in times of global economic downturn it is not uncommon for smaller ocean freight consolidators to discontinue services. Some large forwarders with their own NVOCC services may be compelled to co-load with others.

“It is hard to predict how or if the market will rebound,” he said. “Everything we do is tied to the economy, and if global trade drops by 5, 10 or 15%, then no doubt this will be felt by the NVOCCs as well.”

“I think being a large, global company will insulate us more than being isolated in a single country or region,” ECU Worldwide’s Tudor said.

ALAN puts COVID-19 supply chain impacts on the map – FreightWaves

The American Logistics Aid Network (ALAN) has released a free-to-use, online tool that shows supply chain managers and transportation providers a country-wide map of where COVID-19 is impacting roads, airports and seaports.

“During disasters like this, few things are more important than accurate visibility to the situation on the ground,” said ALAN Executive Director Kathy Fulton in a statement. “Now, rather than numerous entities across the country working overtime to collect and analyze the same critical pieces of information, this dashboard will serve as a single, unified source.”

Started in 2005 after Hurricane Katrina, ALAN is an industry-led voluntary organization that provides free logistics assistance to disaster relief organizations. The Lakeland, Florida-based network has provided humanitarian supply chain services in response to numerous natural disasters, including hurricanes, wildfires, floods and tornadoes over the years.

The newly launched ALAN Supply Chain Intelligence Center incorporates the online platform developed by Austin, Texas-based Riskpulse, a supply chain risk analytics firm. Riskpulse is used by numerous food shippers, consumer packaged goods manufacturers, automakers and retailers for their operations planning.

Fulton said ALAN has established a team of industry volunteers to add the latest COVID-19-related state and local transportation closure and waiver information daily to the Supply Chain Intelligence Center.

ALAN expects the tool to remain important to aid logisticians after the COVID-19 pandemic subsides. “It will pave the way for better and faster response during all future crises – expediting the delivery of medical supplies, food, and hydration,” Fulton said.

TT Club loads evidence in cargo security push – FreightWaves

The TT Club estimates that the international maritime industry incurs losses of about $6 billion each year because of incorrectly packed or documented cargo.

“That includes damage to the cargo and delays, environmental cleanup, injuries and ship damage. The point is that $6 billion is totally unnecessary. If people followed things correctly, then that $6 billion would be saved to the entire industry,” said Peregrine Storrs-Fox, the TT Club’s risk management director.

The TT Club, with a global network that includes offices in London, Hong Kong, Sydney and New Jersey, provides insurance and related risk-management services to the international transportation and logistics industry. It has been working with the Global Shippers Forum, International Cargo Handling Coordination Association (ICHCA), World Shipping Council and Container Owners Association to push for thorough adoption of the Code of Practice for Packing of Cargo Transport Units (CTU Code), issued in 2014.

The CTU Code, which applies to packing and transport operations throughout the supply chain, was jointly developed by the International Maritime Organization (IMO), International Labor Organization (ILO) and United Nations Economic Commission for Europe (UNECE).

Peregrine Storrs-Fox is the TT Club’s risk management director. (Photo: TT Club)

“From the TT Club’s perspective, one of the frustrations despite putting out advice around lots of different cargo issues over decades now, we still find that somewhere around two-thirds of cargo damage-related claims are coming because of some sort of poor practice in terms of packing — load distribution or securing of the cargo — but also documentary things around classification, declaration of cargo, how that’s documented, how the information is passed correctly through the system between different stakeholders by way of data transfer,” Storrs-Fox said.

In the five-plus years since the CTU Code was adopted, “we haven’t actually seen a significant improvement in the incident statistics. Certainly wherever we go, we see that a lot of people are not aware of the CTU Code at all,” said London-based Storrs-Fox.

Raising awareness

Storrs-Fox said the TT Club, with the Global Shippers Forum, ICHCA, World Shipping Council and Container Owners Association, have built a cargo integrity campaign that begins with promoting awareness of the CTU Code itself.

The TT Club defines cargo integrity as the “adoption of best practices in all aspects of cargo care through the entire intermodal supply chain.”

On its website, the TT Club said cargo integrity includes:

Selection of a suitable unit for the intended commodity and journey.

  • Ensuring that the unit positioned for packing is sound and free from previous cargo residues.
  • Prevention of contamination by plants, plant products, insects or other animals.
  • Proper packing of cargo within a unit, including load distribution, and effective blocking, bracing and securing.
  • Correct classification, packaging, marking/placarding, documentation and declaration of packed goods, particularly those that are regulated (i.e., dangerous or waste).
  • Complete and transparent transmittal of all data regarding contents, enabling appropriate safe handling through the intermodal supply chain.
  • Effective methods of stowing and securing of units for transport in land, sea or air modes.

The TT Club said while the CTU Code provides “the framework for achieving cargo integrity,” further guidance is needed. 

“TT Club statistics indicate that as much as 66% of incidents related to cargo damage in the intermodal supply chain can be attributed in part to poor practice in the overall packing process, including not just load distribution and cargo securing but also the workflow from classification and documentation through to declaration and effective data transfer,” it said on its website.

Germany’s Federal Bureau of Maritime Casualty Investigation (BSU) said in February that misdeclared coconut charcoal was the most likely source of the blaze on the Yantian Express, which caught fire in the Atlantic Ocean on Jan. 3, 2019.

International Union of Marine Insurance (IUMI) Secretary-General Lars Lange told American Shipper last month that vessel fire safety “needs regulation and it needs a level playing field. Safety shouldn’t be left to individual business entities. Safety should be dealt with at a regulatory level, and that would mean in this case the IMO.”

The IUMI issued a report in October titled “Containership fires: It is time to take action.” It said that 2019 had an alarming number of container ship fires, including the Yantian Express and APL Vancouver, which suffered from a fire while en route from Shekou, China, to Singapore.

The IMO’s Maritime Safety Committee was to meet in London May 13-22. That meeting has been postponed because of the coronavirus. Storrs-Fox hopes the Subcommittee on Carriage of Cargoes and Containers (CCC) will still meet Sept. 14-18 and take up issues relating to the CTU Code.

Misdeclaration of cargo

The TT Club also wants to bring attention to cargo inspection efforts and has partnered in initiating work to update the IMO’s Circular 1442, with ultimate aims including “to bring in standardization so there can be consistency of inspections and valid sampling globally.”

Circular 1442 currently infers a bias toward declared shipments subject to the International Maritime Dangerous Goods Code (IMDG), and the proposals to the CCC subcommittee sought to ensure broader application as well as references to the CTU Code that had been approved subsequently, according to Storrs-Fox.

Storrs-Fox noted that “a number of shipping lines have cargo screening activities looking for non- or misdeclared cargo. Again, that’s an area that this group is monitoring and seeing how we can support those initiatives.”

Intentional misdeclaration of cargo can be difficult to prove, he said. “Evidentially it’s not always easy to pinpoint who is responsible, and even if you can identify the culpable party, they aren’t necessarily going to be in a jurisdiction where you can take enforcement.”

Storrs-Fox referred to a civil case following a 2012 explosion and fire aboard the MSC Flaminia that killed three crew members and destroyed thousands of containers.

“Six years later the culpable parties were legally identified and they happened to be, in accordance with that judgment, U.S. domiciled or partially domiciled in the U.S., which eases enforcement,” he said. 

A U.S. federal judge in September 2018 found the manufacturer of a chemical being transported aboard the Flaminia as well as the non-vessel owning common carrier liable for the explosion and fire.

Prosecutory action varies from country to country, Storrs-Fox said. “Trying to get standardized regulatory enforcement is not very easy.”

Storrs-Fox said it is “obviously very difficult” to determine whether cargo is intentionally misdeclared, and referred to statistics Hapag-Lloyd put out about five years ago related to its cargo patrol activities.

“It would appear that somewhere around 4% of the cargo flagged as problematic was more likely than not to have been deliberately misdeclared. It’s difficult to extrapolate quite how many that means in overall terms. I did a back-of-the-packet calculation a couple of years ago. That might equate to something around 150,000 containers per year being more likely than not misdeclared and particularly dangerous. That’s out of about 180 million laden containers moved per year,” he said.

Storrs-Fox said he has heard “anecdotal stories of plenty of instances where shippers provided false documentation, false images, those sorts of things. It’s definitely out there, it’s definitely happening, although it isn’t always going to be deliberate. There will be some who fail to declare accurately out of ignorance as well.” 

Dangerous goods stowage

Shipping lines have taken educational steps. The CINS Organization made up of 16 operators, for example, issued safety considerations for dangerous goods stowage in September 2018. That guidance came in the wake of a March 2018 fire aboard the Maersk Honam that killed five crew members.

The State of Maritime Safety 2020, published last week by Safety at Sea magazine, said data shows “a small but steady decline in ship incidents between 2015-2019 for casualties and total losses, while the world fleet continues to grow. The vessel numbers of the world fleet grew by 8.5% between 2015 and 2019, but casualty figures remained largely constant, with the number of vessels that were involved in casualties vacillating between 1.19-1.41% of the world fleet.”

Storrs-Fox said it’s difficult to determine if the number of cargo-related ship fire incidents is decreasing.

“It would seem 2019 perhaps was a particularly poor experience and 2020 may be a better experience. I’m always wary of this because it depends on what becomes publicly known. Obviously when you’ve got a Yantian Express or something like that, you’ve got a major incident that everyone gets to know about,” he said.

Change is needed

“Another incident in August 2019, involving the APL Le Havre, was actually relatively minor. Reportedly it involved charcoal on deck that went on fire. The crew was able to respond and put the fire out. It impacted half a dozen containers or something like that. To my mind, that is not a major incident, such as the Yantian Express. But it does show that there are a number of lesser incidents that are happening,” Storrs-Fox said.

“The frequency of these lesser ones I hear about, either through interactions with shipping lines or through other networks, is much more concerning,” he said. “It’s what might be called the near misses, the APL Le Havre-type incident where the crew is able to respond and resolve things successfully. I’m concerned much more about each of those because they have the capability of becoming another major incident.”

Certain commodities cause greater concern, Storrs-Fox said.

“Take charcoal, for example, which is regularly coming up as a problem cargo. Now charcoal is produced in some European countries — Germany or Spain or the U.K., for example. It’s produced in South Africa. It’s also produced in Indonesia, Vietnam and China. Most of the incidents we’ve seen have been much more of Asian origin than they have been of origin elsewhere. But it isn’t always easy to identify that successfully because of the way the trade actually works. There are times when goods are moved from one place to another place for reshipment so that they can be bagged as being produced in that intermediate place, so the whole trade is complex,” he said.

“There is a perception that China is the origin of a lot of problems and I think we need to put that in context. China is or has been a kind of production house for the world. They produce an awful lot. Therefore the fact that lots of shipments seem to be more involved in shipments that cause problems may actually statistically not be the issue. China may even be better than some of the other countries,” Storrs-Fox said.

He pointed to a survey last year of 500 containers by the National Cargo Bureau. “There were actually quite a lot of problems from non-Chinese-initiated shipments.” 

If stay-at-home restrictions ease with the passing of the coronavirus pandemic and the CCC and IMO Maritime Safety Committee are able to meet this year, changes to Circular 1442 could be approved by the end of 2020.

“Ordinarily it would be concluded in September and signed off in December this year. You’re talking within 18 months having a substantial change,” Storrs-Fox said. “The pace of change through the global industry and international regulatory environment can be frustrating. For example, IMO, as a UN agency, has 160-odd countries and 40-odd NGOs meeting and proposing and discussing. To gain consensus and acceptance and then adoption is always going to be something quite tricky.”

German blockchain-anchored data security company Ubirch joins BiTA – FreightWaves

Cologne-based blockchain company Ubirch announced it has joined the Blockchain in Transport Alliance (BiTA), an organization dedicated to determining best practices and standards for blockchain in the transportation industry. BiTA’s members include Descartes, Daimler, FedEx and Uber Freight among dozens of other global brands. Ubirch will bring its deep expertise in cyber security technologies to the Alliance and help develop blockchain-based solutions for the Industry.

Ubirch is already working hand in hand with strong industry partners. Cooperation with Lufthansa Industry Solutions and mobile security specialist Giesecke & Devrient Mobile Security shows how logistics and supply chain can work together in the digital age. Blockchain in connection with the Internet of Things (IoT) enables tracking of condition, position and other data-points, directly from containers, ships, forklifts, AGVs or trucks, allowing for a data-driven aupply chain and parametric transport insurance that reacts immediately when something goes wrong. For example, using an air cargo container, Ubirch, together with Lufthansa Industry Solutions, demonstrate how this works with 5G, damage-detection on the Edge and secure data transmission.  

Stephan Noller, CEO at Ubirch, said, “Ubirch’s partnership with BiTA, as well as working alongside other global industry leaders in transportation, logistics and supply chain, will allow us to engage in the development of security standards for how blockchain technology will be used in such transportation activities as track and trace, provenance, smart contract management and fraud detection. By helping to develop a common framework and standards by working with other industry participants, we will promote broad adoption of this disruptive digital technology for transportation and logistics.”

“Blockchain technology will transform the supply chain by introducing greater transparency, innovation and efficiency,” said Patrick Duffy, BiTA President. “We are fortunate to have member companies like Ubirch, that have experience with blockchain security applications. It will be a key player in helping us develop blockchain standards in transportation.”

The Ubirch solution works in a similar fashion to notarizing a contract. The seal can still be broken and the contract changed but not without leaving traces (evidence of tampering), and if these traces are detected, the original document can be retrieved from the notary’s archive for comparison. Innovative cryptography and blockchain technologies guarantee the trustworthiness of IoT data. While most other IoT security solutions focus on securing the transmission channel and/or the device, Ubirch focuses on securing the IoT data-packets individually. The advantage and uniques selling proposition of this approach are pervasiveness, warranted authenticity and order of sequence as the security is attached to the data-packets with these interlinked in a blockchain. They are always secured – even if they have been transmitted over non-secure channels. Ubirch technology – deployable as software or on SIM-cards – is aimed primarily at customers in the industrial, smart cities, insurance, IoT start-ups, energy supply, homeland security and logistics segments.

About Ubirch

Ubirch is the specialist for blockchain-based security technology in the field of IoT with locations in Cologne, Berlin and Munich, Germany. The team consists of experienced specialists in cryptography, blockchain and data-driven business models. Consisting of an extremely lightweight client for sensor firmware and the matching cloud backend, Ubirch’s “Blockchain for Things” solution enables military-grade data protection to deliver new business models for IoT. For further information visit www.ubirch.com

About the Blockchain in Transport Alliance

Founded in August 2017, BiTA has become the largest commercial blockchain alliance in the world, with nearly 300 members. BiTA members are primarily from the freight, transportation, logistics and affiliated industries. Alliance members share a common mission to develop a standards framework, educate the market on blockchain applications/solutions and distributed ledger technology, and encourage the use of those applications.

Logistics service providers become survivalists – FreightWaves

The COVID-19 pandemic is putting third-party logistics providers in financial peril, but it also offers an opportunity. Now is the time to demonstrate their value to customers who face dire supply chain disruptions, industry officials say.

“Brokers and forwarders are needed now, and will be in the future,” Amy Magnus, president of the Washington-based National Customs Brokers and Forwarders Association (NCBFAA) told American Shipper. “Looking for every opportunity to add value and assist importers and exporters is what we do.”

The most important step, logistics professionals say, is to pick up the telephone and call the shippers.

“Nothing beats a good old-fashioned phone call to not only lend a sympathetic ear but also to identify opportunities to assist in their current supply chain challenges,” Washington-based Airforwarders Association Executive Director Brandon Fried said.

“We should be asking them about how they are faring in these unusual times, how they are coping, and what their plans are for importing and exporting for the next few months,” said Magnus, who also serves as director of customs affairs and compliance for Saint Albans, Vermont-based A.N. Deringer.

“During these unprecedented times, it is imperative that we stay in constant communication with all levels of our clients’ operational personnel,” said Lance Malesh, chief commercial officer for BDP International, based in Philadelphia.

“Our CEO is reaching out to other CEOs on a weekly basis to understand their current business environment and expectations of future business needs,” he added.

New business opportunities

Fried said the questions that forwarders and customs brokers ask their shippers today may lead to new business opportunities, even as they witness certain product import and export reductions, blank sailings by container carriers, and tighter air transport capacity.

“Now is the time, albeit virtually, to get to know customers and their logistical needs,” he said.

Fried noted the current challenges with importing personal protective equipment, as well as other medical supplies, from China to fight the coronavirus. Forwarders have the knowledge to find efficient and cost-effective international transportation service options for stressed shippers. He said with the increase in air transport costs, forwarders can help shippers consider where they might use slower but cheaper container shipping.

“There may be previously undiscovered trucking needs or products essential to the pandemic mitigation that customs brokers and forwarders never knew existed with their customer verticals,” Fried said.

“As with any challenge, there are always opportunities,” Malesh said. “Every client’s needs are different, but we are seeing opportunities, both at a supply chain solution, as well as at a transactional level.”

BDP, for example, has experienced an increase in ad-hoc air and ocean shipments due to the volatility in the global marketplace caused by COVID-19. The 3PL has also increased discussions with shippers to provide deeper end-to-end visibility across their supply chains, he said.

Magnus said customs brokers should use their skills to assist importers with possible tariff exclusions and duty drawback opportunities. (Drawback is a refund of customs duties paid on imported materials that are later exported or used in the manufacture of exports.)

“Many clients are turning to importing or exporting new and different products that they are unfamiliar with — think of a U.S. manufacturer now importing personal protective equipment,” she said. “Perhaps this manufacturer has no experience with FDA (Food and Drug Administration) or other PGA (participating government agency) requirements. They’re going to need professional advice before embarking on an entirely new product line.”

Fried said forwarders might also use this time to provide shippers with training on international freight transportation topics, such as dangerous goods.

Money matters

Albert Saphir, principal of Weston,Florida-based ABS Consulting, said it is important for forwarders and customs brokers to understand the financial condition of their import and export customers.

“The biggest risk for forwarders and customs brokers are accounts receivables if their customers are running into financial challenges, which is likely the case for most,” he said.

“I know from several clients of mine that some of their customers — interestingly enough some are very large corporations — have asked for extended payment terms of up to 120 days already,” he said. “This is a huge risk that very carefully needs to be weighed. If it is for regular forwarding/customs broker fees, that may be manageable to keep a good client. But if this is for freight and duty charges, this can very easily put forwarders and brokers out of business.”

Saphir, who has advised many people over the years with starting freight forwarding and customs brokerage operations, said the 3PL industry will experience some contraction in the coming months as the coronavirus continues to drag down the U.S. economy.

“Starting a new forwarding/broker business right now will be more difficult and likely is best put on hold until we have a better understanding of how this all will evolve,” he said. “Unless, of course, you have a few customers that are committed to supporting your new venture.”

Deutsche Post DHL posts pre-tax profit despite COVID-19 outbreak – FreightWaves

The coronavirus pandemic dented first quarter profit by 200 million euros ($218 million) at German logistics giant Deutsche Post DHL Group (OTCMKTS: DPSGY), but officials say the company’s geographic and product diversity will help it weather the crisis.

Preliminary pre-tax profits of 590 million euros ($645 million) were also affected by restructuring costs for the company’s electric cargo bikes, but adjusted operating profit of about 1 billion euros ($1.09 billion) was 200 million euros ($218 million) above that in the same 2019 period. 

DP DHL said this week it is pulling its full-year guidance because of the economic uncertainty caused by the global pandemic. Business is recovering in China after the lifting of mass quarantines there, but is now slowing considerably in Europe and North America. 

“While the development of the business situation in China has been quite promising in the last weeks, Europe and North America are still in an earlier stage of the pandemic,” DHL said. “It is likely that these regions are going to see a comparable downturn and subsequent upswing like in China, while the peak of the pandemic and therefore the turnaround of the curve are not yet reached.”

The company has an estimated 550,000 employees located around the world. Most of its global operation is currently participating in the international relief effort to deliver healthcare products to medical facilities. Having an in-house airline that can make urgent deliveries for customers, especially in the healthcare and humanitarian fields, is another advantage for the company, it said.

At the unit level, DHL Express lost 90 million euros ($98.5 millon), but without deducting interest payments and taxes it posted a 390 million euro gain ($426 million). 

The Global Forwarding and Freight business experienced a “strong decline” in air and ocean freight volumes, resulting in 30 million euro loss ($32.8 million), but achieved operating income of 70 million euros ($76.5 million).

DHL’s supply chain business also lost 30 million euros ($32.8 million), but before taxes and interest payments was 100 million euros ($109 million) in the black. 

DHL said it will publish more detailed results of its first quarter financial performance on May 12.

Logistics real estate operator Realterm closes fundraise on fifth fund – FreightWaves

Supply chain real estate operator Realterm announced that it has completed its ninth fund raise, this time closing a 100 million euro ($109 million) closed-end logistics fund in Europe. This was the first fund the Annapolis, Maryland-based real estate company has closed in Europe.

Our successful fundraise is a testament to the team that we have built and our investors’ belief in our ability to create value through our differentiated investment approach and market insights,” said Peter Lesburg, Realterm’s Managing Director of Capital Markets.

The Realterm Europe Logistics Fund’s first investment was a 10,000 square meter (108,000 square feet) high flow-through facility in Brussels, Belgium that will be fully leased to Deutsche Post DHL Group (DPW.D.IX). The facility sits on a high-traffic corridor with close proximity to the Brussels Airport and nearby ports.

Realterm’s Brussels high flow-through facility location – Source: Realterm

“The exceptional location, functionality and access to both transportation infrastructure and a large consumer base make this a great first addition to the portfolio. The property is suitable for a wide variety of operations, including air cargo, e-fulfilment, regional distribution and last mile delivery. We are excited to welcome DHL as our first customer in Europe,” said Managing Director and the fund’s manager Balazs Lados.

Realterm manages $5.5 billion in logistics real estate assets through five different private equity funds. The firm’s assets include airport and surface transportation logistics real estate throughout the U.S. and North America. The company also operates a fund that invests in warehouse and logistics real estate throughout India’s industrial markets. In total, Realterm manages more than 300 properties with more than 35 million square feet. 

In March, Realterm acquired a 4.1-acre, 47-door less-than-truckload (LTL) cross-dock facility in Miami positioned just off the I-95 corridor. In February, the firm acquired an 18.1-acre cross-dock and transload facility in Chicago with access to Midway International Airport and the intermodal terminals of BNSF Railway (Berkshire Hathaway, NYSE: BRK.B) and CSX Corp. (NASDAQ: CSX).