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| »Issue 2, Volume 07 www.scarbrough-intl.com » February 2007 | ||||
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In this
issue:
-Cover Story |
Scarbrough International Ltd named 2007
United Shipping “Partner of the Year”
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COVER STORY Short Sea Shipping Program Pursued The overburdened, aging transportation infrastructure in the United States may see some relief in coming years, particularly along coastal areas, thanks to an energy bill signed into law late last year. The multi-faceted Energy Independence and Security Act of 2007 (H.R. 6) will work to alleviate our dependence on oil by, among other things, establishing a short sea shipping program. For those not familiar with short sea shipping, it is simply the commercial movement of cargo via inland and coastal waterways, principally from a major port to a more minor port following international arrival into the U.S. Short sea shipping offers a more environmentally friendly method of transportation by using less fuel per ton of cargo moved than other means of transport. It also utilizes existing waterways and ports, which is far cheaper than adding miles of highway and rail to our infrastructure. Under the bill, the Department of Transportation (DOT) will identify possible short sea shipping opportunities over the next year to allay the current overcrowding on traditional land-based travel lanes (truck and rail). Additionally, the bill permits companies to make use of Capital Construction Funds (CCF) to finance short sea shipping vessels. The CCF allows companies to defer federal income taxes, instead putting that money into an account to be used for the building or acquiring of vessels. The CCF can also be used to reconstruct vessels. Short sea shipping provides an excellent avenue for smaller, older vessels to be reconstructed and remain in service. There are very few deep water coastal ports in the U.S. capable of handling the large, modern vessels. The less prominent coastal ports are often too shallow and small for these leviathans, but are perfectly suited to handling the smaller vessels. Short sea shipping is already quite prominent throughout Europe, where double digit traffic gains have been seen on many routes. Of particular interest to Midwestern states is the potential increase in Canada-U.S. trade being routed over the Great Lakes and through the St. Lawrence Seaway. Traditionally viewed as the industrial heartland of the country, states bordering the Great Lakes could see an increase in water-based trade. When integrated more closely with road and rail transportation along these bodies of water, the area could double its cargo volume while at the same time reducing environmental pollution. The bill did not address two of the major concerns being expressed by those interested in the program: It did not provide loan-guarantees for the building of short sea vessels, and the Harbor Maintenance Tax will still be applied at all domestic ports, in effect taxing international shipments twice; once at the first port of arrival, and again at the secondary port. There is current legislation being presented which would permit waiver of the Harbor Maintenance Tax on these shipments. This may provide the catalyst necessary to move the program into high gear over the next several years, providing an alternative transportation method that is both cost-effective and more environmentally friendly. Fact Sheet: Energy Independence and Security Act of 2007, available online, last accessed 22-Feb-08. Click Here. Bruce Barnard, “EU Wants to End Short-Sea Customs Checks”, The Journal of Commerce Online, 16-Oct-07. Binational Great Lakes St. Lawrence Seaway Study released, available online, last accessed 22-Feb-08. Click Here. Nathan Eilers, Milwaukee Branch Manager
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SCARBROUGH NEWS YOUR CARGO HAS BEEN DELAYED… …due a to port strike in… …due to a customs officials strike in…. Is this statement something you’ve heard in the past few weeks or months from your Scarbrough account representative? If so, you’re not alone. Many countries are experiencing extreme cargo delays due to strikes and “protests” occurring at the ports, with customs officials, airline workers, and within the trucking industry. January 9 – The Greek Port Workers Federation (GPWF) announced that the “go slow strike”, which began this past December, will continue at least until the end of January. As a result of this, many Steamship Lines have refused bookings originating from or destined to Greek ports. Many local Greek port truckers are also refusing to service (collect or deliver) the port areas. On January 24th, Greek port workers decided to continue the “go slow strike” throughout February, but will proceed with the 24-hour strike scheduled for January 30th. January 21 – Indefinite transport strike begins across many parts of India. Transportation workers are protesting the mandatory rule over the installation of speed governors in commercial and public transportation vehicles. This strike ended on January 22nd, but has not been “resolved”. January 23 – Customs officials in Cyprus go on strike. “Frustrated over ongoing problems with the Customs and Excise computerization system, port customs officials called a 24-hour work stoppage” The Cyprus Customs Officers’ Association President has not ruled out the possibility of calling an indefinite strike until issues with the system have been resolved. January 24 – Lebanon Transport Unions declare driver’s strike. The drivers’ strike was over rising living and fuel costs. This strike was announced over mid-afternoon by the union leader. January 24 – Polish customs officers protest against low wages; “lack of promotion opportunities, motivation, and a high psychological burden connected to their work” (www.polskieradio.pl/thenews). Polish laws prohibit officers to strike, however many officials have taken holiday or medical leave during this time. These are just a few examples of the many strikes and protests that have occurred recently. If you have received word from your Scarbrough Account Representative that your cargo is being delayed to its final destination, for any reason, you can be sure Scarbrough is obtaining the latest information regarding the delays and responding accordingly. We will continue to work diligently with the steamship lines, airline representatives, and our foreign partner networks to best manage these types of delays and route your cargo as efficiently and cost effective as possible. Scarbrough wants to be your partner for all of your International and Domestic transportation needs. - Trish Cousins, Kansas City Export Supervisor |
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BUSINESS NEWS
Proposed Change in Valuation for Multi-Sale Goods A recent Customs and Border Protection (CBP) proposal may alter the current valuation used for certain imported goods, and in turn have some importers paying more in duties, fees, and taxes. Under current guidelines, goods which are purchased by an overseas buyer (or buyers) for the express purpose of export resale to the United States are valued, for Customs purposes, at the amount of the initial sale. All that could change if the proposal is adopted. The CBP-proposed alteration states that “the price actually paid or payable for the imported goods when sold for exportation to the United States is the price paid in the last sale occurring prior to the introduction of the goods into the United States, instead of the first (or earlier) sale.” The Transaction Value for the imported goods would thus be the final sale price paid by the U.S. importer, undoubtedly a higher price than the original sale overseas. The proposal is open for public comment through March 24, 2008. - Nathan Eilers, Milwaukee Branch Manager |
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BUSINESS MONITOR How History Repeats Itself I was sitting at my desk using an old Shipping Digest when something caught my eye. “Dollar’s swan dive helps revive Eastbound Trans-Atlantic air cargo.” May 2005. I felt as though you could take this exact article and put it in any newspaper around the world today. In May 2005, our dollar took the same dive as today in January 2008. Eastbound cargo lanes were overbooked for weeks and transit times were at the mercy of the airlines as they are now. Comparing May 2005 to right now is quite an eye opener with currency fluctuation being a main reason air exports have increased in volume. Freight Forwarders saw great opportunities for major growth at the time, but feared the economy would deteriorate if the dollar kept falling compared to the Euro. Besides the decline of the dollar, Jack Boisen (Vice President of Continental Airlines) felt other factors were also involved -the recent expansion of the EU, and U.S. suppliers were increasing exports in the wake of globalization. One agent in the article which we have actually send freight to was Dachser in Germany. They felt they would see good opportunities from the States for more freight importing into Germany and opened two new offices in the U.S. They also talked about the increase in Fuel and Security Surcharges which have been on the rise since the May 2005 article and are still rising today. Customers have noticed this and are feeling the pressure and hope that fuel rates will not continue to increase. Historically when cargo volume was down, airlines would cut cargo rates low enough to fill the planes. Unfortunately that is not the story today or as it was in 2005 when rates remained steady and the airlines did not give out spot rates. This is the same issue we have today with space being tight due to the increase in exports. The only difference now is fuel is more expensive than ever. As we look back in time to 2005, we can see how our economy fluctuated much like it is today. Sometimes it’s not a bad idea to keep in touch with the past as a way of helping us keep faith our economy will bounce back like it did before. Shipping Digest May 2, 2005 - Karen Healy, Chicago Export Department |
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BUSINESS MONITOR U.S. Export Volumes The largest import hub in Europe for ocean containers is The Port of Rotterdam. In 2007, their container imports increased by 12% in comparison to 2006. The increase can be attributed to several sectors including coal, roll-on/roll-off freight, and mineral oil products; which offset a 2% slide in crude oil imports. Also, with the value of the US dollar being significantly decreased in respect to the Euro, the European Union has a bigger buying power and imports from the United States are growing significantly. The Port of Rotterdam Authority on Friday forecast further strong growth in 2008 with overall cargo likely to rise by 4% to 420 million metric tons, while container traffic is set to rise 10% to nearly ten million TEU. Rotterdam is the first European port to handle more than 10 million TEU and surpass 400 million metric tons of cargo, the Authority said. What does this mean for Scarbrough and our customers? We face serious difficulties in equipment availability throughout the United States; especially in Midwest. There are also container space shortages on vessels bound for Europe and several General Rate Increases have been implemented in this particular trade lane. Scarbrough International is working diligently with the carriers we utilize to ensure our long term relationships and previous export cargo volumes will help us secure container space on outbound vessels and negotiate better rates for our customers. As a partner in international logistics, we will make sure to watch the situation on the market and communicate timely and accurately to our customs to prevent any surprises. As always, we will continue to work for all of our customers and make the experience of international logistics as pleasant as possible - Arijana B. Hoormann, St. Louis Branch Manager
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BUSINESS NEWS
What is This Peak Season Surcharge? I am sure everyone has heard this question from our customers. But, how many people actually know what the peak surcharge is; or why it is in place? This surcharge actually relates to the law of supply and demand. For you non-economic experts out there, this is the law that states when supply is high, demand is low. Furthermore, when supply is low, demand is high. Now how does this relate to the peak season surcharge? Consumers tend to spend most of their hard earned money in the last few months of the year leading up to the holiday season (peak season is typically July thru October). As consumers spend more money and the demand for import and export shipments rise, there becomes a shortage in cargo space aboard ships and aircrafts. In turn, steamship lines and airlines have to schedule more sailings and flights to meet the growing needs of cargo space. They have to position their equipment differently, hire more workers, work longer hours, make quicker transit times and the list goes on. The peak season surcharge helps offset the high cost incurred by steamship lines and airlines during this season. In summary, peak season surcharge is unavoidable. It relates directly to the rise in carrier cost during the busiest period of the calendar year. The most important strategy is staying ahead of the peak season curve by proper volume forecasting. Importers and exporters have experienced relative success during this period by coping with and over coming peak season dilemmas. Next time someone asks you what a peak season surcharge is, tell them it is as simple as the law of supply and demand. - Charles Brooks, St. Louis Customer Service Representative |
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NEW REQUIREMENTS: US Customs & Border Protection 10+2 Initiative Currently, there are 10 elements required for shipments to the United States and to a Foreign Trading Zone. In conjunction with these existing security programs, USCustoms is considering the requirement of importers and carriers to electronically submit two additional elements of information on cargo before it is brought into the United States by vessel. Thus, the “10 plus 2 Initiative” is derived. Please visit the USCBP website for more details: http://www.cbp.gov/xp/cgov/ import/carriers/security_filing/. |
QUOTE OF THE MONTH - Thomas A. Edison |
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SCARBROUGH NEWS We are pleased to announce that Scarbrough International Ltd. will be attending the 2008 meetings for the following networks:
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" Big enough to meet your needs, small enough to care." |
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