Freight Capacities Continue to be Challenged Amid COVID-19 Pandemic

freight

Undoubtedly, 2020 has been a year of challenges. Whether by Air, Ocean, or Ground, freight has felt the deep impact of the COVID-19 pandemic.

Air Cargo

As airlines have increased the number of flights, air freight rates have decreased with the corresponding increase in capacity, with air rates currently at approximately double. It is currently forecast that the demand for air cago will increase, along with rates. With the much anitcipated fall launches of new smartphones from Apple and Samsung, air capacity will continue to be challenged. 

At destination, there is significant congestion and wait times at terminals. Airline handling warehouses are struggling to keep up with demand, causing lengthy waits for pick up.

Ocean Cargo

Early in the pandemic, ocean carriers started to use blank sailings to control capacity and increase their pricing. As economies re-opened, supply chain have not been able to recover from this. Large volumes of cargo being held at origin were being pushed out in addition to large quantities of PPE.

In May, ocean rates were $1600 USD to the West Coast, and $3100 to the East Coast. Currently, ocean rates have increased to $4000 USD to the West and $5200 USD to the East respectively. 

With the huge surge of cargo, Canadian railroads have not been able to accommodate the overflow. The Montreal port strike that took place this past August has had a crippling impact on rail in particular, as carriers diverted containers to Halifax, and rail simply could not provide enough cars to move cargo between Prince Rupert and Halifax. It is expected that the backlog of cargo diverted to Halifax could take upwards of a month to clear.

It is also currently a challenge to secure export rail appointments, as many rail locations are no longer able to accept empty containers since they have run out of capacity.

These cargo delays are causing equipment shortages at origin.

The port facilities — Prince Rupert, Vancouver, Montreal, and Halifax — are all full and dealing with congestion. This is causing delays in cargo loading to rail. In Vancouver, it is now taking longer for vessels to berth and discharge containers. For some vessels it is currently taking up to 3-4 days for vessels to berth.

The cumulation of these issues is wreaking havoc on schedule integrity. There are some new schedules from Shanghai to Vancouver that have increased from 15 to 30 days, while vessels are not returning to Asia on time, impacting schedules at origin.

Ground Cargo

Despite the closure of the Canada / U.S. borde, truck transportation has not been largely affected. The current issues that do exist are around cargo imbalances, with more cargo coming out of some areas than trucks moving in. Carriers moving cargo to Canada are full.

These challenges, of course, pose significant obstacles for businesses. We encourage you to reach out to us for guidance around how to navigate these complex freight issues as we continue to move through the COVID-19 pandemic.

We will continue to provide updates as they become available, and are always available to answer any questions or concerns. 

Webinar: Avoid Audits and Delays While Increasing Your e­Commerce Business

Carson International is pleased to partner with Miller Thomson LLP for another instalment in our webinar series addressing Canada/U.S. cross-border trade developments and updates.

Cross­-border e­commerce is plagued by a myriad of legal and financial regulations, with every country has its own regulations concerning imported goods. Customs agencies use the commodity type, quantity, and other factors to determine duties and taxes charges.

Avoid missteps that may result in border delays, financial headaches and fines by joining the conversation.

Panelists:

Dave Pentland, Carson International
Dan Kiselbach, Miller Thomson LLP

Webinar Details:

Avoid Audits and Delays While Increasing Your e­Commerce Business
Wednesday, September 30, 2020
Time: 12:00 p.m. (PST) / 3:00 p.m. (EST)

Please register by September 29 at 4:00 p.m. (PST).

The webinar will be approximately 30 minutes in length.

Canada Abandoning Free Trade Negotiations With China

Chinese and Canadian flags

Canada is abandoning free trade negotiations with China amid a host of disagreements on a range of topics, according to Foreign Minister Francois-Philippe Champagne.

“I do not see the conditions being present now for these discussions to continue at this time. The China of 2020 is not the China of 2016,” Champagne said about trade negotiations as quoted by The Globe and Mail.

The comments mark a major policy shift towards China that brings Canada more in line with the hardline posture adopted by the United States, Australia and parts of the European Union.

What began as an expressed interest in fostering deeper economic ties between the two countries, has now turned soured after Canadian authorities detained Huawei CFO Meng Wanzhou in 2018 at the request of the U.S., which was followed by the arrests of two Canadian nationals on charges of espionage in China.

The tense relationship has been further exacerbated by Canada’s condemnation of the newly enacted Chinese law on national security in Hong Kong and a suspension of some bilateral agreements with the special administrative region.

Beijing has said that it reserves the right to respond to any interference on Canada’s part and the Canadian side will be held accountable for all the consequences.

Despite the tensions, China remains Canada’s second-largest trading partner after the US.

(Source: Economic Times)

Webinar Recording — Non-Resident Importers: Tips and Traps

freight

On August 20, we hosted a webinar in partnership with Miller Thomson LLP for non-resident importers.

In case you weren’t able to join us — or just need a refresher — follow the link below to access the presentation and webinar recording.

Please feel free to reach out to Carson at any time if you are a non-resident importer and need trade guidance.

Carson Guide to Aluminum Tariffs

Carson Guide to Aluminum Tariffs

As of August 16, 2020, the U.S. government restored a 10% tariff on Canadian aluminum imports. In response, the Canadian government is taking steps to target the U.S. with retaliatory tariffs, totalling $3.6 billion.

Aluminum and retaliatory tariffs will have a huge impact on North American trade.

That’s why we put together this guide to help navigate businesses through this ongoing trade situation. Download our guide today to find out what you can do to reduce impact to your business.

Webinar Recording — The Canada-US-Mexico Agreement: What’s New in the “New NAFTA”

CUSMA

On August 6, we hosted a webinar in partnership with Miller Thomson LLP about CUSMA and how this agreement differs from its predecessor, NAFTA.

In case you weren’t able to join us — or just need a refresher — follow the link below to access the presentation and webinar recording.

For more resources on CUSMA, be sure to visit our CUSMA resource centre. Here, you will find:

  • A quick overview of what has changed since NAFTA
  • A Carson Certificate of Origin available for download
  • An agreement timeline
  • FAQs
  • Uniform Regulations

Please feel free to reach out to Carson at any time for further information on how we can help your business navigate CUSMA.

USMCA vs. NAFTA: What’s the Difference?

In September 2018, The United States, Canadian, and Mexican governments announced a new trilateral free trade agreement. As of March 2020, the agreement, known as USMCA or CUSMA, is approved by all three nations and is set to effectively replace the previous agreement, NAFTA.

The USMCA’s main goal is to implement a free-trade system that accommodates for the digital era. The agreement features several key changes that make it different from and a notable improvement to NAFTA.

What Is NAFTA and What Does It Stand for?

Prior to the introduction of the USMCA/CUSMA, the North American Free Trade Agreement (NAFTA) was in place to help reduce trade costs, increase investment opportunities, and enable North American nations to play a more integral role in the global marketplace. The agreement came into effect in 1994.

Like the newly approved USMCA, NAFTA is an agreement between Canada, the U.S., and Mexico, with the goal of liberalizing trade between the three countries.

What Is USMCA/CUSMA and What Does It Stand for?

The new agreement is known in the U.S. as the United States-Mexico-Canada Agreement (USMCA) and worldwide as the Canada-United States-Mexico Agreement (CUSMA). The main goal of the USMCA/CUSMA is to modernize free trade between the three countries and make some necessary updates to rules of origin and processes around North American trade.

How Are NAFTA and USMCA Different?

There are some main differences between the USMCA and NAFTA that will make the USMCA a more ideal replacement for NAFTA.

De Minimis

One big change was the threshold for duty-free entry of low-value goods into each of the three countries. The new de minimis include:

•  Canada: $40 CAD for taxes and $150 CAD for customs

•  U.S. – $800 USD

•  Mexico – $50 USD for taxes and $117 USD for customs

Certificate of Origin

Unlike NAFTA, the USMCA won’t require importers to complete a formal certification document. Instead, importers, exporters, or producers can use informal documentation including commercial invoices. However, under the USMCA, previous NAFTA certification documentation and certificates will need to be kept for at least five years.

Improved Dairy Market Access

The U.S. dairy market will benefit from access to another 3.6 percent of the Canadian dairy market. The USMCA also removed restrictions on imports of ultra-filtered milk into Canada from the U.S. Canada further benefits from keeping the dairy supply management system currently in place, which maintains limits on imports of foreign dairy products.

Automotive Changes

The North American auto industry will also benefit from the changes made in the USMCA. For example, the agreement requires 75 percent of a vehicle’s parts to come from North America, an increase from the 62.5 percent rule in NAFTA. In addition, 70 percent of all glass, aluminum, and steel automotive fabrication materials must come from North America. Workers who help produce 40 percent of automobiles and 45 percent of light trucks will also be required to make at least $16 per hour.

There are several other areas that the USMCA will affect, making it a considerable improvement over NAFTA. Ultimately, the ratification of the new agreement will lead to several major changes in North American trade. 

For up-to-date information regarding USMCA, visit our CUSMA page. If you need help understanding these changes, or navigating their impact, Carson International can walk you through these updates every step of the way.

Webinar Series: Canada/USA Cross-Border Priority Trade Developments and Updates

Carson International is pleased to partner with Miller Thomson LLP for a webinar series addressing Canada/U.S. cross-border trade developments and updates.

Trade has always been an integral part of the Canada / United States relationship and even during times of crisis, like today, business depends on goods moving as seamlessly as possible between our countries.

Our expert panel will explore with you the following topics: duty payment deferrals; tax deferrals; new CUSMA / USMCA / T-MEC rules of origin; tariff rate quotas, advance rulings; e-commerce; customs enforcement; potential US tariffs, potential Canadian countermeasures, “Buy America” provisions, trade sanctions; and anti-dumping and countervailing duties.

Panelists:

Dave Pentland, Carson International
Dan Kiselbach, Miller Thomson LLP

Webinars:

Personal Protective Equipment: What Importers Need To Know
Thursday, July 23, 2020
11:00am PST

The Canada-US-Mexico Agreement: What’s New in the “New NAFTA”
Thursday, August 6, 2020
11:00am PST

Non-Resident Importers: Tips and Traps
Thursday, August 20, 2020
11:00am PST

Risk Minimization Strategies: Advance Rulings
Thursday, September 3, 2020
11:00am PST
Please note, this webinar will also include a brief overview of aluminum tariffs.

Each webinar will be approximately 30 minutes in length.

What Are International Trade Agreements?

To help facilitate trade between countries, international trade agreements have been put in place to maintain efficient operations, comply with each nation’s standards, and avoid certain non-tariff and tariff barriers, among other benefits.

What Are the Different Types of International Trade Agreements? 

There are two central types of international trade agreements: bilateral and multilateral. Agreements could pertain to certain types of goods and services or specific market entry barrier types.

Bilateral International Trade Agreements

Bilateral agreements facilitate trade between two countries. Some bilateral agreements include Canada-Israel., U.S.-Mexico, and E.U.-South Africa, among others.

Multilateral International Trade Agreements

Also known as regional agreements, multilateral agreements form certain international trade unions, including the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). For example, multiple treaties including the Treaty of Rome help regulate the European Union, while the General Agreement on Trade and Tariffs shapes the WTO.

How Do They Affect Trade?

Having international trade agreements in place can benefit international imports and exports in several ways, including:

• Better access to a larger customer base

• Optimized supply chain operations through dealing with foreign suppliers via the agreement

• Reduced cost of penetrating foreign markets because of more efficient and simplified customs processes, duties, and regulatory compliance

• More efficient production through partially or completely relocated operations

• Easier access to foreign financial institutions and investors along with foreign workforces and customers

Examples of International Trade Agreements

Ever since the General Agreement on Tariffs and Trade (GATT) was implemented, the world has seen an increase in multilateral trade agreements along with local trade agreements.

One important trade agreement that helped pave the way for multilateral regionalism was the 1944 Bretton Woods Agreement, which gave rise to the International Trade Organization (ITO), the International Monetary Fund (IMF), and the World Bank. The Bretton Woods Agreement began when both the U.S. and Britain came out of World War II as the world’s foremost economic leaders, which led them to develop a more liberated and cooperative trade system.

The GATT came along in 1947 as the ITO dissolved following the Bretton Woods Agreement. The GATT would help reduce tariffs for member nations, allowing for expanding multilateral trade, but a growing number of regional trade agreements also came out of it. Part of what would develop from the GATT just five years after its implementation would be the European Union.

Another key trade agreement to come about in the early 1990s would be the North American Free Trade Agreement (NAFTA), which formed in the U.S. between Mexico and Canada. By 1995, the GATT would be replaced by the World Trade Organization (WTO), which would work to develop and implement policies on far more than goods, covering services, investment, and intellectual property.

Another major recent development is the development and implementation of the United States-Mexico-Canada Agreement (USMCA), which is set to replace NAFTA. The USMCA will boost auto manufacturing, strengthen labor laws, provide more market access for dairy farmers, upgrade NAFTA to accommodate the technology sector, and more.

Understanding the ins and outs of international trade, particularly the impacts of international trade agreements, will help you stay up to date with trade law and keep your operations running as smoothly as possible. If you’re finding it difficult to keep up with trade laws or navigate the different agreements–let us do it for you. The knowledgeable trade experts at Carson International can provide reliable assistance on all things trade, from start to finish.