Canada To Push Back Against Biden’s Buy American Pledge

The minister responsible for international trade says Canada is well-positioned and ready to push back against a proposed massive new infrastructure bill that strengthens U.S. President Joe Biden’s Buy American pledge.

The U.S. Senate on Monday began debating the $1 trillion USD spending plan, which promises historic investments in everything from the nation’s railways to its electricity grid and high-speed internet network.

But in a worrying development for Ottawa and Canadian companies, the 2,702 page bill would also strengthen laws that call for U.S. tax dollars and government contracts to be spent on American companies as much as possible.

“My pitch to them is that you don’t have a better partner than Canada and that we are on this shared mission in economic recovery together,” said International Trade Minister Mary Ng on CBC’s Power & Politics today.

Ng said work is well underway “to demonstrate how interconnected our supply chains are and how important Canada is” to the U.S. as the Senate begins to debate the bill.

Prime Minister Justin Trudeau also raised concerns with the infrastructure bill during a call with Biden on Monday.

Right now, the bill — which is likely to be amended — says that “taxpayers expect that their public works infrastructure will be produced in the United States by American workers.”

Since taking office earlier this year, Biden has said repeatedly that investments in U.S. companies will ensure a strong recovery from the pandemic and position the U.S. to fend off China and its more quickly growing economy.

A 2019 U.S. government report stated that of the $290 billion in contracts the U.S. government issued in 2015, Canadian firms got contracts worth about $674 million.

(Source: CBC News)

Global Supply Chains Are Being Battered By Fresh Covid Surges

Asia’s renewed surge in Covid-19 infections is compounding supply-chain blockages across the world’s biggest source of manufactured goods.  After weathering earlier pandemic waves better than other regions, the fast-spreading delta variant has thrown into turmoil factories and ports in countries that were once among the most successful containing the virus.

The snarls in Asia — where the United Nations estimates around 42% of global exports are sourced — risk twisting their way through global supply chains just as shipments would usually ramp up for the Christmas holiday shopping season.  As earlier snags have shown, problems that start in Asian ports can ripple slowly, showing up later as delays in places like Los Angeles or Rotterdam and higher prices for consumers.  The flare-ups also worsen an already tortured year for exporters, with shipping costs sky-high due to a shortage of containers and as raw materials such as semiconductors become pricier and difficult to source amid red-hot demand.

“Delta is likely to significantly disrupt trade in Asia,” said Deborah Elms, executive director of the Singapore-based Asian Trade Centre. “Most of the markets have been fortunate in managing Covid well so far. But as Covid continues to spread, this lucky streak is likely to end for many locations.”

In a sign of those concerns, oil prices extended declines at this week’s opening in Asia as the delta variant’s spread has undermined the outlook for global demand.  In China, the world’s third-busiest container port was partly shut recently, while in Southeast Asia — among the worst-hit regions — factory executives have stalled production of electronics, garments and scores of other products.  At stake is an export boom that shielded trade-driven economies during the pandemic and was expected to fuel a broader rebound. The World Trade Organization had forecast Asia to lead an 8% rise this year in global goods trade.  Meanwhile, the supply choke will fuel concerns that rising inflation for Chinese producers or U.S. consumers will prove more than transitory, testing expectations among policymakers for a near-term cooling in prices.

The delta variant — as contagious as chickenpox — infiltrated China’s tough border defenses, seeding the first cases for months in places like Beijing and Wuhan. Indonesia is leading Southeast Asia in cases and deaths, pushing the region toward being among the worst-hit globally as vaccination rollouts lag. While China’s cases are relatively low, its zero-tolerance approach has ensnared the Meishan terminal in Ningbo-Zhoushan port, where all inbound and outbound container services were halted Wednesday after a worker became infected.  That shutdown follows the closure of Yantian port in Shenzhen for about a month after a small outbreak, which had ripple effects for international shipping.  In Southeast Asia, manufacturing managers saw a slump in activity last month as critical exporters struggled to keep factories running, a sign that Covid might finally be making a dent in the region’s resilient trade.

While Indonesia, Malaysia, the Philippines, Vietnam and Thailand account for a combined 5.7% of global exports, they can greatly impact bigger economies like the U.S. and China, particularly in electronics, according to estimates by Natixis. China imports 38% of its data processing machines and 29% of its telecommunication equipment from the five countries, while the U.S. depends on half its semiconductor imports from the bloc.  That extends to export hubs of Japan and South Korea, which have remained mostly on track. Samsung Electronics Co., for instance, last month said revenues in its mobile phone business have been hit by the outbreak in Vietnam.

(This is an excerpt from the16 August 2021 edition of gCaptain)

Ships Divert from Ningbo, No Timeframe Given For Terminal Reopening

Having learned lessons from the closure of Yantian Port earlier in the summer, a number of carriers are not hanging around waiting for Ningbo Meishan Island Container Terminal to open anytime soon, with several ships opting to skip Ningbo this week.

One port worker at the terminal was found to have contracted Covid-19 yesterday, resulting in the terminal being closed. Tests on the port’s workforce are underway, and the terminal is being decontaminated. For all other Ningbo terminals, the gate-in of export containers is now limited to two days of a vessel’s expected time of arrival.

“It seems the whole Meishan terminal is closed until further notice. All the shipping agents are running around trying to change to Shanghai,” one well placed source told Splash today.

There has been no official announcement yet on how long the terminal will be closed. The outbreak at Yantian in eastern Shenzhen in late May resulted in a partial lockdown lasting four weeks.

The sheer enormity of Ningbo-Zhoushan port, the world’s largest port in tonnage terms, appears to have helped prevent a wider total port lockdown.

Meishan Island is approximately 30 km away from Ningbo’s major container terminal at Beilun, and 60 km away from Ningbo downtown.

Meishan accounts for approximately 20% of the near 30m teu that pass through the port each year. There are currently a total of 41 container services calling Meishan, eight into North America, six for Europe, and two for the Red Sea. The Meishan closure mainly impacts the Ocean Alliance, a grouping made up of Cosco, OOCL, CMA CGM and Evergreen.

Cosco and CMA CGM have already indicated that a number of ships will skip Ningbo this week.

The Covid closure comes at a time where both Ningbo and Shanghai had been experiencing severe congestion, the worst in the world, over the past two weeks. Data provided by MarineTraffic today shows the unprecedented volume of ships waiting for berth space to open up at Ningbo today.

Clients should expect further delays and congestion amidst these issues.

(Source: Splash247)

Corporate America Impatient Over Chinese Trade Policy Review

Groups representing America’s largest companies are getting antsy over the Biden administration’s extended review of trade policy toward China.

Groups like the U.S.-China Business Council, the Chamber of Commerce and the Business Roundtable welcomed the president’s pledge during the campaign to reset trade policy toward China after four years of trade-policy-by-tweet from then-President Donald Trump.

Eight months into his presidency, however, the companies want action. And they’re beginning to wonder whether the lack of it on tariffs and trade restrictions indicates that Biden’s brand of being tough on China might not be that much different from his predecessor’s.

“If the Biden administration wants to make the case that they have a different approach, it’s time to lay out the strategy they have promised,” said Anna Ashton, vice president at the U.S.-China Business Council, which led a letter signed by more than 30 corporate groups asking USTR to provide tariff relief and restart trade talks with Beijing. “To the extent they’ve given any clues on strategy, those clues have not really suggested they are planning to diverge from the course we were on at the end of the Trump administration.”

USTR, which is leading the China trade review, says that it is only doing what Biden promised. Even before he won the presidency, Biden’s surrogates warned that trade policy would take a backseat early in his administration, as the White House focused on passing domestic economic stimulus.

The administration says Biden has already moved to reconcile diplomatic relationships with allies by signing a deal to pause the Boeing-Airbus subsidy dispute with Europe, agreeing to work with them to combat Chinese steel flooding global markets, and creating a new Trade and Technology Council with the EU.

“Along with historic infrastructure investments to Build Back Better at home, we are conducting a robust, strategic review of our economic relationship with China and engaging a wide range of stakeholders, including the business community, to create effective policy that puts American workers, farmers and businesses in a stronger position to compete with China and the rest of the world,” said a USTR spokesperson.

(Source: Politico)

Canada Posts Surprise $3.2B Trade Surplus

Canada’s trade surplus swung to its widest point since 2008 in June as exports of products like oil surged while imports shrank.

Statistics Canada reported Thursday that exports surged by 8.7 per cent to $53.8 billion. Energy led the way with exports rising by 22 per cent to $11.3 billion. That’s the largest amount since March of 2019.

Cars and car parts were also up, by 14.9 per cent, as were metal and non-metallic minerals, which rose by 12.7 per cent.

All in all, Canada exported $4.3 billion more goods and services to the world in June than it did the previous month. That’s the biggest monthly increase on record, if 2020’s volatile numbers are stripped out.

While Canada was shipping more goods and services to the rest of the world, it was also buying less.

Imports fell one per cent to $50.5 billion as consumer goods fell by 3.7 per cent.

“This category was weighed down by a decline in clothing, footwear and accessories, which Statcan noted was in part due to restrictions in some parts of the country and port disruptions in Asia related to COVID-19 outbreaks,” TD Bank economist Rishi Sondhi said.

Imports of cars and car parts, meanwhile, fell by 3.8 per cent.

One type of good that Canada imported a lot more of, however, was vaccines. Imports of vaccines rose by 74.5 per cent in the month to $745 million. That’s 21 times higher than the amount of vaccines that Canada was importing the same month a year ago, before the country’s COVID-19 vaccination effort ramped up.

Almost all of Canada’s trade surplus came from dealings with the U.S.

Canada posted a surplus of $8.3 billion with the U.S. for the month. With the rest of the world, however, Canada continues to have a trade deficit, although that deficit shrank to $5.1 billion, resulting in a total trade surplus of $3.2 billion.

“Canada’s merchandise trade balance has posted surpluses in four of the first six months of the year, boosted by strong demand arising from U.S. re-openings and the rise in commodity prices,” Bank of Montreal economist Shelley Kaushik said.

“Looking ahead, expect imports to recover as the economy reopens, while still-strong energy prices and U.S. growth should continue to support exports.”

(Source: CBC News)

Biden Nominates Pagán as Deputy Trade Chief, Frost Assistant Treasury Secretary

U.S. President Joe Biden has announced his intention to nominate Maria Luisa Pagán as deputy U.S. trade representative based in Geneva, and Joshua Frost to be assistant secretary of the Treasury for financial markets.

Pagán, who was born and raised in Puerto Rico, has spent almost three decades as a trade lawyer in the U.S. government and is currently the deputy general counsel at the Office of the U.S. Trade Representative, the White House said in a statement.

It said Biden planned to nominate Christopher Wilson, a 20-year veteran of USTR, to be chief negotiator on innovation and intellectual property.

U.S. Trade Representative Katherine Tai said both officials would bring valuable experience to their new jobs at a time when the United States is seeking to re-establish relationships with its trading partners and reform the World Trade Organization.

Frost has spent nearly 23 years at the Federal Reserve Bank of New York, most recently as the co-chair of the liquidity risk program for large bank supervision, the statement said.

(Source: Reuters)

World’s Two Largest Ports Experience Unprecedented Congestion

Ningbo and Shanghai, the world’s two largest ports, are experiencing unprecedented volumes of tankers, bulk carriers and containerships back up into the East China Sea as a combination of renewed Covid cases, fierce weather and strong U.S. demand creates further supply chain havoc.

Ningbo-Zhoushan and Shanghai to the north handled 1.17bn and 510m tons in 2020, marking them out once again as the world’s top two ports. In container terms, they’re also on the podium – Shanghai ranked number one in the world with Ningbo-Zhoushan in third place.

The two ports were hit hard by a typhoon late last month and have seen productivity slow as new anti-Covid measures are being carried out at most Chinese quaysides in the wake of the sudden spread of the delta variant of Covid-19 over the past three weeks.

When a Covid-19 outbreak was detected at Yantian Port in late May, operations at the key southern Chinese export hub were slashed by 70% for most of June.

Most ports in the country are now requiring a nucleic acid test (NAT) for all crew, with vessels forced to remain at anchor until negative results are confirmed.

Many ports in the country are also requiring vessels to quarantine for 14-28 days if they previously berthed in India or performed a crew change within 14 days of arriving in China.

While Ningbo and Shanghai have the most amount of ships at anchor waiting for berth space, the global container port congestion looks increasingly worse as the below map compiled today by eeSea shows – the bubbles indicating ships backing up across five continents.

(Read full story via Splash 247)

Strike Averted: Tentative Deal Reached For CBSA Border Workers

Canada’s border agents reached a new tentative agreement with the federal government late Friday after a daylong work-to-rule campaign left long lines of semi-trailers and passenger vehicles idling for hours at some of the country’s busiest international gateways.

The deal — announced late Friday after more than 36 straight hours of mediated talks — came with just days to spare before U.S. citizens and permanent residents are expected to begin queuing up for their first chance to get into Canada since before the start of the COVID-19 pandemic. Guards who work for the Canada Border Services Agency were part of the work-to-rule job action that began early Friday amid contract talks between the federal government and the Public Service Alliance of Canada’s Customs and Immigration Union.

Members of the union, which represents some 9,000 CBSA employees, spent the day following procedures to the letter after a negotiation deadline was set for 6 a.m. ET Friday.

“We are relieved that CBSA and the government finally stepped up to address the most important issues for our members to avoid a prolonged labour dispute,” Chris Aylward, national president of the Public Service Alliance of Canada, said in a statement.

“The agreement is a testament to the incredible hard work and dedication of our bargaining team who worked through the night to reach a deal.”

It helped that the work-to-rule effort put “intense pressure” on the government “at every airport and border crossing across the country,” he added.

About 90 per cent of front-line border workers are classified as essential employees, a designation that prevents them from walking off the job.

(Read full article via CBC News)

U.S. Ports Face Peak-Season as Anchorages Fill

The fear voiced by Port of Los Angeles Executive Director Gene Seroka earlier this year was that “we will still have vessels at anchor come midsummer,” when terminals pivot to handling the peak season rush starting around August 1.

It is now midsummer. There are still vessels at anchor — a lot of them.

Logistics consultant Jon Monroe warned Thursday, “Now we have a myriad of charter carriers all introducing vessels into a China-Pacific Southwest service at the same time the large carriers are adding extra loaders. Expect the West Coast to be slammed the entire month of August. We are entering gridlock plus.”

The number of container ships at anchor in San Pedro Bay off the ports of Los Angeles and Long Beach rose back to 30 on July 23. There were 27 at anchor on Friday.

The all-time record — 40 — was set on February 1. Beginning in mid-March, San Pedro Bay anchorage numbers gradually declined as ship arrivals were curbed, both intentionally by carriers to get schedules back on track and unintentionally because their ships fell too far behind. 

The 2021 low — nine container ships at anchor in San Pedro Bay — was hit on June 18, as fallout from the port closure in Yantian, China, further pared arrivals.

The following day was the turning point. On June 19, the total number of ships in the complex (at berths in Los Angeles and Long Beach, and at anchor) fell to 30. It hadn’t been that low since mid-October, when the anchorages first started to fill.

After June 19, the respite ended. Delayed Yantian cargo started to arrive. Import demand heading into peak season brought more ships. Between June 19 and Friday, the total number of ships in the complex increased 80% and the number of ships at anchor jumped 170%.

The data confirms that more ships calling in Los Angeles/Long Beach (both at berth and anchor) equate to a higher percentage of ships at anchor. Since the trend reversed on June 19, the share of ships at anchor versus the total has risen back up to 45%-55%, moving in the direction of the 60%-65% peak seen in the first quarter.

Altogether, around 80 container ships are awaiting berths at ports on all three U.S. coastlines. And peak season is now set to begin in earnest, implying even more congestion ahead.

(Read full story with detailed graphics via Freight Waves)

Massive FCL Surcharges on the Horizon

We have been made aware of some massive surcharge increases that will become effective as of September 2021.

Leading carrier MSC has announced an enormous increase for surcharges on all FCL from Asia Pacific to North America.

This is in response to the expected increased bookings as retailers begin prepping to have their goods on the shelves in time for the holiday season.  This is putting a massive strain on availability for space and equipment as we move into peak season for 2021.

Our expectation is that other carriers will follow suit as we approach September.

MSC has announced the below surcharges for all shipments discharging origin ports as of September 1st, 2021 for GRI, PSS and CGS:

  • GRI (General Rate Increase): 
    USD $2,400 / $3,000 / $3,000 / $3,798 per 20’/40’DV/40’HC/45’
  • PSS (Peak Season Surcharge):   
    USD $2,000 / $2,500 / $2,813 / $3,165 per 20’/40’DV/40’HC/45’
  • CGS (Congestion Surcharge):     
    USD $800 / $1,000 / $1,125 / $1,266 per 20’/40’DV/40’HC/45’
  • TOTAL:                                                 
    USD $ 5,200 / $6,500 / $6,938 / $8,229 per 20’/40’DV/40’HC/45’