When the current NAFTA ceases to exist on July 1st, will you be paying duty on your US, Canada or Mexico origin goods?
On July 1, 2020, NAFTA is no longer in effect and the new CUSMA/USMCA/T-MEC rules are in play. Here’s what you need to know:
NAFTA Certificates of Origin are no longer valid as proof of origin on future shipments
New Rules of Origin determine whether your goods will now qualify under the new agreement
New origin certification is required to benefit from the preferential/duty free status of CUSMA/USMCA
If you do not have new certifications in place on July 1, 2020 – duty will be applicable on all goods previously duty free with NAFTA!
To take advantage of the duty free status that CUSMA/USMCA offers, your goods must qualify as “originating” in the territory (applying the CUSMA/USMCA Rules of Origin) and you must have valid certification in place. Universal can help.
Certification can be completed on a single-shipment basis or with a blanket certification. Valid certification requires 9 data elements and a signed statement of verification for each commodity. The validation can be done on each commercial invoice (single-shipment basis) or with a blanket certification to cover multiple products for a 12-month validity period (similar to Blanket NAFTA Certificates).
To best ensure a compliant, duty-free entry and to minimize service fees, we recommend blanket certification over single-shipment certification. This way, our Customs Consulting team validates the certification only once and can manage the origin status for each product in our client tariff database. Also, the review can be completed in advance rather than in the rush of a live-shipment environment.
CUSMA/USMCA Management Service
If you require assistance in determining whether your product line will qualify under the new Rules of Origin, or if you would like assistance in managing your CUSMA/USMCA certification process, please contact your Client Care representative or Brian Rowe, Director – Customs Compliance & Regulatory Affairs.
US-Canada truck border crossings rebound
Data from the Canada Border Services Agency points to a continued increase in freight movement, up from the staggering pandemic plunge.
The number of trucks crossing the US-Canada border reached its highest level since late March. Nearly 86,000 truckers entered Canada from the U.S. during the week ending May 31. While positive, it still represents a decline of almost 22% compared to a year ago.
Despite the uptick in cross-border trucking, merchandise trade between the U.S. and Canada declined by more than 35%, or C$23.4 billion, in April, according to a June 4 report released by Statistics Canada. Auto manufacturing and energy accounted for most of that plunge.
While U.S. and Canadian freight volumes have recovered off their March lows, a return to pre-COVID-19 production levels is not expected in the near-term.
Remember the U.S./China trade war?
It’s back and at risk of escalating
The U.S.-China Phase One trade deal is not dead. However, the deteriorating relations between the two super powers have put it on life support. This was very apparent during a recent hard line speech by President Donald Trump who alleged China “ripped off the United States like no one has ever done before”, and “got away with theft” of hundreds of billions of dollars a year; that China “raided our factories, offshored our jobs, gutted our industries, stole our intellectual property”… “unlawfully claimed territory in the Pacific Ocean, threatening freedom of navigation and international trade,” broke its word “on ensuring the autonomy of Hong Kong” and “instigated a global pandemic.”
Trump’s fiery speech made no mention of new tariffs, however, for US importers there is still a strong possibility we could see another round of the tariff wars. This scenario has resulted in some US importers starting to accelerate orders over fears the U.S.-China relations will worsen as U.S. Election Day comes closer.
Based on US Customs filing data, US maritime import shipments still indicate the nationwide customs filings remain very heavily driven by imports from China. They also highlight the rollercoaster ride import volumes have taken. In February, filings plunged due to the shutdown of Chinese exports following the initial Coronavirus (COVID-19) outbreak in Wuhan, and rose through March and during the first three weeks of April as Chinese exporters reopened and caught up with delayed US orders. They fell again sharply in late April and the first half of May, as a result of the lockdown of US businesses due to COVID-19.
This caused orders to be cancelled, prompting ocean carriers to institute “blanking” of about 20% of the May and June China-U.S. sailings. The latter half of May saw volumes start to rebound and carriers began “unblanking” previously cancelled sailings and adding extra sailings. Finally, during the last week of May, US Customs filings jumped by a third, most likely due to the booming e-commerce demand during the COVID-19 crisis. This could also be evidence of renewed consumer demand following the reopening of state economies, or of importers concerned about U.S-China relations and front-loading shipments – or both.
In his most forceful statement in a June 18th tweet, President Trump stated the U.S. could pursue a “complete decoupling from China”. This came a day after Secretary of State Mike Pompeo met with Chinese official Yang Jiechi amid questions over whether the nation’s trade pact will remain intact. According to Pompeo, Yang said China is committed to maintaining agriculture purchases that were crucial to Trump’s support of the deal. However, Trump told the Wall Street Journal on June 17th, “I think the trade deal is a great deal. But ever since we got hit with the Chinese plague, I feel different toward everything having to do with China.” Meanwhile, analysts have warned these renewed geopolitical tensions present downside risks to US companies exposed to China.
The signing of the Phase One trade deal was a welcome and positive sign that China-U.S. trade relations were on a path to normalization. It would be extremely disappointing if these escalating tensions jeopardize the agreement and there is a return to the tit for tat tariff wars between them.
For more information, contact Chris Barnard, Vice President – Projects & Market Development.
“Ghost” freighters provide marginal boost to shippers
Ghost freighters, passenger planes flying around the world with no paying customers on board, do not frighten logistics companies. That’s because the planes are not really empty, they are packed with valuable cargo that producers, retailers and their transportation intermediaries need to move fast.
Airlines shut down most of their passenger networks after the Coronavirus (COVID-19) pandemic destroyed travel demand, and these grounded planes represent more than half of the global capacity for moving goods by air. Travellers believe the space underneath their feet is exclusively for storing suitcases, but it also gets sold to businesses shipping loose packages and large pallets of goods, depending on the size of the aircraft. Without enough pure freighters in the market to pick up the slack, logistics companies faced severe capacity shortages and price spikes for moving emergency shipments of COVID-related medical supplies, food, e-commerce orders and intermediate goods needed to keep manufacturing plants going.
Even though global airfreight volumes fell about 30% through April and early May because widespread quarantines extinguished economic activity, the supply of cargo space dropped even more. Airfreight rates, which vary by trade corridor, jumped three to six times above those typically seen during peak shipping seasons. Passenger airlines, sensing an opportunity to utilize idle assets at a time of ultra-low fuel prices, began marketing aircraft as auxiliary freighters – or “preighters”, even stuffing cargo into the passenger cabin in some cases.
More than 150 airlines worldwide are operating in excess of 1,300 passenger planes in cargo mode. Aside from the extra revenue during the Coronavirus dry spell, there are considerable costs associated with parking aircraft, including storage fees as well as maintenance and electrical checks. While the transformation into full-time cargo operators has been financially beneficial for some airlines, it is not a perfect scenario for all. Since passenger planes cannot be filled with the cargo to the same degree as a pure freighter, fuel prices and cargo rates are determining factors for airlines in deciding whether to operate. “Preighters” are also more difficult to load and unload because of their limited space and narrow cabin doors.
How long airlines will continue to operate quasi-freighters remains an open question. With the pandemic waning in some areas and governments loosening travel restrictions, passenger airlines are beginning to schedule more passenger flights in the second half of June and beyond. The resulting increase in freight capacity is welcomed by forwarders, but there still may not be enough flights, or frequency, on certain lanes to satisfy demand.
For more information, contact David Lychek, Manager – Ocean & Air Services.
One of the most popular
tourist attractions is a cemetery.
Global Spotlight Quiz
Name the birthplace of the Tango
This city is a steak lovers paradise.
The port is so central to the city that residents are called Porteños.
This city is its own federal district where the president of the country lives. The presidential headquarters are painted pink.
This city has the highest number of bookshops per person in the world.
One of few major cities with a neighbourhood where most streets are named after women.
This city has the widest avenue in the world.
The city’s university has produced four Nobel prize winners and numerous presidents.
For more information about shipping freight to or from this city, contact Debbie McGuire, Manager – Freight Solutions.
Issue instructions in writing
Always put your requirements in writing to avoid misunderstandings. What is completely obvious to you may be seen much differently by another person. Don’t assume your suppliers and/or logistics service providers know what you are thinking (e.g. “Of course I wanted that to go by airfreight… it’s our year end!”).
Eliminate the possibility of errors by clearly communicating your instructions in writing and then having a record in the event things do go wrong.
At Your Service: Information Systems Team
The Information Systems Team:
Janice Ilkay, Plato Leung, Ofeera Fatima & Paul Glionna
Making connections is now more important than ever. And having the proper IT support to back this up is critical for us to better serve our clients. That is why back in early 2019, we expanded our team with the addition of 2 new IT Specialists to focus on creative ways to report and connect.
Ofeera Fatima has her Computer Engineering Technology Diploma from Seneca. Plato Leung has his Honours Degree in Computer Science from the University of Toronto. Both Ofeera and Plato have a wealth of program and development knowledge and have an enthusiasm for problem solving.
Janice Ilkay is a proud member of Universal’s 30-Year Club, and has been our Manager – Information Systems for 20 years. Janice is leading our group in our constant endeavor to improve efficiency and connectivity with our clients, in a manner that is consistent with our goal to continually provide innovative logistics solutions.
For more information, contact Paul Glionna, Vice President – Systems Development & Operations.
Route is produced by Universal Logistics. Editor: Bettina Scharnberg. Email: email@example.com While every effort has been made to ensure the accuracy of information contained herein, Universal Logistics accepts no responsibility or liability for errors or omissions. Written correspondence should be forwarded to:
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News and Views for the
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