January 2018

Capacity crunch spikes pricing for U.S. trucking

Steep price increases for trucking are now taking effect with the mandatory requirement for Electronic Logging Devices (ELDs) in the U.S. as of December 18, 2017. The ELD is intended to help create a safer work environment for drivers, and make it easier and faster to accurately track, manage, and share Records Of Duty Status (RODS) data. An ELD synchronizes with a vehicle engine to automatically record driving time for easier, more accurate Hours Of Service (HOS) recording. HOS regulations stipulate that a driver may not drive beyond 11 hours, or be on duty more than 14 consecutive hours, before requiring 10 consecutive hours off duty.

Beyond the financial cost of the ELD implementation, the newly enforced strict adherence to the HOS regulations has greatly reduced the capacity of available drivers on the road. Couple this with a very strong U.S. domestic market, and the result is a drastic spike in truck pricing within the U.S. and between the U.S. and Canada.

In the last week of December, just one truck was available for every 12 loads needing to be shipped, the biggest imbalance since October 2005, when the after effects of Hurricane Katrina were being felt.

Shippers are responding by delaying non-essential shipments or paying a premium to ensure trucking will be available when needed.

Our truck freight expert, William Sanchez, is available to assist anyone who needs help with managing existing or planned truck shipments. "With a little creativity and long term planning, it is possible to get around or at least minimize the difficulties created by the tightening market for U.S. trucking," says William.

For more information, contact William Sanchez, Manager – Truck Services.

NAFTA negotiations: Ignore the thunder, wait for the light

An early resolution of trilateral NAFTA negotiations between Mexico, the United States and Canada is not expected as major issues remain unresolved, while the sixth round of negotiations are underway inMontreal.

Canadian Minster of Foreign Affairs, Chrystia Freeland,says Canadian negotiators are entering this round of NAFTA talks with a slate of "creative proposals" to counter some of thedemands made bytheU.S..

U.S. representatives had pushed back against the progressive trade agenda being proposed by Canada – entrenching Indigenous, gender and workers’ rights issues in the pact. Canada, in turn, is not willing to accept four controversial U.S. demands some are calling “poison pills”: raising continental content provisions on automobiles, scrapping a dispute resolution mechanism, limiting Canadian access to U.S. procurement and instituting a five-year sunset clause.

Neutral observers have pointed out that millions of jobs on both sides of the border will be at risk if the U.S., or more precisely President Donald Trump, follows through on threats to pull out of the trade deal.

"We can expect to hear a fair bit of bluster from the U.S. negotiators," says Brian Rowe."They will suggest the agreement is not fair, yet Canada is the number one import market for 32 of 50 States and as a whole, we buy 15% of the U.S.’s exports. The U.S. cannot afford to just walk away.The backlash from affected U.S. States would be devastating. Whether U.S. threats to scrap NAFTA are just bargaining chips remains to be seen."

There is room, however, for changes that benefit all three countries.No country will get everything they want.There will be give and take. That is the nature of trade deals.

For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.

U.S. bound Asian cargo redirected to Canadian west coast ports

	The Port of Vancouver

Key U.S. ports are losing volume to Canadian hubs, offering a shorter transit time from Asia, efficient rail service and greater trucking capacity. As a result, Canadian berths saw an 18% increase in volumes year over year between January and October, while U.S. ports saw far more modest increases: 1.4% for west coast ports, 6.6% for east coast ports.

"We have advised our clients for years to redirect U.S. bound ocean freight to Canadian ports offering multiple competitive advantages," says David Lychek, Manager – Ocean & Air Services. "It sounds counter intuitive, but sometimes taking a slightly less direct route means less costs and reduced transittime."

For more information, contact David Lychek, Manager – Ocean & Air Services.

Customs compliance priorities announced for 2018

Your chances of being selected by the Canada Border Services Agency (CSA) for trade compliance verification in 2018 are higher if you import products on the following list of priorities.

The list identifies products that are of concern, which due to misclassification, have led to a loss of revenue for the CBSA. Non-compliant companies will have to pay retroactive duties and, potentially, Administrative Monetary Penalties.

See below for more details on each new commodity added for 2018:

Mineral Waters and Aerated Waters (new)
Harmonized System Number(s): Heading 22.01

• The risk identified is that imported goods could be incorrectly classified as mineral waters and aerated waters within Heading 22.01, instead of being properly classified elsewhere within the same chapter, and potentially be subject to a duty rate up to 11%.
• This verification priority was released in July 2017.
• Results are not yet available.

Gloves (new)
Harmonized System Number(s): Headings 39.26 and 42.03

• The risk identified is that imported goods could be incorrectly classified as gloves within Headings 39.26 and 42.03, instead of being properly classified within Chapter 61 or 62, and potentially be subject to higher duty rates up to 18%.
• This verification priority was released in July 2017.
• Results are not yet available.

Pebbles, Limestone and Granules (new)
Harmonized System Number(s): Heading 25.17

• The risk identified is that imported goods could be incorrectly classified as pebbles, limestone and granules within Heading 25.17, instead of being properly classified within Heading 68.02, and potentially be subject to a duty rate of 6.5%.
• This verification priority was released in July 2017.
• Results are not yet available.

Spent Fowl (new)
Harmonized System Number(s): Headings 02.07, 16.01 and 16.02

• The risk identified is that imported goods could be incorrectly classified as spent fowl within Headings 02.07, 16.01 and 16.02, instead of being properly classified under tariff items subject to tariff rate quotas (TRQs) within the same chapters, and potentially be subject to very high duty rates.
• This verification priority was released in July 2017.
• Results are not yet available.

Safety Headgear (Round 3)
Harmonized System Number(s): Subheading 6506.10

• The risk identified is that safety headgear could be incorrectly classified under duty-free tariff items, whereas the goods could potentially be properly classified as other safety headgear under tariff item 6506.10.90, which attracts a duty rate of 8.5%.
• This verification priority was released in December 2011 and $126K was assessed in revenue, as 8 out of 8 cases were found to be in error.
• A second round of verifications was released in May 2013 and $214K was assessed in revenue, as 15 out of 20 cases were found to be in error.
• The results of the first two rounds show that the vast majority of the goods that were found to be misclassified were properly re-classified under tariff item 6506.10.90 of the Customs Tariff.
• A third round of verifications was released in July 2017.
• Results are not yet available.

Bags (new)
Harmonized System Number(s): Heading 42.02

• The risk identified is that imported goods could be incorrectly classified as bags within Heading 42.02, instead of being properly classified elsewhere within the same heading, and potentially be subject to duty rates up to 11%.
• This verification priority was released in October 2017.
• Results are not yet available.

Import Permit Numbers (new)
Harmonized System Number(s): Chapters 2 and 4

• The risk identified is that imported goods could be classified under “within access commitment” tariff items within Chapter 2 (meat of bovine animals and poultry) and Chapter 4 (dairy products), without the required import permit number on the declaration.
• Those chapters include goods that are subject to tariff rate quotas (TRQs) under Canada’s supply management system.
• TRQ goods imported without the required import permit number are properly classified under “over access commitment” tariff items and are subject to very high duty rates.
• This verification priority was released in October 2017.
• Results are not yet available.

For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.

Clarification of CETA Origin Declaration in the European Union

Canada and the European Union (EU) have differing requirements for preferential origin declarations. The EU obliges EU exporters to be registered in the REX system for consignments of above €6,000 and to use the REX number in the statement of origin to export, even if the Canadian requirements for claiming preferences do not have this requirement.

All EU exporters are encouraged to register in REX as they may make bigger value shipments in the future.

To qualify for preferential duty rates upon importation, exporters in Europe or Canada must provide a valid CETA Origin Declaration on an invoice, or other commercial document, or as a blanket declaration on their letterhead.

For more information, contact Brian Rowe, Director – Customs Compliance & Regulatory Affairs.

	This fortress has guarded the city’s harbour since 1515 and was dedicated as a UNESCO World Heritage site in 1983.

Global Spotlight Quiz

How many clues do you need to name an ancient city that offers a uniquely elevating experience?

• Known as “The City of 7 Hills”, this is one of the oldest cities in the world.
• A popular tourist attraction is the Ascensor de Santa Justa, a street elevator connecting two parts of the city by taking passengers45 meters high.
• This city was almost totally destroyed by a 8.9 earthquake and tsunami in 1755.
• This city has one of the mildest climates in Europe, with an annual average of 2900-3300 hours of sunshine.
• The raven has been the symbol of the citysince 1173, even though ravens disappeared long ago.
• Although not in the Guinness book of world records, this was the first city in the world to importGuinness beer from Ireland.
• Beneath the streets of this city’s downtown shopping area lies a hidden Roman Underworld with chambers, rooms, bridges and corridors open to the public only 2 days a year.

Click here to see the answer

For more information about freight to/from this city, contact Debbie McGuire, Manager – FreightSolutions.

Quick Tip

Issue Express Bills of Lading instead of Originals and avoid
delays and unnecessary costs

Original Bills of Lading are a good way to ensure immediate payment of your merchandise on shipments where you do not have an established credit arrangement with your client.

However, once proper credit terms have been agreed upon there is very little need for originals. By changing the bill of lading from “original” to “express” you save the costs of international couriers and eliminate potential delays in the delivery of your freight.

At Your Service: Universal Logistics USA Cleveland freight team

Our newly opened office in Cleveland, Ohio gives you direct access to an experienced team of freight management staff, with a wealth of experience handling import and export cargo (air and ocean) and ground transportation throughout theU.S..

Universal Logistics USA Cleveland team members

The Universal Logistics USA Cleveland team members include Suzi Hudak (Manager – Export Services), Leianne Malachin (Manager – Import Services), Pamela Randolph (Freight Services) and Ildi Janecek (Freight Services) and can be reached by phone at (440) 360-7850.