HOS Revisions Timeline

According to a recent report from the Department of Transportation, the general public is set to get their first look at the proposed HOS (hours-of-service) changes on June 7.  The FMCSA (Federal Motor Carrier Safety Administration) is planning to move quickly on the HOS revisions according to the report.  This announcement comes just 1 month after the Secretary of Transportation, Elaine Chao, announced at the Mid-America Trucking Show that her department sent an NPRM (Notice of Proposed Rule Making) to the White House.  Upon the proposed changes being published on June 7, there will be a 49-day period where the public may comment on the changes that is set to conclude on July 26.

However, the June 7 publish date is not set in stone.  The publish date of the proposed rules is contingent upon how fast they clear the White House Office of Management and Budget (OMB).  According to the FMCSA Administrator, Ray Martinez, the FMCSA has kept their foot on the gas with the rule to make sure it does not hang in limbo with the OMB.

Regulations Addressed

While a rough timeline on presenting the HOS regulation changes was recently presented to the public, detail of the proposed changes have not been published.  However, the proposed changes to the current HOS regulations come on the heels of a petition from the Owner-Operator Independent Drivers Association addressing the need for change to the following regulations:

• The 100 air-mile “short-haul” exemption currently at 12 hours on duty
• The 14 hour on-duty limitation (hindering for trucks encountering adverse driving conditions)
• The mandatory 30-minute break for drivers after 8 hours of driving
• Bringing back the option for breaking up the mandatory 10-hour off-duty rest break for drivers in trucks equipped with sleeper-berth compartments

In conclusion, the details of the changes to the current HOS regulations are expected to address increased flexibility for drivers.

BM2 Freight Services, Inc.

Phone: (859) 308-5100

Email: Sales@BM2Freight.com

EU Import Tariffs

In a statement made on Monday, April 8, 2019, the United States Trade Representative (USTR) announced a preliminary list of EU commodities eligible for additional import tariffs. This statement comes in response to a recent ruling by the World Trade Organization (WTO) that found EU subsidies were being directed towards Airbus, resulting in “adverse effects to the United States.”

Additionally, the USTR has calculated an estimated negative impact from the EU subsidies at “$11 billion in trade each year.” This estimate is currently being challenged by the EU and evaluated by a WTO arbitrator. The United States is planning to put into effect a countermeasure worth $11.2 billion per year on qualified EU imports. You can find the preliminary product list here to which the U.S. plans to apply additional import duties.

7 Ways to Mitigate Tariff Costs

The newest EU tariffs being discussed–in addition to tariffs on $250 billion of Chinese goods, the still-developing USMCA agreement with Mexico and Canada, and soaring costs of commercial freight at the US/Mexico border–drive home the need for a cost mitigation plan for your supply chain. Consequently, we have compiled a list of 8 strategies that you can implement to mitigate the new tariff costs:

1. Reclassification – Tariffs are placed on different classifications of products. The first way to avoid new tariffs is by reclassifying items into related, yet unaffected categories. One downfall to this approach is the possibility that your reclassified items may be subject to the entirely different tariffs.
2. Engineering – This would involve buying parts and materials for your item that do not fall under any of the current tariff umbrellas. However, this could prove difficult for your engineering team(s), depending on the items and overall complexity of your product.
3. Buying Ahead – This is the strategy that many companies have started utilizing when the tariffs went into effect. And while this is effective for stockpiling inventory, it can be difficult to forecast a budget for these scenarios with gridlocks and fluctuating lead times.
4. Sharing Tariffs – If your company has buying power with the supplier(s) of your tariffed goods, then you may be able to negotiate sharing the tariff burden in order to maintain a profitable partnership. Granted, this tactic will not work if your supplier knows they have little competition.
5. Changing Supplier Locations – If your supplier has locations in countries unaffected by the new tariff policies (China to be specific), then another way to avoid tariffs is sourcing from those other locations.
6. Finding New Suppliers – Searching for a new supplier, while time-consuming, may be worthwhile for your supply chain in avoiding the new tariff policies. Southeast Asia–specifically Thailand and Vietnam–is becoming a hot spot for the global supply chain.
7. Insourcing – From start to finish, moving your inventory production in-house would help you divert the tariff crisis altogether. However, purchasing and setting up the necessary equipment may prove to be both an expensive and time-consuming venture.

BM2 Freight Services, Inc.

Phone: (859) 308-5100

Email: Sales@BM2Freight.com

Mexico/U.S. Border Situation

Last week, President Trump upped the ante at the U.S./Mexico border by threatening to close it indefinitely this week should Mexico not fix the “illegal immigration coming into the U.S.”  However, the threats were dialed back on Tuesday, April 2^nd as reports from the president came in that Mexico is increasing their efforts for border security according to CBS News.

Furthermore, the U.S. does approximately $600 billion in trade with Mexico every year, and the 2 economies are so far intertwined that shutting down the border could have a devastating impact on the U.S. economy.  A recent statement from White House economic adviser, Larry Kudlow stated that the administration is working on ways to keep truck lanes open.

Approximately 80% of veggies and 40% of fruits imported to the U.S. come from Mexico.  Additionally, it is estimated that the U.S. supply of avocados would be gone in 3 weeks should the border shutdown indefinitely.  According to the Center for Automotive Research, a total border shutdown could halt automotive production within a week and impact at least 1 million jobs.

Border Gridlocks

The transfer of U.S. border agents to immigration duties has affected several border crossings as well.  Drivers have reported facing up to 12 hours of wait time to cross the border.  Of the lanes being affected by the transfer of border agents, one of the most notable is the crossing from Ciudad Juarez to El Paso, Texas.  In addition, the Otay Mesa commercial facility has also been affected by the redistribution of border agents resulting in 8 out of the 10 truck lanes open for the inspection and processing of imports.  Another port of entry affected is the Nuevo Laredo crossing that announced they will now be closing at 11:00PM daily.

Additionally, an estimated 2,000 CBP officers are in the process of being temporarily re-assigned to immigration services from the Canada/U.S. border.  This is likely to affect inbound and outbound shipment times on cross-border freight at some northern U.S. ports of entry.  Overall, the gridlock of freight is causing a large shortage of drivers which is likely to cause and upward trend in shipment prices for cross-border lanes.

To receive updated wait times by-the-hour on your shipments please visit https://apps.cbp.gov/bwt/mobile.asp.

Additional border wait times as of 4/8/19 9:30AM EST:

• Brownsville – Veterans International : no delay, 1 lane open
• Del Rio : no delay, 1 lane open
• Laredo – World Trade Bridge : 45 minutes,  6 lanes open
• Nogales – Mariposa : lanes closed
• El Paso – BOTA : no delay, 1 lane open

BM2 Freight Services, Inc.

Phone: (859) 308-5100

Email: Sales@BM2Freight.com

Brexit Duties Deadline

On March 13, British Parliament voted down the idea of leaving the E.U. on a “no-deal” scenario in which the primary concerns of avoiding a hard border with Ireland and deciding what tariffs to implement would not be addressed.  The vote was no landslide however, with a 312 ‘against’ to 308 ‘for’ final tally.  With the approaching March 29 Brexit deadline looming, the vote on extending that deadline passed last Thursday with a 412 ‘for’ to 202 ‘against’.  However, beyond that point the picture is unclear as the U.K. will be faced with a number of options on how to proceed with their exit from the E.U.  The few concrete factors to the situation include the deadline being pushed back to June 30, and businesses are highly against a “no-deal” Brexit as proceeding in that direction would adversely affect their supply chains and revenue.

Brexit Expert Insights

With 2 solutions to the Brexit “no-deal” scenario voted down by Parliament, the scenario remains largely up in the air for how the U.K. plans to exit the E.U.  In addition to the deadline extension, Parliament voted on an amendment to result in a second referendum that was voted down.  Furthermore, professor of political science at the University of Pennsylvania, Brendan O’Leary stated that a viable option for reaching an agreement on the Brexit would be the Norway option.

The Norway scenario would allow the U.K. to still be a part of the E.U. single market, but would decrease the U.K.’s voice in shaping the conditions due to no longer being a part of the E.U.  However, based off of the current solid facts of the situation the possibility for a second referendum is still looming.  Should another time crunch with the new June 30 Brexit deadline present itself, the possibility of Conservative members of Parliament voting for a second referendum increases.

Furthermore, the overview of the ongoing Brexit scenario demonstrates how interconnected the supply chains of the U.K. and E.U. really are.  Additionally, we would recommend that companies with supply chains in these geopolitical areas take a close look at the situation and find ways to mitigate the risk of additional import and export duties going into effect once a deal is struck.  Adidas is a great example of a company that has taken steps to mitigate Brexit risks by centering their European supply chain in Germany and the surrounding areas.

BM2 Freight Services, Inc.

Phone: (859) 308-5100

Email: Sales@BM2Freight.com