Each month we will publish highlights from the important articles we’re reading about shipping and logistics. This month’s articles include non-compliance penalties for electronic manifests, US retail demand surges, Southern China port congestion, the West’s misconceptions about doing business in China, and air freight rate updates.
Non-Compliance Penalties for Electronic Manifests starts July 1
At the beginning of 2021 electronic manifests (often called E-Manifests), had to be completed for all cargo destined for Canada. E-Manifests ensure a paperless process and establishes advance electronic information for all modes of transportation. This replaced ACI filings, which are now only needed when goods are travelling through Canada to another country like the U.S.1
Non-compliance resulted in Do Not Load messages and cargo delays. Starting July 1st, CBSA will apply penalties. Some shippers are still unaware of this new rule. Contact us with any questions or assistance to help transition to electronic manifests.
Asia to North America Waiting List up to 5 Weeks as US Retail Demand Surges
With COVID-19 vaccinations and businesses reopening in the United States, retailers have upgraded their import forecasts to meet increasing consumer demand for products from Asia. Unfortunately this has resulted in shipping lines allocating more space to the US instead of Canada.
In normal years, peak shipping season for North American imports are from August to October. This year, peak season has already started with some shipping carriers adding a peak season surcharge on June 1st ranging from USD $1000/40’ to $3000/40’. May’s import numbers are expected to show an all-time monthly record, up 51.1% from May 2020, during the initial COVID-19 lockdowns. Supply chains are finding it difficult to keep up with the demand. Expect space to continue to be tight until the end of 2021.2
Congestion in Southern China Ports due to COVID-19 Outbreaks
There have been congestion and delays at the southern China ports of Yantian, Shekou, and Nansha for the last two weeks.3 COVID-19 outbreaks near Yantian port led to authorities restricting business activities and causing vessels to go to nearby ports of Shekou and Nansha.4 Some vessels are delayed by 2-3 weeks because of this.
Yantian is one of the largest ports in the world, so this congestion will have ripple effects across the Asia to North American trade routes.
The West’s Misconceptions about Doing Business in China
A recent insightful Harvard Business Review article highlights three misconceptions that business people in the West have about doing business in China. The misconceptions are:
- Economics and Democracy are Two Sides of the Same Coin – China has proven that democracy is not necessary for economic success. Polling data from Harvard showed that 95% of Chinese citizens are satisfied with their government.
- Authoritarian Political Systems Can’t Be Legitimate – Many Chinese believe that their political system is more effective than the West’s. Western business executives find this hard to believe and don’t understand why.
- The Chinese Live, Work, and Invest Like Westerners – Chinese people approach decisions very differently. One example: the Chinese prefer short-term gains over long-term savings, in investments and careers, compared to those in the West.5
Our team at Canaan Group has been working in the Chinese market for over 40 years, so we’re able to share some of the lessons we’ve learned about navigating business in China with our clients, especially in the areas of transportation and sourcing.
Air Freight Rates Remaining High and Cathay Pacific Service Resumes
Air freight rates lowered through May. But this cool down in rates is unlikely to continue. It’s expected that rates will start rising again heading into the traditional summer lull as consumption levels remain high, inventories are low, and supply chain delays persist.6
The increasing demand has led to Cathay Pacific resuming their air freight service to YVR and adding additional freighter service out of PDX starting the week of June 22nd. Contact us if you’d like more information or quotes.
1. R2 Release, Canada Border Services Agency website, Aug 14, 2020. Accessed Jun 10, 2021.
2. Retailers warn of ongoing supply chain woes amid import projection boost, Journal of Commerce, June 7, 2021. Accessed June 10, 2021.
3. Congestion, container issues pile up at Yantian and southern China ports, Supply Chain Dive, June 9, 2021. Accessed June 10, 2021.
4. Yantian terminal congestion to take at least week to clear, Journal of Commerce, May 31, 2021. Accessed June 10, 2021.
5. What the West Gets Wrong About China, Harvard Business Review, May 2021. Accessed June 11, 2021.
6. Air cargo rates set to stay elevated during summer lull, Air Cargo News, June 4, 2021. Accessed June 11, 2021.