Blog/News

CBP CONSIDERING DUTY PAYMENT EXTENSIONS

In response to the difficulties facing American businesses due to the COVID-19 pandemic and associated control measures, Customs and Border Protection is contemplating granting relief to importers.  In consideration of requests from the National Customs Brokers and Forwarders Association Customs Committee, chaired by GEODIS’ SVP of Trade Services and Government Relations Mary Jo Muoio, along with other industry group requests, CBP is looking at ways to provide flexibility to and extensions for a wide variety of deadlines importers face with customs obligations.

Specifically, CBP is considering granting a ninety-day extension of duty payments.  At this time CBP is working to understand authorities and mechanisms which may allow this and specifics are not available. In the meantime, CBP is reviewing extraordinary requests on a case-by-case basis.  As of today, lacking specific individual permissions, duty and related obligations remain in place.  We expect more information in the near future and will alert our clients as soon as known. If you would like to seek temporary duty-payment relief from CBP, please contact us immediately.  Initially, this relief would be for importers having duty payments due in the next week; if broader CBP issued extensions are not granted, we will pursue additional case-by-case requests.

 If you have questions about your duty payments, bond obligations or challenges meeting other CBP commitments, contact your account representative at Express Trade Capital, Inc. 

China Market Update

Overall Market Conditions:

China officials have extended the Spring Festival Holiday until after February 2. The length of the extensions may vary depending on the location. Shanghai has extended until February 10, while others until February 14 or longer. As factories re-open, labor continues to be minimal as public transportation in certain cities or provinces are still under restriction and quarantine. These can last up to an additional 14 days or longer. Trucking equipment and services as well are still impacted due to the lack of labor as well as road restrictions preventing normal pickup and delivery services.

Airlines:

Passenger Flights: Over 60 airlines have announced cancellation from flights to/from China.

Freighter Flights: Freighter flights are slowly returning as demand continues to increase. As of now, 60% of freighter flights are still not operating.

Airfreight Pricing: Due do the current supply & demand, transit is continued to be limited under a Force Majeure environment based on first come basis.

Infrastructure:

The major airports that are impacted are PVG & CGO with limited amount of staff. WUH is closed until further notice and those operating under normal conditions include, BJS, SZX, HKG, LAX, ORD, JFK, AMS, & FRA. 

All Seaports are operating under normal conditions, excluding Wuhan & Yichang a Hunan province. Ocean demand has dropped by more than half and is not expected to pick up again until after February 20.

Please contact our logistics office with any further questions contact@expresstradecapital.com.

Turkey Steel Tariff Returning to 50%

President Trump announced that Turkey’s tariff rate for steel products under the Section 232 would be returning to 50% in response to a military invasion from Turkey into Syria. The steel tariffs on Turkish steel was previously increased to 50% in August 2018 and then reduced back to 20% in May 2019.

In addition to the increased steel tariffs, the president advised that the U.S. will cease trade talks with Turkey and will impose additional sanctions. In May, the U.S. terminated Turkey’s participation in the Generalized Systems of Preferences (GSP).

Section 301 Tariffs Increase to 30 Percent on Chinese Goods Suspended

After meeting with Vice Premier Liu He of the People’s Republic of China, President Trump announced in a news release on October 11, 2019 that the duty increase from 25% to 30% on List 1, 2, and 3 products would be suspended. A final decision will be made later regarding the additional duties scheduled to go into effect December 15, 2019 for List 4B commodities.

Information regarding the phase one deal can be found in the White House news release here.

IF YOU IMPORT FROM THE E.U.

Following a World Trade Organization decision paving the way, the U.S. Trade Representative (“USTR”) has published a list of products form E.U. origin which will be subject to additional duty rates of 10% or 25% ad valorem, effective October 18, 2019.

We expect that a FEDERAL REGISTER notice will be published with the details including confirming the definition of the October 18 effective date; effective dates are commonly based on the date of entry. 

A link to the list of products, countries and additional tariff rates may be accessed at:  https://ustr.gov/sites/default/files/enforcement/301Investigations/EU_Large_Civil_Aircraft_Final_Product_List.pdf

As with other tariffs, close coordination with your carrier and EXPRESS representative is needed to avoid duties assessed to shipments arriving before the effective date.  EXPRESS Trade Capital, Inc. is available to answer your questions, help assess impact to your business and discuss mitigation strategies. Reach out to us at logistics@expresstradecapital.com

Recycled Retail

By; Carli Valinoti, Express Trade Capital

One of the newest sustainability trends is making old garments new again. Evrnu, a Seattle-based textile-technology startup, is making old clothes and fabrics into new fibers that can be used for recyclable fashion.

Although their products are still being tested, Evrnu has just launched a limited run of recyclable unisex sweatshirts for Adidas by Stella McCartney, calling them “EVER-new.” The hoodies will not be available for the public until 2020 but will be given to athletes to promote the new sustainable line. “Right now, in the U.S., consumers dispose of about 80% of their textiles directly into their garbage can. That’s the behavior we’re really trying to tackle,” said Stacy Flynn, chief executive and co-founder of Evrnu. Recycled textiles can be made into premium fibers which can be dyed and woven into new fabrics made for all different types and styles of clothing. In 2016, Evrnu teamed up with Levi’s Jeans and launched a prototype of jeans made only from repurposed cotton T-shirts.

Consumers are becoming more aware of certain industries’ toll on the environment, including the fashion industry. Although creating new fibers still has some detrimental impact, the process uses a fraction of the amount of energy and chemicals used to make polyester clothing. These recycled garments may end up having a higher price-point, but as more people become aware of how sustainability can help the environment, people may be willing to pay more.

ETC takes great pride in working with sustainable and eco-friendly companies. Contact us for all your factoring needs!

Managing Director Mark Bienstock Talks Trade War with California Apparel News

Business owners who rely on China’s abundant manufacturing facilities and low production costs may be in for a massive challenge. The ongoing trade war the US government has waged with China may not end by March, meaning more potential tariffs that could disrupt the global economy.

ETC’s own Mark Bienstock and other industry experts spoke to California Apparel News this week about strategies to protect yourself and your business from the effects of this ongoing international conflict.

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Tackling Common Problems, Part 1

Sadie Keljikian, Express Trade Capital

Running a wholesale business is financially and logistically complex. There’s a lot to monitor and numerous variables can force you, the business owner, to think and act quickly to effectively manage unforeseen difficulties. Fortunately, most of these difficulties fall into a few categories of common problems that come up for small to mid-sized businesses.

Since these issues are common, solutions are readily available, though perhaps not obvious to less experienced business owners. Addressing them is just a matter of having enough experience to know how best to do it. Here are a few examples of common hiccups for which new businesses might not be prepared and what to do if they come up:

  • Problem: you’re a clothing designer and you decide to start producing and selling your designs independently. You have your designs and samples ready, you’ve sold some pieces direct to customers online, and you’ve even had promising discussions with local boutiques that would like to sell your pieces. There’s just one problem: you’re running this business by yourself and there’s no way you can produce the quantities the boutiques want in the given time frame. How can you get your business off the ground and establish a sustainable production structure?

Designers and inventors consistently run into the same problem: how can I produce the required amount of my product by the time my customer needs it without overextending my resources? There are a few ways to handle this. One is to simply turn down orders you can’t reasonably fulfill using your current production processes, but that means you’d miss out on opportunities for growth.

Another approach is to hire a team to manufacture your products on-site. This is an expensive option since it involves hiring new employees and acquiring new equipment, but it allows you to control product quality and directly and provides a foundation for increased output. As long as the business doesn’t grow more quickly than your overhead can accommodate, manufacturing on-site is a perfectly viable option.

Alternately, many designers and inventors choose to outsource their manufacturing processes, which removes the need for additional employees and specialized facilities. Some creators aren’t comfortable handing their designs over entirely, usually because they worry that their design will be plagiarized or that product quality will suffer. While quality and security concerns are valid, sufficient research and vetting will indicate whether a production facility is trustworthy. As long as you do your homework, outsourcing is an effective and efficient way to increase production.

  • Problem: a buyer at a big-box retailer contacts you to place a huge order. Your production line is ready, but you soon realize that the cost of fulfilling such a big order will leave your operational funds severely depleted. You don’t want to pass up the opportunity to gain bigger customers and expand your business, so how can you fulfill the order without dipping into funds you need to run your business?

Many flourishing wholesalers lose traction because they pass on big orders from influential retailers out of fear that they’ll lose equity or acquire unmanageable debt. What a lot of new business owners don’t realize is that there are ways to supplement business-related costs that don’t involve expensive traditional-style loans.

One way to approach the issue is to apply for a line of credit with a bank or private financial institution. Just like a credit card, a line of credit allows you to defer expenses that might be prohibitive. As long as you and/or your business is creditworthy and you are able to pay on time, there is very little downside to securing a line of credit on behalf of your business.

Another option is to use alternative lending (or “alt lending”). Alt lending is a growing and thriving field in which lenders use creative financing methods, meaning that you don’t necessarily need perfect credit to receive funding. Private financial institutions who offer alt lending solutions can offer funding against purchase orders, invoices, equipment, and even unsold inventory. Most importantly, this method allows you to borrow small amounts as needed, rather than borrowing a lump sum and worrying that you’ll accrue excessive interest.

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Unclouding the Future of Manufacturing

Sadie Keljikian, Express Trade Capital

Job creation, especially in the manufacturing industry, is a hot topic in the US right now. Since last year’s presidential campaign, there’s been an ongoing debate among politicians, business owners, and news outlets about the future of domestic manufacturing. President Trump has blamed the uptick in outsourced labor and consequent job losses on NAFTA, calling it the “worst trade deal” in American history. However, numerous sources argue that technology and automation are the real culprits.

Several sources claim that machines (not outsourcing) are responsible for about 85% of US manufacturing jobs lost since 2000. Even so, many American-run companies are bringing domestic manufacturing back in anticipation of potential legal and regulatory changes emanating from the tumultuous Trump administration, like the proposed border adjustment tax. With advances in automation spanning every industry, even farming, and robotic technology becoming more affordable, it is hard to imagine that there are as many potential jobs in domestic manufacturing as voters have been led to believe. It’s easier for candidates to make vague promises than to explain the more complex and subtle truth. Thus, politicians have been stoking voters with pledges to bring back a golden age of employment that no longer exits and is no longer feasible.

Businesses are taking different approaches in their attempts to create jobs. Some are bringing manufacturing back to the US, banking on the cache of goods labeled “made in the USA” and on US consumers to support domestic businesses by purchasing them, even at a premium compared to their imported counterparts. However, since automation has taken over so many manufacturing processes, it is unclear whether it is a viable long-term solution for employment. Others are attempting to create new jobs by consolidating the retail experience. With recent difficulty in the retail industry, particularly among stores commonly found in malls, some retailers, like Walmart, are creating a mall-like experience within their stores. Many Walmart locations now include services like eye care, dining, and salons, which keep customers in the store by providing them with services they already need.

Other sources claim that there is a serious opportunity for job creation inherent in the current rise of e-commerce. As online shopping continues to grow in popularity, retailers who focus on e-commerce are hiring new sales staff at impressive rates. What’s more, comparable jobs in e-commerce have better salaries, paid leave, stock benefits, and insurance than similar positions in their brick and mortar counterparts. Unfortunately, however, these jobs are highly concentrated in major metropolitan areas, so they don’t reach most of the geographical US.

Some experts are still holding out hope for traditional US manufacturing jobs, just not in mass-produced products. In recent years, the US has seen a rise in domestic manufacturing of custom or handmade products. While these products will never reach mass-production volumes, they appeal to the conscientious shopper who is less concerned with cost than they are with knowing where their money is going. These businesses usually use eco-friendly, fairly traded raw materials and typically work on a much smaller scale, in terms of both space and workforce. Since the products are more expensive to make, they naturally cost more for consumers. However, marketing and sales of such products typically target consumers who are willing to pay the extra cost of purchasing ethically sourced goods, so low volumes aren’t as much of a hindrance to the success of smaller scale, eco-friendly, domestic manufacturers.

In contrast with all the above perspectives, some still say that domestic manufacturing employment is already far more prosperous than most of us realize. A recent paper from the Center for Opportunity Urbanism indicates that 52 of the country’s 70 largest metropolitan locations have actually seen an increase in industrial employment since 2011. Forbes agrees and both say that while manufacturing is unlikely to disappear altogether, the issue is not that the industry is disappearing, but rather that it peaked in the 1950s and will likely never reach or surpass those levels again. Both sources blame automation for the sea change in the industry.

Whatever the case going forward, several of the country’s most prosperous industries are changing the way they do business. Many companies employ technology to cut costs and increase efficiency, often at the expense of jobs. Others simply outsource their production to countries with substantially cheaper labor costs. Might this mean that the end of significant employment in the US manufacturing sector? Possibly. The shifting landscape indicates that the new challenge for governments, manufacturers, and especially for retailers, is creating new jobs. So far, that’s job we cannot automate or replace with technology. Either way, it seems clear that, as technology continues to advance, creative destruction will continue to bedevil any semblance of a stable labor market.

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