Hey, customs brokers. U.S. Customs and Border Protection (CBP) has changed some of the regulations for customs brokers. The rules technically went into effect Dec. 19, but there are some that still need additional clarity. The entire purpose of the new regulations was to modernize them so we aren’t still relying on the Pony Express to get customs brokers’ updated paperwork delivered.
The new. According to the new regulations, customs brokers only have to obtain a national license to do business at any port in the U.S., whereas before they had to obtain licenses from each state. The cost of a national license is more expensive than any state license, but the fact that there is now only one application makes it an attractive option. Smaller customs brokers are now players in importing, since a national license allows them a seat at the table to seize opportunities previously not available.
The sticky part. Customs brokers now must have a power of attorney in place directly with the goods importer. This legal instrument can’t be with a freight forwarder, only with third parties that have a letter of authority to act on that shipper’s behalf. A new feature of these regulations is that all breaches, physical and electronic, must be reported to the importer and the CBP within 72 hours of their occurrence.
Overall, these new regulations seek to enhance security, allow for smaller players to enter the arena and improve an import process that can be challenging at best.
Staying with the theme of cross-border trade, the Port of Laredo has taken home the crown for U.S.-Mexico agricultural trade. Millennials might be the demise of many other industries, but our love of avocado toast might have just clinched this win for Laredo as the port remains where a majority of the produce shipments, via rail or truck, have entered the country.
The demand for cross-border trade has resulted in nine entry points in the Laredo customs district, which covers 84,041 square miles of southwest and northeast Texas. As Laredo continues to be the powerhouse of U.S-Mexico agricultural trade, a broker with little to no presence there would be staring at a missed opportunity. Mexico is poised to be the top trading partner with the U.S. this year and as nearshoring rises so will those volumes.
Market check. Well, well, well, look at those outbound tender volumes starting to increase at a national level. There’s a brief glimmer of hope as the Outbound Tender Volume Index starts to rise even as outbound tender rejections stay consistent at some aggressive lows. Could it be the sign that volumes are returning? It might be a little too early to tell. This spring and summer could be the return to normalcy the trucking industry has needed. FreightWaves founder and CEO Craig Fuller provided some impressive insights in his article.
How’d the lemonade stand do? Old Dominion Freight Line’s stock dropped following Credit Suisse’s decision to move the less than truckload shipping company from a neutral to underperforming rating. Other financial analysts are recommending it might be time to take a break with transportation freight stocks, according to a Seeking Alpha article. Joining Old Dominion in recent ratings changes, Saia moved to outperform while TFI International, XPO and ArcBest are seen as having more attractive stock valuations.
In the asset-based, full-truckload space, Knight-Swift has closed the fourth quarter a little shy of where it wanted to be as the adjusted earnings per share was $5.03, lower than the $5.17 to $5.22 that was planned. As noted in Todd Maiden’s FreightWaves article, “Revenue in the company’s truckload unit fell 7% [year over year (y/y)] to $921 million excluding fuel surcharges. Revenue per tractor was down 9% y/y as loaded miles declined 3% and rate per loaded mile (excluding fuel) was down 4% to $3.18 (only 4 cents lower than in the third quarter).” Knight-Swift appears to be ready to weather the storm expected during the first few months of 2023 before freight volumes and rates are anticipated to pick back up.