With so much happening in the world, it would be easy to forget that a hugely consequential trade agreement is less than a week away from being entered into force. Starting July, the USMCA will be implemented, bringing change to the movement of goods across the North American continent. Companies will now have to adapt to the regulations brought on by the agreement, but having had two years to prepare for it and probably benefitting from the security it brings to supply chain planning, many will welcome them with open arms.

As an article by Spend Matters pointed out back when the the agreement was finalized,

Trade negotiators on Sunday finalized the U.S.-Mexico-Canada Agreement, a new pact that will replace NAFTA. After about two years of turmoil, the deal was welcome news for supply chain professionals because it removed uncertainty from their planning processes. “Glad it’s done — now what does it look like and how to optimize our bottom line and mitigate any ongoing risk,” said Greg Schlegel, founder of the Supply Chain Risk Consortium.

This article by Morai Logistics explains what the USMCA is and what impact it will have on supply chains going forward.

What is the USMCA?

Dubbed “The New NAFTA” or “NAFTA 2.0”, the United States-Mexico-Canada Agreement is a free trade agreement between the United States of America, Mexico, and Canada. It is the result of a renegotiation of the North American Free Trade Agreement (NAFTA). It heavily focuses on the automobile, agricultural, and steel & aluminium sectors. And as a result of the agreement, the companies across North America most significantly effected were those in the agriculture and automobile industries.

What’s Going to Change?

While the USMCA isn’t radically different than previous trade agreements or other agreements that were in the works, it does have some notable differences. Perhaps the most prominent has to do with automobiles. Auto manufacturers now have to ensure three-quarters or more of each of their vehicles are being built in North America. That is even more than NAFTA. That having a requirement in the low 60’s. Thus, to avoid tariffs, North American companies will have to reduce offshoring even more.

Additionally, the agricultural market will be changed going forward. Perhaps most notable will be the relative openness of Canadian agriculture. Canada’s dairy and egg & poultry markets will no longer be as heavily regulated. American and Mexican farmers will have better access to them as a result.

What’s Remaining the Same?

Steel & aluminium will continue to be taxed at 10% by the United States. These tariffs mark the same stance by the U.S. vis-a-vis Canadian steel imports as before.

Similarly, the textile market will also be untouched by this agreement. The restrictions upon the market weren’t strict before and will remain lenient now.

What Does it all Mean?

It’s hard to say exactly how significantly these changes in rules and regulations will influence these various markets. But regardless, supply chains across the continent will be feeling its impacts for better or worse. Like with any agreement, there will be winners and losers. Canadian agriculture might suffer somewhat, for example. However, both Canadian and American automobile should prosper.

A post by ThomasNet highlights some other issues that arise from this agreement to keep an eye on,

For instance, will rising wages accelerate the adoption of automation? Will U.S. farmers continue to produce a surplus of dairy products despite waning demand? And how will the USMCA impact other trade negotiations, particularly between the U.S. and China?

The post The USMCA: What is it and What Does it Mean for Supply Chains? appeared first on Morai Logistics Inc..

According to the International Air Transport Association (IATA), the air cargo industry accounts for over 35% of global trade. Aviation makes the transportation of pharmaceuticals, live animals, electronic devices, and express delivery services possible across the globe.

The role of IATA has been of great importance to ensure the security, profitability and sustainability of the supply chain. However, as global shipping demands and needs of the industry accelerate, so too does the need for change between cargo and airline.

Aviation Pros announced on August 15th, 2017, that “the new IATA FIATA Air Cargo Program has been launched in Canada”. This improved program will meet industry needs in addition to transitioning the relationship between freight forwarders and airlines.

TA FIATA Air Cargo Program

Canada remains a strong leader in the import and export of goods, and even more so when it comes to air cargo transport. To support efficiency and production, IATA aims to:

• Develop global standards and tools
• Offer financial services and industry solutions
• Drive transformation projects
• Create partnerships
• Run campaigns, advocacy and outreach activities

In collaboration with the International Federation of Freight Forwarders’ Association (FIATA), IATA has decided to reengineer the way shippers interact with airlines.

In the past freight forwarders acted as ‘selling agents’ who provided opportunity to airlines, however, as the needs of the industry increased we now see a shift. The Air Cargo Program has been restructured and improved to consider the freight forwarder as a customer of the airlines, a movement that will better allocate responsibilities. There are four key benefits outlined by IATA as a result of this newly improved program, however, one in particular aligns with the global phenomenon of ecommerce. The IATA states:

Working together and establishing joint IATA-FIATA Air Cargo Program increases the potential to achieve key industry goals and common industry initiatives, include e-cargo priorities

We see now more than ever that the integration of the Internet of Things (IoT) and transportation is becoming necessary to move productivity and sustainability forward. The 2017 IATA Cargo Strategy explains the growing need for the air cargo industry to improve efficiency. For instance, moving from paper bill to electronic airway bills will help improve quality of service and reduce errors. Progressive changes, fostered by the new Air Cargo Program, is a representation of Canada adopting a modern approach to global exchange.

Modernization of the Air Cargo Industry

On August 16th, 2017, Morai Logistics announced that the launch of the first full-automated Robo-boat will set sail by 2020. We see modernization taking many routes, and with the air cargo industry we can only imagine the heights the industry will go. E-freight is a great example of the move forward with technology. Writer, Shreya Bhattacharya, states that an ‘e-freight route network’ initiative will not only simplify processes, but will offer transparency following the reduction of delays and inaccuracies.

IATA outlines 10 industry priorities they believe will help move the industry forward. Digitization is included and described as “a key enabler for the development of new innovative services and solutions.” The motivation to modernize the Air Cargo Program is evidence that the industry is looking long term to identify and ensure a smooth and profitable future.

The safe and efficient transport of goods across the globe is facilitated by trusted airlines and freight forwarders. The New IATA-FIATA Air Cargo Program is a global transition to modernizing the way we fly. The benefits are guaranteed to ensure productivity and sustainability and the satisfaction of freight forwarder, airlines and customers.

If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

The post New IATA-FIATA Air Cargo Program: Modern Global Trade appeared first on Morai Logistics Inc..

It’s been 23 years since the treaty was signed. In that time, it’s built up quite the legacy. Let’s looks at how this historic treaty has shaped North American jobs and trade.

NAFTA’s future might be uncertain, but its importance in global politics, economics and world trade cannot be understated. The treaty has reshaped the political economic landscape of Canada, the U.S. and Mexico by tripling regional trade and cross-border investment. That’s not to say it isn’t without its critics. However, the world will be very different if NAFTA were to be replaced.

This is why this week, we thought we’d focus on re-exploring NAFTA. Check out our infographic below for some fast facts!

How Has NAFTA Affected North American Logistics & Supply Chain?

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

The post The State of NAFTA: 23 Years Later appeared first on Morai Logistics Inc..

Pulling the U.S out of TPP was one of Trump’s campaign promises. Though, aside from the possible global-political ramifications of the action, what many are wondering now is if he’ll do the same to NAFTA and what all this will mean for the logistics industry.

Consequences of the Withdrawal

To say TPP was controversial would be an understatement. Several protests around the world were held throughout the negotiations.

There are many reasons for and against TPP, with both sides passionate about their position. But, the trade agreement would have created a network encompassing 40% of all world trade and affected millions of people across the world. Other global concerns would’ve been impacted as well, including cyber security, environmentalism and free trade.

Fallout of the withdrawal is being hotly debated across the professional and media landscape. So we have detailed the three key concerns that are being discussed:

• Loss of North American competitiveness — TPP would’ve eliminated more than 18,000 taxes and trade barriers across its member countries. By pulling out of the trade agreement, the U.S and by extension Canada, is losing out on a large section of the global market. Farming manufacturing, and the services and technology sectors will be impacted the most. While Canada and Mexico can still negotiate on their own, they lose a lot of bargaining power without U.S backing.
• Loss of North American influence over global trade — One notable absence from TPP was China. Some experts theorized the exclusion was intentional. TPP they argue, was an attempt to counter China’s growing economic influence on global trade. China has pushed its own trade pact, called the Regional Comprehensive Economic Partnership (RCEP), which currently has 16 members. By backing out of TPP, Trump may’ve pushed some countries that originally signed to seek other trade agreements, like RCEP.
• Risk of protectionism — The U.S is not part of the RCEP. If it goes through, experts are worried that it will have tariffs against the U.S. This, along with the shaken confidence of TPP members may raise the number and cost of tariffs.

What Will Happen with NAFTA?

Trump promised Americans to either renegotiate or outright end NAFTA during his campaign. His actions with TPP indicate he’s serious about his promise.

When asked on Monday, White House press secretary Sean Spicer said Trump would rather renegotiate NAFTA rather than tear it up.

“Mr. Spicer said Mr. Trump’s complaint is with “multinational” trade deals because they are more complicated to renegotiate. But he said the President was open to bilateral deals – a sign that he might be willing to keep a deal with Canada, even if he makes good on his pledge to change the terms of NAFTA to make it harder for American companies to move to Mexico” wrote Adrian Morrow, reporter for the Globe and Mail.

Trump will be meeting with Prime Minister Trudeau and Mexican President Enrique Pena Nieto in the coming weeks to discuss a renegotiation.

If NAFTA were to end, it would have serious negative repercussions for the transportation, manufacturing and logistics industries across the three nations.

The end of TPP is already having an impact on offshoring efforts. Thus, the coming weeks will see if nearshoring efforts will be upturned as well.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news.

The post Trump Pulls Out of TPP – Is NAFTA Next? appeared first on Morai Logistics Inc..

Several companies were unable to ship their products in a timely manner leading to the accumulation of more and more extra supplies and products. This inventory glut crowded warehouses, eventually forcing companies to cut back on their new orders to clear out their backed-up storage facilities, costing several different businesses in the short and long-term. A new study by the Washington Council on International Trade came out this week and it analyzes the costs and impact of the labour dispute across multiple industries and sectors, including agriculture and food processing, retail, and transportation and manufacturing.

Several different estimates were forecasted at the time as to the cost of the slowdown. “Kurt Salmon consulting firm previously estimated the slowdown would cost U.S. retailers $7 billion. The Manhattan Institute conservative think tank projected apple farmers alone lost $19 million during each week of the slowdown. The North American Meat Institute estimated their losses to be more than $40 million each week” cites this article on USNews.com reflecting on the topic.

The study gives a breakdown as to the actual price tag for the slowdown which ended up being very significant for both the U.S economy, trade, and several different industries:

• U.S. exports dropped by more than $11 billion (nearly 6 percent) between May 2014 and February 2015.
• An estimated $558.8 million in exports were not shipped by water during those months. Some exporters diverted to air cargo, increasing shipments by air a total of $152.6 million.
• The value of goods that were not shipped during the period was $403.2 million.
• Importers racked up an additional $345.1 million in additional costs through reductions in inventory incurred by retailers, delayed delivery of components to manufacturers and so forth.
• Demurrage (storage) fees that would not have occurred if there were no port congestion totaled $7 million, and truck-idling costs of $14.2 million resulted.
• Fruit and meat rotted aboard idle West Coast ships, many of which were anchored off relatively warm ports like Los Angeles.
• Shipping companies rolled out surcharges upward of $1,000 per container on some ships to help cover expenses related to failed deliveries.

The total cost the study determined, is $769.5 million, however the council is very clear that this is only the short term cost. Long-term costs will be more far reaching. “Future costs, such as damaged client relations resulting in the loss of business or sole source contracts, can have long-lasting impacts on Washington businesses,” said the study. “While these impacts are not quantified in this report, they are real and potentially much greater than the near-term costs presented above.”

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

The post The West Coast Port Labour Dispute: One Year Later appeared first on Morai Logistics Inc..

Optimism from Mayor

Political stakeholders have been the most optimistic about the future of the West Coast port and its ability to meet the massive backlog that has accrued over the protracted labour dispute.

” Business should return to normal at U.S. West Coast ports in about three months, and long-term damage from a nine-month labor dispute should be limited, said Long Beach, Calif., Mayor Robert Garcia in an interview with the Wall Street Journal.

Later in the article, he admits that some business may have been permanently lost to East Coast ports, but remained confident that they would regain the vast majority of the business.

Zepol report

A report put out by Zepol concerning the impact of the West Coast port strike puts forth a less optimistic view than Mayor Robert Garcia. Some of the highlights of the report are as follows:

• Total U.S. container imports are down over 5 percent this year, compared to January and February of 2014.
• The ports of Los Angeles and Long Beach, which make up a combined 40 percent of U.S. container imports, declined by 19 and 20 percent so far in 2015.
• East Coast ports have increased container imports by 8 percent this year.
• Total U.S. imports by TEUs (twenty-foot containers) dropped from 2.93 million in January through February of 2014 to 2.78 million in 2015.
• Combined, the ports of Los Angeles and Long Beach have declined by over 230,000 TEUs compared to the first two months of 2014.
• The port of New York/Newark grew by over 34,000 TEUs. The port of Savannah increased 20 percent with an increase of over 40,000 TEUs and Houston rose 29 percent, by nearly 31,000 TEUs.

Canadian fallout

Although Canada wasn’t as heavily affected by the strike as its southern neighbour, however retailers north of the border still felt the impact of the situation, in particular, Ontario’s automotive plants.

An article on OurWindsor.ca discussed the potential and actual impact of the west coast strike at the time. Instances of Honda Honda Canada Manufacturing plants sometimes running at 60 % capacity, congestion at B.C. ports, shipping containers running five to 10 days late, and a trickle-down cost to consumers from additional costs incurred from said congestion were all issues that this article brought up.

As previously mentioned in this article, the worst of the strike seems to be over. However, there’s still a chance that even with the most optimistic of predictions and outcomes, more complication will arise. Especially when the five-year deal still must be approved by the 13,000-member International Longshore and Warehouse Union’s rank-and-file.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

The post Assessing the Costs, Consequences, and Repercussions of the West Coast Port Strike appeared first on Morai Logistics Inc..