Home Insights & Advice How the US government shutdown impacts freight forwarding, exports and logistics

How the US government shutdown impacts freight forwarding, exports and logistics

by John Saunders
22nd Jan 19 9:38 am

The US Government has been on shutdown since the 26th December 2018, some workers in federally funded agencies are coming up to their second month without a pay check, and it seems that there is a large amount of confusion surrounding how this shut down impacts freight forwarding, exports and logistics.

Who is shut down?

Not all federal agencies are shut down, different agencies are funded in different ways across the USA. While some workers are receiving pay checks and not working, others are working and not receiving pay checks. Here we try and explain what this shutdown means for freight forwarding, Exports and Logistics.

The Federal Maritime Commission, also known as the FMC. This is one of the agencies affected by the government shutdown with no staff being paid. Whilst this agency being shut down does impact exports, it is only in the customer service sense. As no staff are working, there is no one available to answer complaints, concerns or if any cargo has gone missing.

There is also no protection for cargo being moved under their jurisdiction. The website is not being updated, so cannot provide organisations with any avenues to voice concerns or ask questions that impact their operations. It is worth noting that operations that are crucial to national security are still operating and will continue to do so, however this is handled by a separate agency.

Foreign Trade Zones or FTZ’s. This is what the rest of the world call free trade zones. Exports arrive into these zones, are then checked, manufactured if required and forwarded on for distribution. This area is in total shutdown, but it does not impact all the exports as not all exports are subject to the free trade agreement.

Localised logistics

Data and information pertaining to local logistics across states is proving hard to come by. The best advice that can be given to logistics firms and organisations is to remain flexible and communicate. This will help other organisations in the same situation as well as consumers or the end user.

International logistics

Whilst international cargo is not currently being held up directly due to the shutdown, custom brokers are becoming increasingly concerned that international cargo will begin to be indirectly impacted. As workers within cargo clearance are not being paid, morale is suffering and as a result small mistakes are being made. Usually these mistakes wouldn’t equate to any issue and could quickly be rectified, however these mistakes are becoming more frequent and have the potential to cause pinch points in the system. These pinch points in processing can impact cargo moving into the US, as the mistakes will need to be rectified.

Initially, it was suggested that if the US Government was shut down for an extended period of time, that it would only slow international exports into the US. However as the situation has become protracted and employees disenfranchised, the cumulation of the mistakes has the potential to have far reaching consequences.

Freight forwarding

Globalisation has made supply chains increasingly long and tenuous, if one link in the chain begins to fail, the entire supply chain can suffer. With the US shutdown continuing, international freight forwarding is starting to show signs of becoming problematic. Physically, the freight is still moving through the US onto other trading partners. However, the issues are starting to arise in the paper work. Permits and the correct forms are not being filled out and passed onto the exporters and forwarders that require it.

As some Government agencies are operating without the support of other agencies and are now working in isolation, cracks are beginning to appear in the system, which is reminiscent to the shut down in 2014. The 2014 shut down paralysed the West Coast port entry system for exports and forwarding and at its height cost the US economy a billion dollars, per day of shut down.

As a large number of websites aren’t being updated due to lack of staff, it is difficult to be totally sure on the impacts of the US Government shut down. The information garnered suggests that freight forwarding, exports and logistics organisations and custom brokers are handling the situation well and through effective communication can continue to do so for the interim.

However, the cracks in the administration processing are beginning to appear. These administrational errors and isolation from sister agencies could create a perfect storm situation where international cargo and freight cannot move into the US and like the shutdown of 2014, would paralyse the inward trade route entirely.

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