Freight forwarders face complex challenges

As we close out 2024, it’s clear that freight forwarding in the US is navigating a complex web of challenges and opportunities. From labour disputes to natural disasters and tightening regulatory frameworks, the air cargo and logistics sector continues to be at the forefront of US economic resilience.

Members of the Airforwarders Association have witnessed firsthand how the freight forwarding community has adapted, often under intense pressure, to keep goods moving in an increasingly volatile global environment.

Here’s a brief look at some of the key developments shaping the industry today.

Dodging a major disruption: The longshoremen’s tentative Agreement

One of the most significant developments this year came just weeks ago when the International Longshoremen’s Association reached a tentative agreement after a three-day strike at East and Gulf Coast ports. This situation had the potential to cause severe disruptions to shipping and freight forwarding operations across the nation.

For every month that port activity is halted, industry experts estimate it takes three to four months to fully recover, meaning a prolonged strike could have had devastating ripple effects on supply chains heading into the critical holiday season.

Thankfully, the tentative agreement provided a temporary reprieve, but it serves as a reminder of how vulnerable our supply chains can be to labour disputes. Freight forwarders, who often serve as the connective tissue between shipping lines, ports, and shippers, would have borne the brunt of these disruptions, rerouting shipments, and mitigating delays for their customers.

While we’ve dodged a bullet this time, the strike underscores the need for continued dialogue between labour, management, and government to ensure that our ports remain operational and efficient.

Natural Disasters: Hurricane Milton and Its Impact on Logistics

While the ports have stabilised for now, the logistics sector faced another hurdle with Hurricane Milton, which tore through Florida, causing an estimated $160bn in damages. While no major immediate shipping disruptions were expected, the storm’s impact on trucking and airfreight logistics was significant.

Truck carriers have been avoiding Florida, and airports across the state were temporarily closed as the storm passed through. Millions of residents were left without power, further complicating recovery efforts.

In situations like these, freight forwarders play a critical role in rerouting shipments, finding alternate airports and trucking routes, and ensuring that essential goods like medical supplies and food reach affected areas. The ability to quickly adapt to changing conditions is one of the strengths of the air cargo and freight forwarding industry, and Hurricane Milton provided yet another test of our resilience.

Regulatory Shifts: Enhanced Air Cargo Advanced Screening (ACAS) Requirements

On the regulatory front, enhanced Air Cargo Advanced Screening (ACAS) requirements on shipments coming into the US remain a focal point for forwarders and customs brokers. These enhanced regulations, which place stricter demands on pre-departure data submission, particularly for high-risk shipments, have required freight forwarders to work even more closely with US Customs and Border Protection (CBP) and the Transportation Security Administration (TSA).

In the coming months, we can expect a greater emphasis on more specific commodity descriptions, especially as the US government focuses on potential changes to de minimis thresholds surrounding e-commerce shipments.

Forwarders and customs brokers will need to adapt their operations to ensure compliance with these new rules while maintaining the efficient flow of goods. Collaboration and technology are key, and many in the industry are investing in digital solutions that streamline data submission and improve transparency across the supply chain.

Fighting the Fentanyl Crisis: New Legislation

On the legislative front, one of the most pressing issues is the fight against synthetic opioids like fentanyl, which continue to ravage communities across the US. The recently introduced “Stop Smuggling Illicit Synthetic Drugs on US Transportation Networks Act of 2024” (S. 5284) takes direct aim at the role of transportation networks in the trafficking of these dangerous substances.

The bill, championed by Senators Maria Cantwell, Jon Tester, Jacky Rosen, Tammy Baldwin, and Ben Ray Luján, directs the Office of National Drug Control Policy to develop a comprehensive national strategy to combat the smuggling of illicit synthetic drugs.

The bill also focuses on integrating cutting-edge technology, including artificial intelligence and quantum hybrid computing, into the detection process. It mandates that CBP carry out non-intrusive inspections of 100% of motor vehicles and railroads entering the US at all land ports of entry within five years, with similar inspections phased in for civil air cargo and maritime cargo over the next decade.

For freight forwarders, this legislation represents both a challenge and an opportunity. While the added inspections will require significant adjustments to operational workflows, the use of advanced technology could streamline the process and reduce the burden on businesses.

Forwarders will need to stay ahead of these regulatory changes by investing in compliance technologies and fostering closer collaboration with law enforcement and government agencies.

De Minimis Policy: What’s next for e-commerce?

Another area of regulatory scrutiny is the US de minimis import policy, which allows for goods valued under a certain threshold to enter the country duty-free and with minimal documentation. With the rise of e-commerce, there has been growing debate over whether the current de minimis threshold, set at $800, remains appropriate, particularly given concerns over the misuse of the policy to evade duties and taxes.

Changes to the de minimis threshold could have significant implications for e-commerce, especially for international sellers and the forwarders that facilitate their shipments. If the threshold is lowered, forwarders will need to adjust their processes to accommodate more detailed customs filings and potentially higher costs for their customers.

This is an area where we are closely monitoring developments and engaging with policymakers to ensure that any changes are implemented in a way that minimizes disruption to the flow of goods.

Moving Forward

In closing, the freight forwarding industry remains a critical component of the US economy, facilitating the movement of goods across borders and ensuring that businesses and consumers receive the products they need.

As we navigate labour disputes, natural disasters, regulatory changes, and the fight against illicit drug smuggling, it’s clear that the industry’s role is more important than ever.

Through close collaboration with government agencies, investment in technology, and a focus on compliance, we can continue to meet the challenges ahead while ensuring the smooth flow of goods across our borders.

We look forward to continuing our work with all stakeholders to keep America’s supply chains strong and resilient in the face of future challenges.

Preserving the US de minimis threshold to foster global trade

US freight forwarders take note: new guidance clarifies export compliance responsibilities