Whenever a government shutdown happens, there are bound to be areas of disruption within our industry. As it currently stands, the December 2018 shutdown is only a partial closing.
Yet, issues are already apparent — including some significant problems that cannot be resolved until the shutdown is over. If the shutdown extends longer term, more supply chain professionals may be affected.
While the government shut down most directly affects the thousands of employees not receiving paychecks, others are beginning to feel the effects too. During times of uncertainty, many people choose to slow spending and wait. It’s likely that this behavior could affect our entire economy if the shutdown continues.
Department of Energy and fuel surcharges
Many supply chain professionals routinely rely on Washington every week when they review and use the weekly diesel price average. Published by the Energy Information Agency (EIA) to adjust contract rates for fuel surcharges, this rate plays an important role in trucking.
On September 21, 2018, after President Trump signed a bill funding energy and water related portions of the federal government, the Department of Energy received funding for 2019. Accordingly, this area of the government is still operating during the shutdown.
Department of Transportation and future rulemaking
Even more directly related to our business, the U.S. Department of Transportation (U.S. DOT) did not receive funding for 2019. Yet the Federal Motor Carrier Safety Administration is currently open as it was funded through the Highway Trust Fund. A long-term shutdown may delay the high-level approvals required for rulemakings from the Federal Motor Carrier Administration around new hours of service (HOS) proposals.
Customs clearance process and delays
The customs clearance process is feeling the immediate impact of a longer-term shutdown. Often, cross-border freight requires approval from partner agencies — the U.S. Department of Agriculture and the U.S. Environmental Protection Agency to name a few — beyond just Customs and Border Protection (CBP).
While many CBP employees are required to report to work, CBP will not be funded during the shutdown. Accordingly, certain processes may be held up during the shutdown, including duty refunds, Post Summary Corrections, and Duty Drawback claim refunds. While hard working customs officers are essential personnel, the closing of these partner agencies may cause significant delays at borders and other related requests to go unprocessed.
Changes to the Harmonized Tariff Schedule (HTS)
The CBP updated their electronic version before year end and accordingly, tariffs are being filed correctly. Alternately, the International Trade Commission has not yet published a 2019 version of the HTS.
Certain private HTS resources have the updated tariff for their subscribers, yet there appear to be updates to certain Unit of Measure that were not previously announced (e.g., grams now to be reported as gm instead of g; hundreds is now reported as HUN). We’re also seeing that certain changes not implemented by January 1, 2019 cannot be claimed until the shutdown is over. Talk to your import expert if any of these changes directly affect your business.
Staffing at various locations is limited
The quota desk continues to work openings. The next opening is for the specialty sugar quota on January 23, 2019. They will issue a CSMS message prior to the opening.
There are many reports that other locations are not operating at full staff. Expect delays while contacts are tracked down to assist when necessary. Overtime is allowed but ports will be cautious and prudent in allowing it as the overtime budget for the coming year is unknown.
The longer the government shutdown lasts, the more disruptions supply chain professionals will notice. As the shutdown continues, more cross-border freight delays will occur as well as some ancillary impact that motor carriers may see while the U.S. DOT is down.
Work closely with your supply chain team or bring in skilled logistics experts to keep you up to date about what the shutdown means for your business.
Jason Craig is Director, Government Affairs at C.H. Robinson. Jason has 20 years of industry experience and a deep understanding of government policies. He monitors regulatory and legislative issues impacting the transportation and produce industries for C.H. Robinson. Jason is member of the Minnesota Freight Advisory Committee (MFAC) and serves as an election judge in the City of Minneapolis.