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Export delays loom if US government shutdown goes long-term

Export delays loom if US government shutdown goes long-term

As the US government shutdown enters its 20th day there are fears it will impact on Australian exports such as wine. 

According to Jason Craig, director of government affairs for freight company C.H. Robinson, back-ups and congestion on land and along the nation’s waterfronts due to a lack of customs clearance personnel could be where carriers and shippers see the most immediate effect of a long-term Federal shutdown.

“And it's not just the land borders with the US and Mexico - imports from Europe and Asia could be affected as well. The same type of clearance process goes on whether it arrives by truck or ship or plane.” he said.

Port of Los Angles spokesman Phillip Sanfield said the shutdown has not slowed freight clearance at the port’s terminals so far, as its customs and security agents are exempt from the government funding problem.

“These folks crank it up a notch in these situations, but I’m not sure how long that situation lasts as the shutdown continues,” he told FreightWaves.

According to the National Customs Brokers and Forwarders Association of America (NCBFAA) president Amy Magnus issues will arise if the automated customs clearance system rejects a shipment. 

"If the data were to be rejected, then it becomes a challenge to get answers," Magnus, who is also director of customs affairs and compliance with A.N. Deringer, told JOC."Luckily we haven’t run into a situation yet.” 

Airforwarders Association (AfA) executive director Brandon Fried added: “A difficult question might relate to a complex duty classification situation, or the decision to hold more than one of an importer's containers for inspection based on a hunch.”

JOC noted: "If the situation deteriorates, then beneficial cargo owners confront the dreaded ‘D’ words: detention and demurrage. Free time expires and containers would be subject to daily charges even though truckers cannot legally remove the container. It’s a difficult situation with no right answers.

"Shippers would claim demurrage fees are unfair when containers are unavailable for reasons beyond their control, as a petition to the Federal Maritime Commission highlighted. Terminal operators would argue that they aren’t a storage yard. Ocean carriers would point out missed business opportunities because their equipment is tied up. Each would demand compensation for their costs."

Trump rejects latest calls for a compromise

More than 800,000 federal workers are about to lose their first pay cheque since being furloughed or working without guaranteed pay. Services have been curtailed across numerous government agencies as a result.

The latest talks between President Donald Trump and congressional Democrats, aimed at ending a partial US government shutdown, collapsed earlier today.

During the White House meeting, Democrats once again pressed President Donald Trump to reopen most of the government. Trump refused, instead asking House of Representatives Speaker Nancy Pelosi whether she would agree to fund his proposed wall between the US and Mexico.

When Pelosi said "no," Trump exited the room.

"I asked what is going to happen in 30 days if I quickly open things up, are you going to approve Border Security which includes a Wall or Steel Barrier?" Trump wrote on Twitter.

"Nancy said, NO. I said bye-bye, nothing else works!"

There is little optimism in Washington that the stalemate will end any time soon.

Impact on brewing and winemaking sector

Until the government reopens, the drinks industry won’t be able to gain approval for any new beer or wine releases.

Breweries and wineries require federal approval for their products’ labels. However, the Alcohol and Tobacco Tax and Trade Bureau, the agency in charge of approving labels, licenses, and new ingredients to beer, wine, and spirits, has been closed.

During the shutdown, companies can continue to submit applications, but the bureau's site notes “submissions will not be reviewed or approved until appropriations are enacted.”

While that won’t be an immediate problem, it's expected to have an impact on summer releases due to the backlog that's currently being created. 

For the craft beer industry, that could mean fewer options and reduced profits, as these small businesses depend on a rotating selection of beverages to drive interest in their brands.

Additionally, craft brewing startups, which require license approval, are also in limbo.

“The government shutdown affects every industry in some capacity and small and independent brewers are no exception,” the Brewers Association told Drinks Business.

“The craft beer industry accounts for more than 23 percent of the $111.4 billion U.S. beer market, and small breweries and beermakers introduce new and seasonal products with less lead time than larger breweries, making delays in permits are particularly impactful.”