How the Government Shutdown is Affecting International Shipping

Many shippers are concerned, and rightfully so, about how the partial government shutdown will affect their international shipping.

You probably already know the standoff between President Trump and Congress, with Democrats having taken back the House majority, has no clear end in sight. Funding a wall at the U.S.-Mexico border is the hot topic keeping the government from setting a budget and, you know, operating. Of course, Democrat and Republican politicians not being able to work together goes well beyond Trump’s wall. Yay for a two party system.

However, the business of this blog is not politics but international shipping. So let’s focus not on the politics themselves, but exactly what this means right now for your imports and exports.

FMC Shutdown

While the the Federal Maritime Commission (FMC) “is an independent regulatory and enforcement agency responsible for ensuring a competitive and reliable international ocean transportation supply system that supports the U.S. economy and protects the public from unfair and deceptive practices,” the partial government shutdown effectively shuts it down.

The FMC is, of course, funded by the U.S. government, so it “closed effective Wednesday, December 26, 2018 as part of the partial federal government shutdown due to a lapse in appropriations” according to a news release on its website.

All FMC employees — with the exception of Acting Chairman Michael A. Khouri and Commissioner Rebecca Dye because they are Presidentially-appointed and Senate-confirmed officials — are on furlough until the shutdown is over. Therefore, the release states all functions of the FMC are suspended, including:

• The Commission will not respond to email or phone inquiries.

• The Commission’s website will be available during the shutdown, but it will not be updated with new information until operations resume.

• The Commission will not accept online filings or applications through its website for the following:

  • Service contracts through SERVCON;
  • Ocean Transportation Intermediary (OTI) automated applications or license updates (FMC-18);
  • Foreign Unlicensed Non-Vessel Operating Common Carrier (NVOCC) registrations or renewals (FMC-65);
  • Tariff Registration Forms (FMC-1);
  • eAgreements Filing System (Ocean carrier or marine terminal operator agreements or amendments; or,
  • eMonitoring System (Agreement monitoring reports, minutes, transcripts).

• The Commission will not accept filings during this period for:

  • Ocean carrier or marine terminal operator agreements or amendments;
  • Applications for certification of financial responsibility for cruise lines embarking from U.S. ports; or
  • Agreement monitoring reports, minutes, or transcripts.

• The Commission’s online databases: SERVCON, the VOCC and NVOCC Tariff List, List of FMC Licensed and Bonded OTIs, and the Agreement Notices & Library will not be accessible.

• The Commission will not accept or act on complaints, requests for dispute resolution services, or ombudsman services.

• All filing deadlines in formal and informal adjudicatory and investigatory proceedings pending before the Commission or Administrative Law Judges are temporarily suspended as of 0001 HOURS December 22, 2018. No filings will be received during the shutdown. Upon reopening of the federal government and the Federal Maritime Commission, the public is welcome to contact the Office of the Secretary, 202-523-5725 or secretary@fmc.gov, with any questions about filing deadlines or computation of time in proceedings.

The good news for importers and exporters on this front is that shipping operations themselves should not really be impacted by FMC’s closure. While the agency is not available to provide its protections during the time of the closure (not that its regulations no longer exist), shippers’ complaints and any filings that would have been made during the time of the shutdown can be made after. However, expect delayed response at that point as the agency plays catch-up.

CBP Remains Staffed

Yes, there is a government shutdown, but operations essential to national security remain active. Such operations certainly include U.S. Customs and Border Protection (CBP).

That does not mean there are no cuts for the CBP during the shutdown, as its website will not be actively managed during the shutdown, but field operations will be staffed as normal. In an email from Chris Reynolds of INLT, Universal Cargo’s house customs broker, Reynolds wrote this means “there will be no interruptions to conveyance, clearance, and cargo release.”

Yes, imports should still move and not get held up by understaffed customs operations. However, there are Participating Government Agencies (PGA’s) that will not be operating, so Reynolds continues:

As some PGA’s will not be funded, CBP will use their discretion at the border to keep cargo flowing. Centers of Excellence and Expertise will be open as normal with drawback and liquidations continuing under normal circumstances.

The Office of Trade operations will also be open to ensure cargo flows as predictably as possible.

As the shutdown drags on, the speed of operations could certainly decrease.

ACE On Its Own

The Automated Commercial Environment (ACE) is an automated system — as should be obvious from its name — U.S. imports and exports are reported through and by which the government determines admissibility of shipments.

Yes, this system should work on its own, and let’s hope that it runs smoothly, because the workers who do maintain it will not be working during the shutdown.

Reynolds writes, “… client representatives will not be working and will only be recalled in the case of an ACE outage. These are the folks who keep the ACE system running, so their absence is of some concern.”

There is some relief in that these workers will be recalled if ACE goes down. But if it does, delays should be expected.

CPSC Investigators Furloughed

One area where there will likely be delays is in the movement of shipments that may be deemed health or safety risks.

Reynolds wrote in his email:

All U.S. Consumer Product Safety Commission’s (CPSC) port investigators have been furloughed and CPSC targeting has been suspended. Shipments that have been targeted, but not arrived for examination, would be released, unless CBP or another PGA has interest or an imminent health and safety issue has been identified. Decisions on whether to release shipments that have been detained because they failed field screening and may be violative will be made on a case by case basis.

Shippers importing goods classified as hazardous materials may experience delays and should probably expect them. Certainly, any shipments suspected to be part of illegal activities will see serious delays as CPSC port investigators are furloughed.

FDA, NHTSA, and FWS Import Operations

The other agencies that Reynolds specifically  mentioned in his email are the U.S. Food and Drug Administration (FDA), the National Highway Traffic Safety Administration (NHTSA), and U.S. Fish and Wildlife Service (FWS) — all of which have import operations.

Here are Reynolds’ summations:

U.S. Food and Drug Administration (FDA) import operations will remain operational, this includes FDA Prior Notice review, entry processing, sampling/examination of high-risk shipments, and all ordinary compliance activities.

The National Highway Traffic Safety Administration (NHTSA) personnel will also be furloughed. Therefore, shipments requiring action on their part will be affected by the shutdown. Expect delays.

U.S. Fish and Wildlife Service (FWS) will operate at the ports as normal during the shutdown since the wildlife inspection program is funded by user fees and not appropriated funds. However, issuance of Import/Export Licenses and Designated Port Exception Permits (DPEP) will be suspended during the shutdown.

Conclusion

So far the government shutdown is having minimal effects on U.S. shippers. Importers are obviously the ones at the most risk to be affected by the shutdown, as their goods must process through U.S. customs. However, as goods entering the country are a security concern, the government shutdown does not stop customs operations, so while the risk of delay increases during this time, movement of goods does not stop.

That being said, the longer the shutdown lasts, the greater the chance of delays. Delays at the ports with imports can eventually affect the movement of exports as well. Hopefully, the country’s leadership will figure out how to work with each other soon and bring a timely end to the shutdown.