The longest government shutdown in US history has had little impact on logistics so far, but the threat to supply chains is growing as the political deadlock enters its 25th day.
Furthermore, the shutdown could delay crucial trade talks with China, adding more uncertainty over new tariffs during the busy period prior to Chinese New Year (CNY).
The current situation is changing rapidly, with around a quarter of the federal government affected and some 800,000 workers going without pay. Affected agencies include the Transport Security Administration (TSA), and the Departments for Homeland Security, Transportation, and Commerce.
While some “non-essential” staff are required to stay home, other front-line workers such as customs and border protection agents and air traffic controllers are working without pay.
This has ensured air cargo is flowing smoothly for now, but both Miami and Houston airports have experienced terminal closures due to a shortage of security workers.
Automated processes mean customs clearances are continuing as usual. However, delays are feared should the system become overwhelmed, for example, since some clearances require complex duty classifications, fumigation or USDA (United States Department of Agriculture) inspection. The hold up of procedures and paperwork at the Federal Aviation Administration has also meant carriers are unable to register new freighter aircraft, according to Cargo Facts.
Writing on LinkedIn, Association for Trade Compliance director Steve Fodor commented, “The US Government shutdown is having an adverse impact on importing into the US and in working with US Customs (CBP) and other Federal agencies that regulate imports. While staff is in place to process entries and clear arriving goods, delays are still occurring due to the fact that support staff is furloughed in many agencies.
“Importers should take this fact into account and plan accordingly to help minimise disruptions in their supply chain.”
At the country’s seaports, there are concerns customs delays could cause added detention and demurrage charges for cargo owners, and potentially exacerbate creeping port congestion through increased container dwell times.
The shutdown is already impacting civilian workers handling much of the paperwork within the maritime sector, according to FreightWaves. For example, regulatory enforcement is handled by the US Coast Guard – the only branch of the military with unpaid workers. The coast guard is also responsible for vital areas of port operations, such as managing port closures during bad weather.
Meanwhile, political deadlock in Washington means there is little sign of the shutdown ending anytime soon. President Trump walked out of the latest round of talks with congressional staff as they again refused his funding demands for a border wall between the US and Mexico.
The government is due to continue trade negotiations with China later this month. However, the talks could be delayed due to the shutdown, notes the Washington Post. The trade war between the world’s two largest economies has already caused havoc for global supply chains, with many manufacturers exploring increased sourcing in Southeast Asia.
A more immediate impact has been the decision by US importers to bring forward shipments to beat tariff deadlines. This so-called front-loading saw surging volumes on transpacific trades last year, as well as increased port congestion and equipment shortages at US ports. For example, the Port of New York and New Jersey is currently experiencing an acute chassis shortage.
The 1 March deadline for the next round of tariffs – rising from 10% to 25% and pushed back from the original January 1 deadline – could see further surges in cargo, particularly when factoring in the already busy CNY period when factories in China boost production before a two-week break.
US exporters are affected by the shutdown, too. The issuing of export licenses, handled by the Commerce Department’s Bureau of Industry and Security (BIS), is currently stalled.
“Everyday I’m at home means less support, less exports and US trade deficit going up,” a Department of Commerce analyst commented on LinkedIn.
“The enormous amount of calls and emails we get as a staff everyday [sic] that go [sic] unanswered is creating a bottleneck and delay I’m sure the US economy cannot afford. It’s just a sad reality of our current political climate.”