now moving on highways can
be shifted to intermodal.
Even YRC Freight, the long-haul
unit of less-than-truckload carrier
YRC Worldwide Inc., moves roughly a quarter of its freight via intermodal, according to James L. Welch,
YRC Worldwide’s CEO.
The shift is being sparked in part
by big shippers’ increasing use of
third-party logistics service
providers (3PLs) and the decisions
by 3PLs to steer more of that freight
to intermodal, Simpson said. It’s
also being driven by the flattish status of over-the-road capacity, she
said. Capacity has effectively
remained unchanged since 2004,
which over time has brought supply
and demand roughly into balance,
she said.
Another factor could be the continued sub-par economic recovery.
In a show of hands at one of the
general sessions, most transport
buyers said their spending growth
would be flat to up only 2 percent
over the next 12 to 15 months.
CAPACITY CONSTRAINTS
No one knows what the future
holds. Industry watchers said capacity will contract between 3 and 7
percent should the federal government be freed by the courts to begin
enforcing its new rules governing
drivers’ hours of service on July 1.
Truckers are still not adding capacity; they are only replacing equipment as it ages. The nation’s rail network is fixed and finite, and there’s
only so much converted truck
freight the rails can handle before
they hit the wall. Railroads can lay
new track, but since the industry
was deregulated in 1980, BNSF has
only added 5 percent more lane-miles to its system, Rose said.
But that is for the future, which is
always five minutes away anyway. In
the here and now, freight moves,
trucks are out there, and shippers
aren’t complaining. ;
—Mark Solomon
Raising the de minimis threshold:
An idea whose time has come?
It is one of the incongruities of the international trade system: A U.S. citizen returning from a vacation overseas can exempt the first $800 of
imported merchandise from customs duties and fees. However, that
same citizen, if engaging a carrier to ship a laptop, would be responsible
for duties and fees above the first $200 of shipment value, and the carrier would have to comply with lengthy and burdensome filing requirements before the shipment entered U.S. commerce.
Past legislative efforts to raise the so-called de minimis threshold on
low-value import shipments have met with no success. But advocates for
the change continue trying. In March, Sens. John Thune (R-S.D.) and
Ron Wyden (D-Ore.) introduced legislation that would hike the minimum levels to $800.
The legislation, the “Low Value Shipment Regulatory Modernization
Act of 2013,” includes a “sense of the Senate” provision calling on the
U.S. Trade Representative to push U.S. trading partners toward adopting
similar thresholds. (A “sense of” resolution merely expresses the opinion
of the majority of Congress and is not enforceable as a law.)
Today, de minimis thresholds vary from country to country, ranging
from Canada at $20 per shipment to Australia at $1,000. Besides the lack
of harmony in the thresholds, another obstacle is that many countries
rely on import taxes to fund part of their value-added tax regimes,
according to Eugene Laney, vice president of international trade affairs
with DHL Express, one of the companies pushing hardest for the change.
DHL Express serves the United States only through international service.
In the House, similar language has been incorporated into an omnibus
bill designed to modernize the operations of the U.S. Bureau of Customs
and Border Protection (CBP).
ADMINISTRATIVE SAVINGS
The current de minimis thresholds for merchandise, which date back to
1993, are intended to balance CBP’s cost of assessing and collecting
duties with the revenue it derives from those collections. However, supporters of the change in the cargo threshold—notably a group known as
the Express Association of America, which includes the major air express
carriers—have said the administrative savings for CBP and the industry
would more than offset the loss of revenue.
In addition, hiking the threshold on low-value shipments could free
up agency officials to focus on more serious issues such as counterter-rorism, counterfeiting, and product safety, they argue.
According to a 2011 report issued by Washington-based think tank
Peterson Institute for International Economics, the Congressional
Budget Office (CBO) estimated that raising the entry threshold to $1,000
from $200 would cost CBP about $44 million in foregone revenue in
2016 and $49 million in 2020.
However, increasing the de minimis levels would save the express carriers and U.S. Postal Service (USPS) about $56 million a year in reduced
paperwork and processing burdens, more than offsetting the foregone
revenue to the government, the Peterson report said. That’s because
shipments valued between $200 and $800—when listed as one entry—
are classified as “informal entries” instead of de minimis shipments.
