CAPE suffers early teething problems

🛃 CAPE suffers early teething problems 🇮🇷 Shippers warned of potential Iran fallout

Figure of the week

The number of consumer-driven lawsuits seeking to recoup tariff-related fees from companies like FedEx, Costco and UPS as CBP’s refund portal, CAPE, goes live.

Quote of the week

“Brilliant if they don’t do that. Actually, if they don’t do that, they’ve got to know me very well. If they don’t do that, I’ll remember them.” President Donald Trump’s response when asked to comment on rumors that some companies, such as Amazon and Apple, have chosen not to apply for tariff refunds because they are worried about “offending” him.

CAPE suffers early teething problems

CBP’s new CAPE system for refunding tariffs has received mixed reviews from users since going live last week . Some users reported that they were able to enter their tariff refund applications without problems, while others reported glitches and system errors. Main Street Alliance National Campaign Director Shawn Phetteplace said several members had reported issues with the portal. “We are deeply disappointed that the portal seems to be having major issues,” he said. He added that it was vital that CBP was able to process refunds quickly, as many small businesses had been forced to stop hiring or had even gone out of business due to the tariffs. “We need those refunds to be processed as soon as humanly possible,” he said. Among the problems users reported were messages saying that the system was experiencing high demand and to try again later. Others reported receiving error messages or that the system refused to recognize their tax ID. CBP said it was looking into the reports of glitches. However, many businesses also reported being able to access the site without problems. Some said that while they had initially received a message saying the system was temporarily experiencing high volumes, they were able to process refund applications upon a second try.

On the “Customs broker” Reddit forum, a number of posts mentioned being able to submit documents to CAPE, but later receiving a 504 error message when trying to access further information. Some said that trying different browsers, or waiting a couple of days helped. Retail analysts report that the next big issue facing shippers will be whether to pass on any refunds to customers. Some companies are already facing lawsuits from customers seeking part of tariff refunds (see Figure of the Week).

However, this is less of a problem than it might appear at first glance. Many retailers preferred to simply absorb the tariff costs and never passed them on to customers in the first place .

Uneasy peace for air freight importers

It is a game of two halves for air freight spot rates between China and the US. Last week, rates rose sharply in the run-up to China’s May 1 Labor Day holidays, with some indexes showing increases of up to 10% week on week on the trade . However, the relative calm in the Middle East, with the ceasefire holding, was having a counterbalancing effect on rates. Capacity is beginning to return to normal in the Gulf and is stabilizing elsewhere, exerting a calming effect on spot rates. That at least is the situation at the time of writing. The US, Israel and Iran ceasefire was holding but talks were failing to lead to any breakthrough. Reports of large numbers of refueling tankers gathering at Middle Eastern airports, indicate the US and Israel could launch new strikes on Iran at any time. If that were to happen, the primary problem for shippers would be fuel availability. So far, operations in Europe and the Middle East have been most affected by shortages of jet fuel, with many flights being canceled in those regions. A new outbreak of hostilities around Iran would likely further disrupt supplies of jet fuel and would also push up the price of crude oil, leading to higher surcharges .

Shippers warned of potential Iran fallout

As the impasse between the US and Iran drags on, there is the potential for more widespread blank sailings and service cancellations, but wider risks for importers are also starting to make themselves felt . Shipping executives say that over the longer term, potential oil shortages could lead to widespread falls in manufacturing production. Asian manufacturing could be particularly affected by oil-related disruptions, as the region is heavily reliant on crude imports from the Middle East. As well as manufactured goods, fertilizers, foodstuffs and plastic production could be impacted, according to separate webinars hosted by Hapag-Lloyd and Drewry last week. Hapag-Lloyd CEO Rolf Habben Jansen said that while so far the Iran war has had a limited impact on global trade, that could change if it drags on for longer. Webinar attendees heard that next year’s peak season could be thrown into doubt by manufacturing shortages. Vespucci Maritime CEO Lars Jensen also told the webinar that the current conflict in the Middle East was likely to entrench routings around the Cape of Good Hope in southern Africa to avoid the Red Sea. Simon Heaney, senior manager of container research at Drewry, echoed that view. For the time being, it appears that US shippers will be able to avoid direct disruptions as a result of the conflict, unless they are importing directly from the Middle East. However, shippers sourcing from Asia may find themselves affected by production shortages moving forward and should explore supply chain diversification strategies.

🤔 Did you know ?

US shippers have been able to look on with relative equanimity as Iran raises the question of potentially charging vessels for passage through the Strait of Hormuz. They might have a slightly different reaction to Indonesia’s proposal to charge ships using the Malacca Strait. Whereas relatively few US shippers would be affected by charges on the Strait of Hormuz directly, at least $1.2 trillion of US trade is estimated to pass through the Strait of Malacca.

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