Judge warns that tariff refunds favor big companies

Figure of the week

2.47 million TEUs

US imports are expected to reach a record 2.47 million TEUs in July, breaking the previous record for a single month set in May 2022. The latest Global Port Tracker from the NRF and Hackett Associates forecasts that the peak season will quickly begin to ebb after reaching its record-breaking highs.

Quote of the week

“Let’s be clear: they are not auditing the entries. They are not identifying errors. They are not fixing declarations… They are not preparing for CBP scrutiny. They are pulling entry data, putting it into a spreadsheet, and uploading it — that’s it. And for that, they want a double-digit percentage of your recovery.” Pete Mento, director of global trade advisory services at Baker Tilly, advises shippers to carefully scrutinize the services provided by brokers charging hefty commissions to chase tariff refunds. He said shippers should ensure that any such services provide added value.

Importers fear oil price effects of Iran standoff

Shippers are likely to face rising fuel surcharges in the coming weeks after peace talks between the US and Iran broke down . At the time of writing, Iran appeared to be launching attacks on shipping after a fresh wave of US strikes following the failure of the talks. Its armed forces were reported to have struck two ships in the Strait of Hormuz, killing one crew member and wounding eight. Oil prices rose to a month-long high, climbing by more than 9% as President Donald Trump pledged to hit Iran “very hard”. At the time of writing they had begun to fall as the White House toned down its rhetoric and dropped plans to charge a 20% fee on all shipments passing through the Strait of Hormuz. Oil prices had been falling since the US and Iran started talks based on the memorandum of understanding (MOU) 30 days ago, leading to lower emergency fuel surcharges. However, shippers with service contracts had only recently started to see that reflected in the latest BAF increases in early July. Shippers are currently waiting to see if the surprise early peak season surge holds up past the end of the month. One early indication will be whether the market can sustain GRIs scheduled for this week. Despite the renewed conflict, Trump told reporters in the Oval Office that he still considered a deal with Tehran to end the war possible. “Yeah, I think a deal is possible. Sure, I do,” he said. “We had a deal with them two days ago, and then they said, ‘Oh, we can’t make that deal. We have to negotiate it further.’” An Iranian Foreign Ministry spokesperson also left the door open for a swift return to talks. He said that while the negotiations were “in crisis,” Tehran was continuing talks with mediators from countries such as Qatar and Pakistan to avoid further escalation. Shippers then, should brace themselves for higher fuel surcharges. But it remains unclear how steep these will be, how long they will last, or exactly when they will start to take effect .

Air freight shippers brace for new surcharges

Air freight shippers are likely to face rising jet fuel surcharges after fresh conflict broke out between Iran and the US . This comes against a challenging backdrop for air freight shippers, with AI-related cargo largely replacing e-commerce as the primary growth engine. While markets appeared to be settling this week, the 9% rise in oil prices that accompanied the breakdown of peace talks between the US and Iran will inevitably make its presence felt in air freight markets if it holds up. However oil prices can quickly change depending on whether the strikes between the US and Iran continue. Analysts had been widely predicting that the market would start to weaken by H2, but major indexes showed only a very marginal week-on-week fall for the week ending July 5. Overall, global spot rates were 38% higher than a year earlier, according to Xeneta. One piece of relatively good news for shippers is that there is unlikely to be a sudden capacity crunch, as there was when hostilities first broke out between the US and Iran. So far, airlines using Middle Eastern hubs appear to have made relatively few operational changes. There is also the question of how long it will take for any rise in the price of jet fuel to feed into surcharges. After all, many airlines’ fuel surcharges had still not begun to reflect the fall in oil prices that followed 30 days of talks between the US and Iran and a cessation of hostilities. This is not necessarily unjustified. Airlines’ fuel surcharges are likely to derive from the prices of jet fuel at the time they made the purchase. That may have been weeks or months earlier. Therefore few shippers will be betting on seeing any substantial decrease in their fuel surcharges despite the up and down volatility of previous weeks .

Judge warns that tariff refunds favor big companies

A judge has warned that US small shippers are at risk of missing out on IEEPA customs refunds as the first deadlines begin to loom . When the CBP tariff refund system was set up, shippers were given a window of one year from the time their entry was made, plus 180 days, to submit claims. This means deadlines for entries made in February and March 2025 will begin to arrive at the end of July. At the same time, data from CBP indicates that while 60% of the value of tariffs owed has been refunded so far, this represents only 30% of the total number of entries. The discrepancy in figures has raised concerns over why larger, higher-value entries appear to have been more likely to have been refunded and processed than smaller entries. Court of International Trade Judge Richard Eaton said: “It is understood most of the refunds that have been processed so far have gone to large importers, not small.” He questioned whether this meant CBP’s method of refunding tariffs had been sufficiently accessible to small importers. Eaton called on CBP Commissioner Rodney Scott to clarify “if it is the government’s policy to refund the duties to importers, both large and small…”. Tariffs have lately taken a back seat in news headlines, but have been cited as a major driver of the front-loading that has seen an early peak season surge. Many industry insiders are expecting new Section 301 tariffs when the Section 122 tariffs expire at the end of July.

At the same time, the role of some brokerage services seeking to obtain refunds for smaller firms while taking a percentage commission of recovered duties has also come under fire (see quote of the week).

Small shippers who are struggling with the IEEPA tariff refund process should bear in mind that once the deadline has passed they become ineligible for repayment .

🤔 Did you know ?

Two of the world’s busiest container ports, Shanghai and Ningbo, are recovering from Typhoon Bavi. According to Linerlytica, vessels had begun leaving the ports by the weekend. However, it is expected to take two weeks to clear the backlog and return operations to normal.

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