Friday, December 28, 2018

Trump Wall to Prove a Barrier to Trade as Customs Staff Go Unpaid

US Government Shutdown May Lead to Future Port Congestion
Shipping News Feature
US – Not for the first time political shenanigans in Washington are having consequences far beyond the perimeter of the District of Columbia. With the President refusing to sign up for a spending package as his demands for funding to build his Mexican wall go unanswered, large parts of the government are shutting down with hundreds of thousands of government employees likely to go unpaid until the matter is resolved, and the possibility this may affect the port sector.

Of course we have seen this many times before but Mr Trump’s intransigence, and the open hostility toward him on the matter, from Democrats and some Republicans alike, is likely to make this a comparatively lengthy dispute. Many employees will simply be sent home on unpaid leave but, although the idea is for customs and border staff to keep working, their pay will be ‘delayed’.

The immediate effect is likely to be unnoticed but, should the situation remain unchanged into the second half of January, things could start to build up. The shutdown immediately affects 25% of government employees (the other 75% are untouched until September 2019) and, included in those hit are the Departments of Transportation, Homeland Security, Agriculture, Commerce Food and the Drug Administration and Environmental Protection Agencies.

Many goods, particularly imports require more than a normal customs clearance procedure and agricultural checks, fumigation of cargo etc. could mean a build-up of cargoes, particularly perishables. Any new hours of service rules from the Federal Motor Carrier Safety Administration (FMCSA) should pass through unaffected unless they cannot get the mandatory signing off completed by the Department of Transport.

The FMCSA recently ruled that the State of California’s unilateral action in changing federal hours of service by insisting on a 30 minute break after 5 hours of driving, rather than 8 hours, was unlawful and said to offer ‘no safety benefit’.

As to the possibility of a lengthy shutdown history tells us there have been 6 such events since 1995, half of that number in 2018. In 1995 one lasted over three weeks, the longest in over 40 years with the current impasse already the third longest in that period.

Photo: Wall samples erected close to the Mexican border.