otto, Author at Cordova Brokerage

April 29, 2022

Continuing Covid Lockdowns in China and The Effects on the Global Supply Chains

China covid lockdowns in a drawn example

For most people in the U.S., strict covid lockdowns are a nightmarish memory of the recent past, but for 24.9 million people, it’s still very much a reality. In pursuit of their ‘zero-covid’ strategy, China has once again shut down their cities and locked people in their homes. While to the rest of the world, the concept of endless lockdowns seems rather draconian and unthinkable, the Chinese government has doubled down on these policies.

In addition to harming its population and its own economy, these governmental policies also cause reverberations around the world. Part of those reverberations includes the effects on the global supply chain.

Let’s look at the specifics.

The Continous Covid Lockdows and The Effects on the Supply Chain

As the world slowly returns to normal in America, other parts of the world continue to struggle under the covid threat and are a long way away from normalcy. Recent reports out of China, for example, are slowly painting the horrid picture of a population stuck in their homes without the ability to work and —at times— feed their family.

Chinese lockdowns are much different than what Americans might remember as lockdowns. Even the strictest period in American covid policy did not compare to the Chinese government’s enforcement. In China, residents can be subjected to much more oppressive actions, including the complete inability to leave their homes. They can’t leave for work, get food, or even receive medical care. It is keeping the population completely barricaded.

Reports of people going hungry in Shanghai are slowly trickling into the Western media. According to some reports, government handouts of food have been somewhat unreliable. The authorities in China themselves have admitted to a food shortage as a result of a lack of planning and coordination.

When Omicron hit Shanghai, the authorities changed course with their policies and turned to a zero covid mentality. Before that, Shanghai had comparable covid policies to the rest of the world: mask mandates and social distancing, but nothing to the level of draconian lockdowns. With the fast spread of Omicron, the government began what they called a ‘temporary pause,’ which has been extended again and again. For communities with a single new positive case, the lockdown is extended for 14 days.

In Tesla’s factory in Shanghai, workers are practically living on-site in order to keep production going. The company is doing its best to provide sleeping bags and mattresses and designated areas for eating and entertainment.

The External Effect

The full consequences of the lockdowns still remain to be seen, as Western media has little access to many of the realities in China on the ground. Shanghai is where one of the world’s largest ports is located. Their Pudong airport is the world’s busiest cargo airport. The city accounts for 7.4% of China’s exports and 14.4% of imports.

The city has one of the most essential semiconductor manufacturing centers, is the center of many auto producers, including SAIC Motor, and SAIC’s other joint companies, including Walkwages, GM, Tesla, and Ford.

At this point, it is no secret that the United States imports a lot of goods from China. The past few years have certainly brought this idea to the forefront of people across all sectors. The United States imported about $435 billion of goods from various Chinese cities.

The current policies are creating all kinds of stop gaps and hurdles in the city itself, where the ports are overfilling without anybody to pick up their orders or deliver them. This is despite efforts to maintain a ‘closed-loop’ system at the ports, where workers sleep and eat on-site without leaving. So when lockdowns end, a pent-up amount of orders will cripple supply chains by creating clogs in the supply lines.

Reverberations of the Chinese Lockdowns in Europe

Many American companies have become highly dependent on Chinese goods. America is not the only country that feels the gaps in the supply chain due to Chinese policies. The European Union sent a letter to the Chinese government asking them to reconsider their stringent policies as European supplies suffer the consequences of backlogged orders. According to Freight Waves:

Container volumes out of China have dropped 31%. This impacts the U.S. surface freight market.
There are reportedly 300 containerships and 500 bulk ships off the coast of China
Backlog of orders when things open back up will create massive chaos and clogs in the supply chain

Get Professional Assistance With Exports and Imports Through a Customs Brokerage

The world of global supply chains, imports, exports, and fluctuating markets is an ever-changing landscape. It is often affected by the policies of governments around the world and COVID lockdowns.

A customs broker specializing in studying the changing regulations and what’s happening in the world of international trade in order to better facilitate the exchange of goods.

Learn more. Connect with us at Cordova Brokerage.

February 18, 2022February 18, 2022

What is the Bullwhip Effect in Supply Chains? Here’s How This Phenomenon Affects Trade

supply chain diagram hand drawing on chalkboard

We’ve covered the complexities of the supply chains and the role of imports and exports in a highly globalized and interconnected market extensively. The vulnerabilities of the supply chain have become all too clear for people involved in every aspect of production, manufacturing, assembly, and distribution. This has led to major instability across many sectors and a profound assessment about how supply chains need to be reinforced and less dependent on imports from certain countries—at least that is the view for some.

So in the coming months, you might be hearing a lot about the bullwhip effect in the supply chain. It’s already making the rounds. So what is this phenomenon?

Here are the basics.

The Interconnectedness of the Supply Chains

The importance of uninterrupted movement and goods across all industries cannot be understated. Everything we see at the store shelves or car lots has likely undergone a long journey that possibly began in a different country, traveled across oceans, waited in a cargo ship or shipping container, went to the manufacturing plant, and then made its way—via highway and truck—to the store or dealership in which you will buy it from.

This long journey was far more fragile than people had realized. It was the disruptions of 2020 that really cracked open some of the problems. Now that the economy is gearing back up, companies and manufacturers are running into different kinds of problems.

How did it all begin?

A major shift in lifestyles, consumer demands, and economic conditions. For example, as the world shut down, consumer demands fluctuated towards at-home spending. This meant exercise equipment, cookware, entertainment, computers, and other personal products.

The Bullwhip Effect Phenomenon

So there’s a lot of discussion right now about companies such as Peloton, suffering from the bullwhip effect. There’s speculation about the chip shortage and automobile manufacturing being impacted by the phenomenon as well. So what does this mean?

The idea can be simplified as follows:

Think of a whip. A relatively small movement of the wrist causes large waves in the movement of the whip at the other end. So, small changes in consumer demand at the retail level will cause ever-growing reverberations and fluctuations in demand at the wholesale, distributor, and manufacturing levels.

Let’s look at an example of the Bullwhip Effect

A store sees an increase in demand for exercise equipment. As happened to Rogue Fitness at the beginning of the pandemic. The company then makes augmented decisions based on these observations, but the effects grow as it moves back into the supply chain. The amplified decisions made at the ground level easily destabilize and misalign the supply chain behind it.

If a fitness equipment company like Rogue (for example), was used to selling 100 barbells in one month and suddenly they see a spike in demand, they will likely turn around and double their order. The company might over-correct and amplify that number and suddenly order 300. This sudden jump will have major consequences as it moves back to the supplier, manufacturer, and importer (if it applies). Hence, the bullwhip.

The effect is magnified when there is uncertainty and/or lack of information, as there was when the pandemic began. Nobody really knew what was going to happen and some companies miscalculated, some ordered less, some more, and suddenly were faced with a strained and backlogged market.

The Microchip & Semiconductor Issue

One of the biggest concerns facing people in the trade and the domestic manufacturing business is the high dependence on microchips and semiconductors. A lot of our current consumer goods make use of these little components that are largely imported from places like Taiwan.

These semiconductors are found in electronic devices, vehicles, computers, and other high-tech appliances.

How is this Affecting Trade and Imports and Exports

For one, the world of international trade has certainly changed since the start of the pandemic. Countries have become a lot more stringent and the ease with which products flowed in and out has certainly been disrupted. Companies have realized that putting all of their eggs in the China or international import basket can be risky. So, some companies have gained an advantage over international importers given the backlogs at the supply chain. Products are not getting to the U.S. as swiftly as they once did.

So this has shifted the balance in the importing numbers prior to the pandemic. Companies have started to manufacture components that were previously brought in from overseas, but that still leaves a lot of companies with material and labor shortages.

Is Your Company Importing or Exporting Goods? Talk With an Experienced Customs Brokers

As a businessperson, you are likely watching these markets and fluctuations carefully. So while a customs broker doesn’t control the supply chain or the supply and demand of goods, we can help you with the ever-changing landscape of international trade and transporting goods across oceans. This is a complicated field as countries develop stringent paperwork and documentation requirements.

You have enough to worry about. Leave the paperwork to us. Call Cordova Customs Brokerage today.

December 9, 2021December 9, 2021

The Benefits of Warehousing Services for International Trade

Do you know the warehousing industry in the US will be worth $29.2 billion in 2021 as international trade grows?

For the import and export trade, warehouses optimize your business’s operations. You should thus find the best warehouse for your storage needs in international trade.

For all your inventory management needs, you require a sizeable warehouse. Such needs increase with the business expansion internationally. A great warehouse helps streamline the supply chain, thus helping the brand grow.

Your business’ development is better suited with warehousing. If you doubt the need for warehouse space, this article is for you. Continue reading to understand the benefits of warehousing services for international trade.

Have Centralized Storage

Do you desire to have a centralized location for your business operations? Warehousing answers such concerns by allowing you a single site for storage.

The existence of a production gap in business can be a massive blow to business success. Your supply chain has to be as streamlined as possible, and it starts with having a central storage area.

Storing goods centrally allows you to receive, store quickly, and distribute commodities. As a result, you save on time and costs you’d otherwise incur with a production gap.

You’ll thus have to check the location when choosing a warehouse that fits your needs. It needs to be strategically located to meet the wants of your target market.

Better Order Processing

How efficient is your order processing? Did you know that you could increase your order processing ability through warehousing?

It’s no secret that you seek to serve your customers as fast as possible. An agile order processing system will help you achieve customer satisfaction.

Your clients want timely delivery, and the warehousing service helps you fulfill it. By having the items in inventory, you’re only left with shipping once clients place orders. Warehouses facilitate accountability, meaning you’ll know what inventory levels to maintain.

Improved Production Quality

Most people assume warehousing is only linked with the supply chain after production. It’s not true since investing in a warehouse also influences production.

When producing in large quantities, quality management systems can be lenient. You thus end up with several items in your inventory that might not be up to standard.

Warehouses offer you better insight into your production quality. You’re able to evaluate your raw materials to ensure you have quality inputs. By planning the necessary quantity for production, you’re able to keep an eye on the quality of the finished goods.

By detecting defects early, either on the raw materials or finished goods, you’ll adjust as need be. Warehousing thus ensures that your items meet the quality standards for international markets.

Improved Purchasing Decisions

How do you decide when to make additions to your business? From raw materials to equipment and supplies, warehousing helps make better purchasing decisions.

A warehouse is effective in inventory control and management. As a result, you’ll know about your order history on the sale of commodities. It’s thus ideal for identifying areas that need replenishing.

By determining what you need to stock up, you’re able to make strategic purchase decisions. You thus don’t get to splurge on raw materials or items that you don’t need. In the end, you’ll have an easier time turning a profit.

Leverage Seasonal Market Changes

Peak and off-peak seasons can be confusing for the business. Warehousing services assist you in leveraging operations for seasonal market changes.

Low seasons for your business are characterized by not hitting your sales targets. Such occurrences shouldn’t put you off since the warehouses let you plan for the low seasons.

You can study consumer trends to diversify your business as you adjust to market needs. Warehousing supports business growth since you can stock up for the peak seasons. The warehouse gives your business operations a boost without increasing the cost burden.

An Important Risk Management Tool

Business is risky, and you’d want to stay clear of anything that would result in losses. Warehousing is a risk management tool that’s invaluable in international business.

The risks within the international markets include inflation and exchange rate fluctuations. One of the functions of warehouses is to hoard commodities to avoid losses. You can keep inventory until you get an excellent market rate on your commodities.

There’s also the risk arising from product spoilage once production is complete. Warehouses are equipped with special facilities for a favorable condition to avoid spoilage.

Warehousing services leverage other risks such as theft and fires. The warehousing service insures goods in storage, so you get compensated for any product damage.

Types of Warehousing to Know

Let’s get familiar with the different warehousing types to better understand these benefits. You’ll need the knowledge before importing products!

Here is a brief outline of the various warehousing types:

Public warehouses are state-owned and presented for rent by private businesses
Private warehouses are owned solely by a specific entity to store their commodities
Cooperative warehouses are owned jointly but are available for rent to private businesses
Distribution centers apply in the distribution of shipments from one point to another

You Now Know the Benefits of Warehousing Services for International Trade

Every business has warehousing needs to be met for efficient supply chain processes. The needs grow with expansion into international trade, so you need warehousing services. The above guide highlights the benefits of warehousing services for international trade.

Are you looking for a warehousing service? Cordova Brokerage is here to help!

We’re strategically located within the US/Mexico border for convenience when exporting products. Our staff offer inventory control, logistics management, and security over the warehouse space. You can trust our team with your warehousing needs as we help your business grow.

October 31, 2021

Supply Chain Vulnerabilities and Changes on the Horizon— A Customs Broker’s Perspective

Aerial view of container cargo ship in sea.

Hundreds of cargo ships hover out at sea, waiting, floating quietly, unable to port. Thousands of goods sat there, far from their destination. These scenes were real, and they caused a stir in the markets. The images took hold of the news cycle in the Fall of 2021 and began circulating concerns about supply chain chaos in our midst. Those working in the import and export business might have had a preview of some of this as various conditions began causing backlogs, labor shortages, and other problems.

So what’s all this about? What does this have to do with exporters and importers of goods?

Here’s what we know.

The Tangled & Fractured Supply Chain, The View From Here

It’s no secret that covid struck a blow to what seemed to be a relatively robust economy and normal-flowing supply chains. The virus wasn’t just the normal jab to the chin, it went for the liver shot too, bruising the supply lines from different directions. Supply chains are fragile, intricate, and very much depend on the labor of people involved in every aspect of production and trade.

If you mess with one part of the chain, the ripple effects are felt throughout.

When the pandemic hit, supply chains were the first major indication to U.S. consumers that this virus was not just another over-blown scare tactic by the nightly news. Americans began to see the shelves of the supermarkets a little emptier than usual and then, a lot emptier, and all of a sudden hand sanitizer vanished from the face of the earth.

For people in the import and export business, the incoming chaos was detectable on the horizon as early as January and February of 2020. It was then that the virus had started to spread in China and slowly trickled into the production of many essential goods manufactured there.

In late 2021, people are still referring to the mysterious supply chain shortages in day-to-day conversations. The average American encounters these effects in a myriad of ways, such as short-staffed restaurants, longer-than-usual wait times when it comes to purchasing tech products, making vehicles, car rentals, home construction, and even DIY home projects, as well as access to skilled laborers and workers.

Some have narrowed down the shortages to a couple of major pain points:

Computer chip (semiconductor) shortages
Port congestions
Labor shortages at the ports
A shortage of truck drivers to drive goods cross country
Skilled labor shortages across all sectors
Backed up supply in manufacturing plants
Heightened consumer demand after a year at home

Stuck at Sea — Cargo Ships Floating of the Coast of America’s Port

The Port of Los Angeles is often known as “America’s Port.” That’s because it is the biggest and busiest port in the country— founded in 1907 and active ever since. This large port extends across 7,500 acres of land and water along the coast. It is through this port that thousands of goods enter the country and make their way into supermarkets, stores, and shelves. The port handles over half of U.S. imports, and yet, 65 cargo ships were stuck on the water in September 2021 waiting to dock.

What does this all mean?

On the ground, it appeared to be one continuous blame game. Some blame the dockworkers for not unloading fast enough, others blame a shortage of truck drivers for not clearing out the docks, and still, others blame more internal workings of the supply chains, varying covid-19 protocols across countries, increased restrictions, lack of supply, etc. In the end, some may argue that it begins with policy—that it has really been one domino after another that has acted upon the many layers of the supply chain.

So What Do Supply Chain Shortages Mean For Me?

Well, it depends. As of this writing, the supply chain shortage has manifested itself differently for everybody. For some people it means waiting on that home renovation project, for others it means holding off on buying that new car, and still for others it means being unable to find workers to staff their restaurant.

For the nation at large, it means there is likely a link to a labor shortage, which means that everyone will see some effect of this in their lives, in some form or another.

What Does All This Mean For Importers?

As a brokerage company, we work with many clients that import or export goods. Amidst the dizzying changes and all the rest, importers and exporters are having to adjust and improvise.

Some people argue that an over-reliance on imports meant that the U.S. was dependent on foreign goods. That dependence has been partially responsible for the situations we face today, and that it also poses a risk to the supply chains, which become vulnerable to outside conditions. For example, most of the semiconductors are produced in Asia and any backlog of production there will impact various sectors in the United States— from car manufacturers to the production of home appliances.

The Guardians at the Supply Chain Gates

As brokers, we man the gates at the supply chains. That is, we do security, act as the liaison between importers and exporters and the Customs Border Protection Agency, which oversees the incoming cargo and products from overseas, as well as the outgoing goods. Brokers have no real control over the markets or the breakdown of the supply chains—we stand guard and make sure compliance is met by anybody taking goods out of the country or bringing them in.

Are You an Exporter or Importer of Goods to the United States? Learn More at Cordova.

Cordova Brokerage works with people on the ground ensuring accuracy and compliance. Whether the markets ebb and flow, as they do, goods continue to move in and out of our border and we are here to safeguard that process and complete the process accurately.

August 11, 2021

Trade Deficits and Why They Matter: What Importers and Exporters Should Know

Global business logistics import export background and container cargo freight ship transport concept

Whether you are an exporter, importer, or work in the financial sector, the word trade deficit comes up enough to garner attention. During the Trump administration, this was a central talking point, and it certainly stirred debate from both sides. People that never concerned themselves with the trade gap suddenly found themselves arguing about it. As customs brokers, we operate in the international trade sphere day-in and day-out, this number is relevant to what we do and the importers and exporters we deal with. So what exactly is a trade deficit and how does it impact the everyday back and forth of international trade?

The international market is interconnected, and the downfalls of one country will inevitably affect another.

What do We Mean By a Trade Deficit?

Whenever a nation has an import surplus— meaning they import more than they export—a trade deficit emerges. The Council on Foreign Relations, for example, cites the following number: in 2018, the U.S. exported $2.500 trillion in goods and services while it imported $3.121 trillion. This means that there was a trade deficit of $621 billion.

As part of managing the overall U.S. economy, the idea is to try and find a balance between these numbers. The trade balance makes up the nation’s economic relationship with other countries, known as the balance of payments.

What is the balance of payments?

This balance of payments, as defined by the Council of Foreign Relations, is that it “consists of the trade balance, or current amount, and the financial accounts or the measures of U.S. purchase and sales of foreign assets.”

So a trade deficit is mostly caused by an imbalance between the rate of investment and the rate of savings of any given country. To reduce the U.S. deficit will in turn mean that Americans should save more or invest less and smaller trade deficits might benefit smaller U.S. exporters that compete with importers. At the same time, however, smaller trade deficits might work against regular Americans as they have less choice for consumption domestically and fewer opportunities for investment that fuel further domestic growth.

What Influences the Size of the Trade Deficit?

Gary Clyde Hufbauer and Zhiyao Lu of the Peterson Institute for International Economics pointed out that the trade deficit is impacted by several working forces:

Government spending: When the government is throwing cash around and increasing its spending, it decreases the national savings rate and raises the deficit.
Dollar rate exchange: When the dollar is stronger, the American consumer can buy foreign products more easily.
The growth of the U.S. economy: A growing U.S. economy means that consumers have more disposable income to pursue buying goods from abroad.

The Trade Deficit Trends

Because the trade deficit numbers are always a balancing act, there is a constant pendulum shift in the numbers. Changing administrations and federal policies will also have a considerable impact on these numbers, so here’s what the last few years look like:

Trade deficit:

In 2017, $568 billion
In 2018, $621 billion
In 2019, $616.8 billion
In 2020, $678.7 billion

Trade Deficit Number of 2021

In August of 2021, Bloomberg News published a report about the U.S. trade deficit and how it had widened to a record $75.7 billion for the month. The number—which indicates the trade gap between goods and services— grew to 6.7% to $75.7 billion. The report seems to indicate that there is a steady surge in consumer demand.

Why Does the Trade Deficit Matter?

Well, it depends on your industry. If you are in the import or export business, the trade deficit will tell you something about the state of the economy and what way the pendulum is swinging. The trade deficit also indicates how the U.S. is doing in terms of some of its largest imports and exports. In 2020, for example, the U.S. imported about $116.4 billion of petroleum, the lowest amount since 2002.

How the trade deficit affects the U.S. economy is argued about by economists and industry specialists. Some argue that an increased deficit for a prolonged period means that the country is operating with debt and it makes the economy unstable. Other effects of a continuing large deficit mean that U.S. companies may not be producing that many goods and the nation become overly dependent on others for these goods. When that happens for long enough, the U.S. industries lose their competitive edge to foreign companies and slowly discourage domestic jobs.

Connect with a Customs Brokerage That Keeps You on Top of Things

As a customs broker, Cordova stays on top of all relevant international trade news. Whether it has to do with imports, exports, rising prices, worldwide pandemics, we got you covered. Part of our jobs is to keep our clients in compliance with ever-changing U.S. trade regulations, tariffs, and more.

Ready to keep your international business in compliance with a professional brokerage company? Call Cordova today and learn more.

June 7, 2021June 7, 2021

Import & Export News: Trade Scuffles with the Chinese and the History of Trade with the Nation

USA and China trade war. US of America and chinese flags crashed containers on sky at sunset background. 3d illustration

China has been in the news often for the past year. Aside from the virus, the country has also made headlines for some of its economic ties to many large companies in the United States. There have also been some tensions with the nation as news of some of its less than optimal working conditions continue to emerge. The United States does a lot of training with China and has had a complex economic relationship. A few imports from the country have been stopped recently, so we thought we would look at our trade relationship with the country and how that has changed over the years.

Import News from China and Its Affects the Global Supply Market

On May 28, 2020, the U.S. government blocked imports of seafood from the fleet of a Chinese company that allegedly forced its workers into slave-like conditions. These conditions also allegedly led to the deaths of at least three Indonesian fishermen last year, as reported by the AP. Customs and Border Protection announced the blockage as they got the news that the company, Dalian Ocean Fishing, had less-than-favorable working conditions for its crew. Imports from said company exceeded $20 million as recently as 2018. Most of their imports were tuna.

Customs Law Allows for Protections and Holds Based On Forced Labor Suspicions

There is a law in the books that allows Customs and Border Protection to put such a hold when they suspect slave labor conditions. The law —the Tariff Act of 1930— is there to protect U.S. companies from unfair competition, but also is used as a political tool to put pressure on companies that engage in this kind of behavior. This law has been utilized more frequently in recent years as allegations of slave labor conditions emerge from various industries and several countries around the world. According to the report, the fact that U.S. Border and Customs Protection put a hold on the entire fleet means that investigations produced substantial evidence of abuse. The forced labor issue has been a point of contention between China and the United States and the recent developments will likely only strain the already-tense relationship. Before the exit of the Trump administration, they announced an import ban on goods from Xinjiang, as it was announced that it was produced with Uyghur forced labor.

Goods Imported By China to the United States

The United States does a considerable amount of trading with the Chinese. Over the years, the U.S. and China have overcome several differences (political, social, and otherwise) to maintain a somewhat stable trade relationship. In 1979, the U.S. and China re-established diplomatic relations and signed a bilateral trade agreement. This spearheaded a time of rapid growth and trade between the two nations. It went from about 4 billion in the late seventies to $600 billion in 20217. China is the biggest source of imports for the U.S.

The U.S-Chinese Trade Deficit

China is the world’s largest economy and its production capabilities far exceed those of the U.S. because of its large population of 1.4 billion people. It also has a much lower standard of living, which allows for production with lower wages. This also allows for the trade deficit. The exchange rate also plays a role in creating the deficit.

The lower standard of living makes most labor and goods a lot cheaper in China. The nature of the trade relationship between the two nations has changed and has gone from low-wage goods to necessary computer products. U.S imports from China include computers, cell phones, toys, clothes, sporting goods, and more.

The top trade categories for imports coming in from China include:

Electrical machinery equipment
Mineral fuels including oils
Computers and other machinery
Ores, slag, ash
Optical or technical apparatus
Vehicles
Plastics
Copper
Organic chemicals
Oilseeds

One of the biggest categories, of course, is imports of electrical equipment and machinery. So much of our electrical devices and tech tools we use every day come from Chinese borders. The electrical equipment imports focus on the following components:

Integrated circuits/microassemblies
Phone system devices like smartphones
Solar power diodes
Lower-voltage switches
tv/radio radar device parts

Get the Import or Export Process Right with Experienced Custom Brokerage

Here at Cordova Brokerage, we help those involved with international trade navigate the troubled waters of trade relations. It’s not always clear-cut when it comes to trading with other countries and other nations always have their own restrictions, laws, and changing politics.

Call us today. Learn more about what Cordova Brokerage can do for you and how we can help make your business and trade go smoothly.

April 8, 2021April 8, 2021

An Overview of the U.S. Trade Systems and Trade Agreements Through the Years

Close up of businessmen shaking hands. Global network and a world map in the foreground. block chain concept.

As you sit in front of a screen and read these words, there are millions of goods and products being transported across borders. Many of the products we encounter every day have a long and arduous journey from where they are manufactured to the shelves of our stores. Trade impacts our economy in a significant way, and it’s why over the years we have seen changes to the way the country approaches its trade policies and why it has become a hot-button issue in elections and during difficult economic times.

The U.S Constitution grants Congress the power of trade activities between foreign countries. Trade within states is regulated and overseen by the states themselves. Over the decades, the United States went from a far more protectionist nation to one that embraced free trade and emphasized its benefits.

From Protectionism to Expansion of Imports and Exports

The state of U.S. trade policy has evolved since the Great Depression. The country’s views and needs have grown and shifted dramatically since then. Tariffs and dutiable imports reached 60%. There was no central organization that oversaw the changes that occurred in trade across the globe, so many local laws were shielded from understanding the bigger picture.

Before the Great Depression, the U.S was far more isolationist in both its trade policy and foreign policy, but the 20th century had its plans for America and the rest of the world, and events that transpired shifted the American approach to trade to a far more open policy.

It Begins with a Little Act Called Smoot-Hawley

The U.S was in dire straits in an attempt to fix the domestic economic situation, so Congress had to make moves to remedy this by finding ways to grow the economy and get things moving again. The tariff act raised duties on over 20,000 imported goods and may not have had the effect desired. This led many U.S trading partners to step back and cause a reduction in total U.S trade volumes. Many historians argue that the Smoot-Hawley act deepened the Great Depression.

Not long after, President Franklin Roosevelt signed into law the Reciprocal Tariff Act, which gave the President authority to negotiate reciprocal trade agreements. Around this time tariffs were reduced with 21 countries, which helped spur economic growth. Of course, it wasn’t until WWII, that U.S production and manufacturing boomed. After the war, GATT was signed. This was the General Agreement on Tariffs and Trade.

The Trade Act of 1974, addressed many concerns for U.S trading companies that were seeing themselves as unable to complete with unjust import competition. This law imposed adequate procedures to help protect the American industry amidst a growing and exponentially more complex international market.

In 1995, the World Trade Organization replaced GATT and helped a surge of free trade agreements after the Cold War. In this era, the percentage that was subject to tariffs dropped from 65% in 1990 to about 30% in 2017.

President Reagan’s Impact on Trade in the Late 20th Century

President Ronald Reagan helped continue to push the move towards more free trade. As a stalwart proponent of conservative policies, Reagan understood that opening up trade for America meant increasing opportunities. In 1988, Reagan gave a radio address about the virtues of having a free trade society and the economic and social benefits that this provided a society. He pointed to the pattern of free nations and their prosperity after imposing free trade laws and allowing for more freedom in the import and export realm.

Reagan declared “We should beware of the demagogues who are ready to declare a trade war against our friends, weakening our economy, our national security, and the entire free world all while cynically waving the American flag. The expansion of the international economy is not a foreign invasion. It is an American triumph.”

It was this mode of thinking that continued a trend towards a trade policy that made the international exchange of goods more accessible.

The Complexities of the Ever-Changing Trade Industry

Developing a product to ship to international markets is a long and hard journey with plenty of steps and hurdles to overcome. It’s not always easy, as there are competing interests, politics, changing regulations from every angle. It’s a fast-moving industry that must adapt to the conditions and regulations of other countries, as well as changing economic and cultural trends.

As international markets and nations see ups and downs and changes in their administrations and leaderships, those changes are reflected in the policies and regulations imposed on importers and exporters. A customs broker is a middleman that does the heavy lifting when it comes to researching and following these changing rules.

Stay on Top of The Changing Trends in Trade Policy with a Trusted Customs Broker

As a customs broker, Cordova Brokerage takes care of doing the leg work in ensuring you are in compliance with your import or exports to and from the U.S. We are here to provide accurate service and facilitate the difficulty in maneuvering U.S trade restrictions and law.

Contact a reliable customs broker at Cordova today for questions regarding imports and exports.

February 9, 2021February 9, 2021

The Many Roles of a Customs Brokerage: Importing, Paperwork, & Clearance

A businessman selecting a Customs Concept button on a clear screen.

A customs broker is a type of middleman. They are facilitators. Experts on laws and regulations that are ever-changing and shifting. A customs broker represents the interests of the United States as it relates to the importation and exportation of goods across international waters and borders. Here at Cordova Customs Brokers, we thought we’d take a moment to explain the day in the life of a customs broker, what we do, what we’re responsible for, and why it’s important to go with the one you trust.

To put it simply, a customs broker works with importers and exporters of goods. Everything that comes in through this country’s borders must be documented and follow what we call compliance. We get shipments cleared through customs and other agencies that might need to get involved with shipments. There are thousands of shipments that come in each day, as the relative size of imports has grown from 10% of GDP in the early 1990s to 15% in 2017.

Why Do Importers Need a Customs Broker?

Bringing goods into the United States, or any other country might seem simple on its face. In reality, each country has its own set of rules and regulations when it comes to bringing in goods from other countries. As it is stated by Customs, “When a normal ‘entry of merchandise’ is made under the provisions of 19 U.S.C the required information and documentation is required to be filled or electronically transmitted by the “importer of record.”

As customs brokers, we work for the ‘importer of record.’ They are our clients and we represent their interests in successfully getting their goods into the United States in order to do business. The United States has regulations as well and it can make importing goods a little more complicated. A customs broker navigates the complicated process for you, getting through the paperwork, compliance, and dealing with various agencies on your behalf.

These shipments include everything from crabmeat to squeaky toys for dogs, children’s toys, shrimp, and more.

The process of customs brokerage existed as early as the 1850s when an importer or consignee endorsed the bill of lading over to a tradesman. These tradesmen were called ‘customhouse brokers.’ In the beginning, these brokers would sign the merchandise with their name instead of the original consignee but it led to many problems. This issue was resolved with the Customs Regulations of 1857 and the beginning of what were to be many new changes to the way we do imports.

What is the Process of Importation like?

It depends on whether shipments are coming through by air, water, or land. As a general overview, however, the process is relatively similar. When we work with an importer, we get the information we need and input it into specialized software that will sort through the information and send it to Customs and Border Protection. So, for example, if there is a shipment coming in, we do the paperwork and preliminary clearance before they get to the designated terminal. If the product needs to be approved by another agency like the FDA, this needs to be done as well. When the shipment comes in, it will be cleared in their computer system and the goods will be good to enter and be released to whoever is going to pick them up from there.

Today, it is all done electrically. Technology has certainly given our job a major advantage and speeded up the process of importation in the last couple of decades.

On any given day, a customs broker that works with importers will see any number of different types of goods. Shipments will come in carrying food like shrimp, crabmeat, and other delicacies, toys from cheap toys to more commercially popular ones, clothes, and more. Many shipments come in from China, as one of our biggest importers. One interesting tidbit here is that shrimp is actually a big import. Thousands of people in the United States consume a lot of shrimp each day.

What is the advantage of working with a customs broker?

As we mentioned earlier, we act as a kind of middleman that facilitates the process between various entities and agencies. Most importers are business people who want to keep to the business they are in and are not interested in being backlogged with a bunch of paperwork and confusing regulations. This is where we come in. We take care of all the legal stuff so their shipments will have no problems at the border, so they will be cleared, and ready to continue with the business of making money.

We take care of:

Clearing goods through customs
Making sure those goods reach their destinations
Calculate duty or tariff payments owed
Compile and fill out necessary documentation like invoices, certificates, and cargo-control documents
Keep on top of changes in export or import laws and regulations

Are You an Importer Looking to Bring Goods Into the U.S? Call a Trusted Customs Broker

Here at Cordova Customs Brokerage, we have been helping importers do business in the United States for many years. Our brokers are always up to speed with new regulations and changes—as they happen often—and abreast of all necessary compliance guidelines. Call us today for more information.

December 7, 2020

A Look at Two of America’s Biggest Exports: Aircraft and Automotive

Container ship in import export and business logistic. Trade Port. Shipping, cargo to harbor and Cargo plane with working crane bridge in shipyard at sunrise, logistic import export and transport indu

The U.S economy is far less dependent on trade than you might think, even though we do our fair share of trading across the world. In 2019, the total value of all U.S exports accounted for about 11% of GDP. Each state has its dominant industries and you can tell a lot about a state by looking at their major exports. You can tell a lot about a country as well.

The United States is certainly known for its innovation around the world, and it might be telling that some of our major exports are aircraft and electrical equipment. If you look at it state by state, you’ll find that U.S exports are also incredibly diverse, since the country is vast and each state has different natural resources and leading industries. So we thought we’d take a look at some of the biggest exports of the United States and their histories.

Many states have major exports that become their staples and embed themselves into the identity of the state. In states like Pennsylvania, for example, coal is the top export. In the great state of Texas, we know that we are an oil-producing state and that is one of our biggest exports. Many might remember the once-upon-a-time football team, the Houston Oilers.

The Invention of Flight

The story of the Wright brothers is a familiar story of perseverance, brilliance, and hard work. The two grew up together in Dayton, Ohio, always pursuing their curiosity. The two went into the printing business in 1889. Three years later, they opened a bicycle shop. The two built and fixed bicycles for several years before the talk of flying machines began to further spark their curiosity. This experience would be crucial when it came to designing their first flying machine.

They began with a small kite to test some of their theories regarding control. It took them several attempts to finally break ground with a 12-second flight in 1903. This became the first powered, heavier-than-air machine to achieve sustained flight. Just before World War I, the brothers’ 1909 Model A flyer was sold to the U.S Army Corps for $30,000. It was less than a decade that the first airplane was landing on a carrier for military purposes.

The advancement of aircraft is closely and intricately linked with military operations and needs. The biggest leaps in these innovations happened for defense purposes and were then used in commercial settings. Aerial reconnaissance dates back to even before World War I. The use of observation balloons was the first step to this military tactic, but balloons could only offer so much subtlety. From there, some of the Army’s first flyers began to emerge. One was the Glenn Martin Bomber, a two-engine bomber that could carry up to four crew members and five machine guns.

That speaks volumes about the innovative spirit and urgency that surrounded the invention of aircraft and airplanes. America’s biggest exporter today is Boeing. They are the world’s largest aerospace company; they assemble commercial airplanes and defense products. As of December 2019, Boeing employed over 143,000 employees. They are the U.S Defense Department’s biggest contractor.

The Invention of Automobiles in America

Nothing has ever been the same since the invention of the internal combustion engine. The first stationary gas engine was invented by Karl Benz in 1879. He is often credited with being the father of the automobile. When it comes to cars in America, we usually think of Ford when we think of early pioneers in the automotive industry.

Along with Ford, we think of Chrysler and Dodge. All companies that are still standing today. Many people might not be aware, however, that 485 automobile companies entered the industry between 1899-1909, but it was Ford that seemed to surpass them all once he introduced this revolutionary Model N. As Ford introduces the assembly line and mass production begins, there is nothing to stop the mass production that leads to mass consumption and demand of automobiles.

Today, automobiles totaled a worldwide US$758.4 billion. By value, cars represent the world’s number two exported product by value, behind crude oil and just ahead of electronics. The United States is the number #3 exporters of cars in the world behind Germany and Japan.

The United States loves its cars. We have many unique companies working on the design and innovative ways to improve the way we drive. The world of electric cars is just getting started and companies like Tesla are here to stay.

With such a large country, it’s no surprise that we have a great amount of innovation and invention. Here at Cordova Brokerage, we help exports and importers go through the intricate system of customs, warehousing, and more.

October 9, 2020October 9, 2020

A Look at How Two Major Conflicts Changed America’s Exports

Container ship in export and import business and logistics. Shipping cargo to harbor by crane. Water transport International. Aerial view The United States wasn’t always a powerhouse of exports. For some time after World War I, the U.S maintained a rather isolationist policy and was largely content to produce everything domestically. The first part of the 20th century looked very different in terms of international imports and exports.

Woodrow Wilson once said, “Britain has the earth, and Germany wants it.” A very true premonition of what was to develop throughout the rest of the twentieth century with two major world conflicts that would change the dynamic of international trade forever. So we thought we’d take a historical look at how America became an economic superpower and some of the major events that changed the way we do imports and exports.

The United States would not enter World War I until after the conflict had been raging for almost three years. President Woodrow Wilson had initially pledged neutrality and it wasn’t until Germany got a little over-aggressive in international waters and sunk American liners like the Lusitania. As America sent its first wave of troops, the balance of power was already tilting from Britain to America.

In 1916, Britain bought more than a quarter of engines for air fleets, more than half of its shell casings, two/thirds of its grains, and almost all of its oil from foreign suppliers. America was the largest. Back in the States, this was slowly giving the American economy a boost and spearheading what would soon turn into a massive mobilization for production, factories, steel mills, and more.

It wasn’t long before American farmers were overproducing to send to Britain’s soldiers, factories were manufacturing to send steel supplies, and more. The economic potential of the United States all of a sudden became too apparent to politicians domestically and abroad.

As the war raged on, American production became more and more important to the Ally effort. Once the war was over and the world had to sit back and reflect on what it had done and what had happened, international trade and the economy had certainly changed. During the decades between the two world wars, the Great Depression and learned to slowly revitalize its economy. Complex relations between nations would entangle the situation even further as countries like France, Britain, and Germany scrambled to pay off their debt, rebuild their societies, and re-strengthen their economies.

The Home Front During the Second World War

It would be about twenty years later that the world would see global conflict once more, but the signs of these changing economic powers began appearing as early as the 1930s when prominent leaders like Winston Churchill took note of Hitler’s economic ambitions. One the war broke out and the United States entered in 1942, the demand for the production of war materials skyrocketed overnight. Because the U.S mainland was not being bombed or invaded, America had its vast lands for production capabilities.

What had been a steady flow of agricultural exports, for example, shot up and this increase continued for at least forty years. The American farmer was producing goods for people at home and soldiers abroad who needed an incredible amount of supplies and food. Hogs, poultry, eggs, dairy products, and vegetables were the top priorities of the agricultural export industry.

The United States production during the war was massive and put people that had been out of work for some time right back to work, including women who had largely been discouraged from the workforce in the past. Here are some amazing facts about American production power during this time:

America produced and provided over two/thirds of all the Allied military equipment produced during the war. This included:

- 297,000 aircraft
- 193,000 artillery pieces
- 86,000 tanks
- 2 million army trucks
- 41 billion bullets
- 2.6 million machine guns

All of this catapulted America into a prominent place in the world’s economy. In 1939, a few years before the war, the U.S was the 39th largest economy. In just a matter of years, it was number one.

American Exports Today

Today’s international markets look a lot different than they did following World War II. Slowly but surely all of the devastated countries recovered and regrew their economies. This includes Germany and Japan who had been absolutely devastated both in infrastructure, jobs, loss of population, and not to mention credibility on the world stage. Countries like Britain, however, never fully recovered to the empire status, of course. The United States became a powerhouse economy, driven by innovation and the ability for mass production. Today’s U.S major exports include:

Commercial aircraft
Industrial machines
Semiconductors
Electric apparatus
Telecommunications
Medical equipment

Even though the international trade landscape has changed in 2020, given the economic impact of things like the pandemic, here at Cordova Brokerage, we continue to support and guide exporters and importers looking to trade in the international markets. Connect with us today and ensure that your exports or imports are in compliance and following all of recent government regulations.