Market Overview

Freight Delays Loom If Government Shutdown Goes Long-Term

Freight Delays Loom If Government Shutdown Goes Long-Term

Backups and congestion on land and along the nation's waterfronts due to a lack of customs clearance personnel could be where carriers and shippers see the most immediate effect of a long-term federal government shutdown.

The prospects of avoiding such a scenario did not improve at the close of business today on Capitol Hill, where lawmakers returned to work for the first time since Saturday but with no votes scheduled on the appropriations bill to re-install funding.

The shutdown affects 25 percent of the federal government, including funding for the Departments of Transportation, Homeland Security, Agriculture, Commerce, Justice, Housing and Urban Development, Interior, Treasury, and State. Also swept up in the closure is the Food and Drug Administration and the Environmental Protection Agency.

In the short term, the effects on the processing of imports are likely negligible, says Jason Craig, director of government affairs for C.H. Robinson (CHRW), who has lived through major federal government shutdowns.

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But while the current partial shutdown – now in its 6th day - may be having little immediate effect, that could change if it moves beyond two weeks and into 2019, Craig told FreightWaves.

"In the chaos of a shutdown, some workers get told to stay home, and some are told to come back in. It's unlikely that the government would stop the clearance process completely, but things could get delayed if the process gets overwhelmed" at the borders he said, affecting imports of everything from auto parts and machinery to fruits and vegetables.

"And it's not just the land borders with the US and Mexico - imports from Europe and Asia could be affected as well. The same type of clearance process goes on whether it arrives by truck or ship or plane," he said.

"It also depends on what type of clearance. Everything has a unique requirement, some require fumigation, some require USDA inspection - there are lots of different types. So you can't say one sector will be more impacted than another, because it depends on the type of clearance and the priority given at a particular port or border crossing."

For shippers and carriers throughout the supply chain, "that's the toughest part about shutdowns, the uneven impacts that are very difficult to predict."

The Port of Los Angeles, the country's largest container port, relies on both the U.S. Customs and Border Protection and the U.S. Coast Guard – both a part of the Homeland Security department – for clearing and securing freight.  

Port of L.A. spokesman Phillip Sanfield said the shutdown has so far not slowed freight clearance at the port's terminals as customs and security agents there are exempt from the government funding problem.

"These folks crank it up a notch in these situations, but I'm not sure how long that situation lasts as the shutdown continues," Sanfield told FreightWaves.

It's a situation the port is keeping a close eye on because of the record freight volumes it is currently seeing – along with problems with chassis availability and truck appointment times – much of it related to the timing of tariffs on Chinese imports. The port is on track to have a third year in a row of record container volume.

"We have enough other logistical issues to contend with, with the amount of volume we're seeing and labor supply being somewhat lighter during the holidays," he said.

If a shutdown does extend long term, there is also the possibility that rulemakings from the Federal Motor Carrier Safety Administration related to new hours-of-service proposals could be delayed as well.

While the FMCSA is not directly affected by the shutdown, a government official contacted by FreightWaves confirmed that agency proposals requiring sign-off from the DOT secretary could delay rulemakings.

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Posted-In: Department of Transportation Environmental Protection Agency Federal Motor Carrier Safety AdministrationGovernment News Global Federal Reserve Markets


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