4 Things to Know About Logistics Regulations in 2020 (6/14/24)

In the ever-changing world of logistics operations, businesses of all sizes must be aware of trade regulations, tariffs, HOS rules, and new legislation that affects compliance.

When it comes to compliance, what worked in 2019 may not work in 2020. Staying on top of industry regulations that affect local and global shipping can feel like a full-time job. Failing to do it, however, can lead to additional costs, a lower ROI, legal woes, and delays in shipping.

Growing concerns among American businesses in 2019 were not just niche issues related to those involved in logistics operations; they were the issues seen all over the news: trade wars, controversial new bills, and labor regulations. These developments unfolded throughout 2019 and are set to have a monumental impact on the way vendors and carriers operate in 2020. This article will discuss key components that will affect compliance in the immediate future. We will cover:

• Trade compliance issues, including the U.S.-China trade war and the implications of Brexit

• Scrutiny from U.S. Customs and Border Protection on DDP

• New HOS rules from the FMCSA

• The effect that AB5 may have on independent truckers

• Potential solutions for business owners

Trade compliance

In 2019, the trade war between the U.S. and China was the subject of many news headlines. Over the course of the year, lengthy negotiations resulting in tariff increases lead to confusion among logistics operators. Importers also faced red tape when shipping across the U.S.-Mexico border and the U.S.-Canada border, as well as increased tariffs. In Europe, the unpredictable ramifications of Brexit became a frustrating variable when sorting out logistics compliance.

As recently as December 15, China suspended tariffs on several U.S. imports, including cars and corn. The U.S., in turn, agreed to hold off on tariffs on many China-made products, including electronics and toys. As of December 2019, 25% of tariffs were still in place on a reported $250 billion in Chinese goods.

Businesses should pay close attention to trade negotiations with China in 2020 and anticipate potential costs and delays when shipping globally.

Additional costs for DDP

For businesses using DDP (Delivered Duty Paid) shipping, which requires the seller to take on risk for shipments, logistics regulations may result in additional costs. When opting for DDP, the shipper is responsible for tariffs, insurance, and all expected and unexpected fees.

In 2020, DDP could result in extra fees if the shipment requires a close inspection during its journey to the recipient. Per the DDP arrangement, this cost falls back on the shipper. Businesses should be aware that U.S. Customs and Border Protection will be looking closely at shipments and may open and inspect those that have not been correctly classified.

New hours of service mandate

The FMCSA (Federal Motor Carrier Safety Administration) has long been developing new mandates for HOS (hours of service). In 2020, many new regulations will be enforced. These rules affect approximately 3.5 million truckers. In 2019, the FMCSA’s goal to finalize regulations was delayed by the extended government shutdown, but by the end of the year, changes were back on track. Heading into 2020, businesses should be aware of regulations aimed at modernizing HOS, minimizing accidents, and accounting for inclement weather. According to the FMCSA, these compliance efforts are aimed at increased safety on the road and preventing injury.

According to the Commercial Vehicle Safety Alliance, ELD (electronic logging devices) are now required on all trucks and drivers may no longer use AOBRDs (automatic onboard recording devices). The ELD works by monitoring driving time and mileage to minimize fatigue. New HOS rules require mandated 30-minute breaks for every eight hours of driving time plus 30-minute off-duty breaks for every 14 hours on duty. Other regulations account for short haulers and dangerous weather.

Shippers should be mindful of ensuring that truckers have switched from AOBRDs to ELDs as the deadline for doing so was December 17. Businesses should also be aware of exemptions to new HOS regulations, like those found in Alaska, where the FMCSA allows for 20-hour duty-time windows and 15-hour driving time windows due to the logistics of shipping on Alaska’s thousand-mile truck line.

AB5 and the definition of “independent contractors”

In September 2019, the California Senate passed AB5, a bill that aims to define the difference between employees and independent contractors in the state. While the goal of AB5 was to better regulate gig economy platforms like Uber and DoorDash, the legislation could have a big impact on independent truck drivers. Logistic operators who oppose AB5 believe it will make it difficult for trucking companies to contract together and will negatively impact the independent owner-operator model. In November 2019, the California Trucking Association filed a challenge to the law that argues that AB5 could put 70,000 independent truckers out of work.

Business owners in California should be cognizant of the effects of AB5, which goes into effect in 2020, as regulations could result in a shortage of truck drivers statewide.

Potential solutions

The best way to minimize increased costs and shipping delays in 2020 is to stay up to date on changing laws. Businesses should pay special attention to which items may be difficult to move globally and how products are being classified. When handling logistics, shippers should view the process through the eyes of U.S. Customs and Border Protection and the FMSCA. New regulations will not favor businesses that cut corners and attempt to avoid tariffs, so staying current on compliance issues and consulting experts will be key in 2020.

Resource Logistics Group provides transportation and shipping advice combined with professional services and state-of-the-art technology. Our transportation advisors will help you understand changing regulations in the industry and what they mean for your logistics operations. From contract negotiation to easing back-office burdens, we’re your ally in excellence. Visit our contact page to get your free benchmarking analysis.