Brooke Chase

By David Lawder, additional reporting by Daniel Burns and David Shepardson in New York; Editing by Stephen Coates and Josie Kao

WASHINGTON, (Reuters) – The catastrophic bridge collapse that closed the Port of Baltimore to ship traffic on Tuesday is causing some logistics headaches, but is unlikely to trigger a major new U.S. supply chain crisis as competing East Coast ports are poised to handle more cargo, economists and logistics experts say.

With six people presumed dead after a container ship collision destroyed the Francis Scott Key Bridge, it remained unclear how long the span’s twisted superstructure would block the harbor’s mouth.

But port officials from New York to Georgia were busy fielding queries from shippers about diverting Baltimore-bound cargo from containers to vehicles and bulk material.

“We’re ready to help. We have ample capacity to absorb any surge in container traffic,” Port of Virginia spokesperson Joe Harris told Reuters.

The Norfolk-based port is expected to be a major beneficiary due to its proximity to Baltimore, but ports in Savannah and Brunswick, Georgia, also were poised to absorb some traffic, a spokesperson for the Georgia Ports Authority said.

U.S. Transportation Secretary Pete Buttigieg told MSNBC on Wednesday that while there were many ports on the East Coast, “there is no substitute for the Port of Baltimore being up and running,” as it is the top U.S. port for vehicle imports and exports, including farm and construction machinery.

Treasury Secretary Janet Yellen said a federal supply chain task force was meeting on Wednesday to assess the port’s closure but said the Biden administration “will do everything as quickly as we possibly can” to reopen it.

Supply chain experts say U.S. port infrastructure is more resilient than during 2021 and 2022, when they were understaffed and clogged with ships and containers, spiking prices and contributing to inflation as Americans binged on goods purchases during the COVID-19 pandemic.

“The collapse of the Francis Scott Key Bridge in Maryland is another reminder of the U.S. vulnerability to supply-chain shocks, but this event will have greater economic implications for the Baltimore economy than nationally,” Ryan Sweet, chief U.S. economist at Oxford Economics, wrote in a note.

“We don’t anticipate that the disruptions to trade or transportation will be visible in U.S. GDP, and the implications for inflation are minimal,” he added.

NO SHIPS, NO WORK

The impact on the Port of Baltimore’s more than 2,000 workers who load and unload cargo vessels could be significant if the closure lasts more than a few days.

The dockworkers are day laborers, said Scott Cowan, head of the International Longshoreman’s Association Local 333 in Baltimore, meaning they only work when there is cargo to be moved. He estimated there might be about a week’s work clearing the existing inventory at the port.

After that, the workers could lose a collective $2 million a day in lost wages, he said.

The port directly generates, opens new tab over 15,000 jobs, with an additional 140,000 jobs dependent on port activity, according to Maryland Governor Wes Moore’s office.

VEHICLE PORT

One area of concern is higher shipment costs for imported cars and trucks and for exports of farm tractors and construction equipment as Baltimore is the largest U.S. port for “roll-on, roll-off” vehicle shipments, with over 750,000 cars and light trucks handled by state-owned terminals in 2023, according to Maryland Port Administration data.

Ford Motor Co (F.N), opens new tab and General Motors (GM.N), opens new tab said they would reroute some affected shipments but the impact would be minimal, while Volkswagen (VOWG_p.DE), opens new tab is unaffected because its new Sparrows Point vehicles terminal is located at a former steel mill site on the bridge’s Chesapeake Bay side.

The risk of car price spikes is further dampened by a recovery in automotive inventories to their highest level since May 2020, after being drawn down sharply during the pandemic. The industry’s inventory-to-sales ratio is near its 32-year-average of 1.96 to 1 according to Census Bureau data, and sales incentives have risen in recent months as high interest rates dampen demand.

COASTAL SHIFT

Ryan Peterson, founder and CEO of logistics platform Flexport, said that with Baltimore handling only 1.1 million twenty-foot equivalent containers last year – ranking 12th in the U.S., any impact on container rates and shipping costs from the disruption would be far less than increases caused by cargoes diverted from the Suez Canal because of attacks on Red Sea shipping by the Houthi militant group in Yemen.

But the port outage could contribute to a shift of container traffic to West Coast U.S. ports that was already underway over the past several months because of the lack Asian shippers’ access to the Suez route and reduced capacity in the Panama Canal due to low water levels. Peterson said the potential for an East Coast longshoreman strike in late September – at the height of Christmas-season imports – also has some shippers considering West Coast shipments.

“East Coast volumes are down and there is the ability for those ports to flex up to handle this,” Peterson said.

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The Corporate Transparency Act (CTA) was enacted back in 2021, but few businesses have considered whether they’ll be impacted. Now that the law is officially in effect (as of January 1, 2024), small business owners now need to ensure compliance.

An estimated 32 million businesses will now need to report detailed information about their operations. However, in a survey of its members, the NFIB found that 90% have never heard of these new requirements. This article will outline critical information you need to know.

What is the goal of the Corporate Transparency Act?

The CTA was passed to tackle money laundering, tax fraud and other unlawful activities. Specifically, it targets “non-employer firms,” or entities that have no employees, according to Thomson Reuters. The reasoning is that many “bad actors” have concealed their ownership of corporations, LLCs and similar entities in the U.S. to cover up fraud, financing of terrorism and more.

As a result, many small business owners who have “one-person operations” will need to provide greater transparency into business operations by reporting Beneficial Ownership Information (BOI).

What is a Beneficial Ownership Information Report and who needs to file it?

Millions of small businesses will need to file a BOI Report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). Specifically, companies created or registered to do business before January 1, 2024, will have until New Year’s Day 2025 to file their initial BOI report, according to the FinCEN.

However, entrepreneurs who created or registered their businesses in 2024 can wait until receiving actual or public notice that their creation or registration is effective to file their BOI report. They will technically have 90 calendar days to file. Any company created on or after January 1, 2025, will need to file their reports within 30 calendar days of receiving actual or public notice that the business is effective.

Both domestic and foreign companies need to file, according to Thomson Reuters, with reporting companies typically including:

• Limited liability partnerships
• Limited liability limited partnerships
• Business trusts
• Most limited partnerships created by filing with a secretary of state or similar office.

Companies stared within the U.S. and required to file a BOI are called “domestic reporting companies,” while entities created in foreign markets but registered to do business in the U.S. are called “foreign reporting companies.”

Domestic reporting companies created before January 1, 2024, have to provide information about the company and its beneficial owners. Any domestic reporting company created on or after January 1, 2024, needs to provide information about the company, its beneficial owners and company applicants.

Which companies are exempt from filing a BOI report?

Exempted companies include securities issuers, domestic governmental authorities, banks, and others that don’t fall into the above categories. “Large operating companies” are also exempted from filing BOI reports, according to Wolters Kluwer. These are entities that:

• Employ more than 20 full-time employees in the U.S.
• Have an operating presence at a physical U.S. office
• Have filed a federal income tax or information return in the U.S. for the previous year, with more than $5 million in gross receipts or sales

What information needs to be reported?

Primary company details:

• Full legal name
• Any trade or “doing business as” names
• Current street address of principal place of business
• Jurisdiction of formation
• Taxpayer identification number

Beneficial owner and company applicant details:

• Full legal name
• Date of birth
• Current residential street address
• Unique identifying number and the issuing jurisdiction from a current U.S. passport, state or local ID document, driver’s license or a foreign passport and an image of the document from which the unique identifying number was obtained

Who is a “beneficial owner” and “company applicant”?

A beneficial owner is anyone who either exercises substantial control over the reporting of the company or who owns at least 25% of ownership interests. A company applicant is someone who directly files the document that creates the domestic reporting company and oversees the filing of the document. Company applicants can only be an individual who directly files the document to create the business entity — or files for the entity to do business in the U.S. The company applicant also can be the person primarily responsible for directing or controlling the filing.

Both beneficial owners and company applicants must report their information directly to FinCEN.

What happens if BOI report information is wrong or needs to be updated?

If information in a report is inaccurate, a new report must be filed within 30 calendar days. The same guidelines apply if existing information needs to be updated. For example, if a beneficial owner’s address has changed, or there has been a legal name change, the BOI report may need to be updated. It also would need to be updated if a company’s main headquarters changes.

 Where can I go for more information and support?

The U.S. Chamber of Commerce encourages small business owners to consult lawyers or tax and accounting specialists if they need help filing their BOI reports.

January 17, 2024 | IWF News |  Warren Shoulberg

New data from the Producer Price Index suggests that costs are coming down on things like softwood lumber as part of an overall decline in material costs.

The wild ride up in construction materials in 2023 may have peaked as the year ended and going into 2024 we could see some declines in those costs, new statistics indicate. 

An analysis of the Producer Price Index by the Associated Builders and Contractors organization shows encouraging news for builders going into the new year. “Construction input prices declined for the second straight month in November,” ABC’s chief economist Anirban Basu said in a statement. “While much of the recent decline is due to record domestic oil production and the resulting precipitous decline in gas and diesel prices, other commodities like iron and steel and lumber products are currently more affordable than they were at the same time last year.”

Softwood lumber prices dropped by almost 6% in November and have declined by nearly 20% versus the same period a year ago. Construction input prices overall decreased 0.3% in November.

Prices of materials going forward, according to Basu in the statement, are equally as encouraging. “This is a welcome development for an industry still dealing with extraordinarily elevated financing costs and rising labor costs due to ongoing worker shortages.”