GOVERNMENT SHUTDOWN: IMPACT ON U.S. SUPPLY CHAIN

As a U.S. government shutdown looms, both industry and government agencies are preparing for potential disruptions. At issue is 12 appropriations bills that have not been passed that dictate discretionary spending levels by Congress. With the new fiscal year starting in October, the deadline for lawmakers to pass legislation that funds programs covered by the appropriations process is Saturday night at midnight. Failure to pass appropriations legislation would result in a complete government shutdown.

“Many agencies essential to the facilitation of trade will see reduced functions at varying levels during the shutdown.  CBP resources will be limited and may be diverted to other priorities.  Partner Government Agencies, such as FDA, EPA, and USDA, are anticipating furloughs.  The impacts to importers and exporters will include delays in the supply chain and potential additional costs.

Importers should work closely with their Customs Brokers to proactively monitor import shipments, especially those subject to Partner Government Agency requirements, and expect delays in release. Exporters with shipments subject to additional export requirements, such as licenses from BIS, should also expect delays as these were not available during prior shutdowns.  Export control enforcement is anticipated to continue as normal.”
Kate Rayer, Vice President Regulatory Services, LCB, CCS | Green Worldwide Shipping

SUPPLY CHAIN IMPACT

The trade industry is essential to the U.S. economy and will likely weather a short-term government shutdown with ease. Following is a list of key agencies involved in the U.S. supply chain and the potential disruptions that could occur as the result of a government shutdown:

Federal Maritime Commission (FMC)

Percent Furloughed: 94%

Concerns: FMC, overseeing container shipping competition, would cease most activities, affecting filings, applications, and adjudicatory proceedings.

Federal Railroad Administration (FRA)

Percent Furloughed: 35%

Concerns: Rulemakings related to railroad safety would halt.

U.S. Coast Guard (USCG)

Percent Furloughed: 13%

Concerns: While safety and inspection regulations would continue, the USCG, part of the Department of Homeland Security, could face morale issues due to service member pay concerns.

Surface Transportation Board (STB)

Percent Furloughed: 99%

Concerns: Virtually the entire agency would close, affecting case processing, regulatory filings, and ongoing rulemaking activities.

U.S. Maritime Administration (MarAd)

Percent Furloughed: 24%

Concerns: Most functions continue, but activities related to cargo and commercial sealift would be suspended.

Customs and Border Protection (CBP)

Percent Furloughed: 8%

Concerns: While cargo inspections continue, policy, regulatory, legislative, auditing, and training activities could be suspended, affecting import processing.

Federal Highway Administration (FHWA)

Percent Furloughed: 0%

Concerns: Operations continue as normal, but state agencies express concerns about potential delays in project timelines due to funding disruptions.

Federal Motor Carrier Safety Administration (FMCSA)

Percent Furloughed: 0%

Concerns: FMCSA expects to continue normal operations, subject to available cash.

National Highway Traffic Safety Administration (NHTSA)

Percent Furloughed: 0%

Concerns: Activities funded through the Highway Trust Fund or the Infrastructure Investment and Jobs Act (IIJA) would continue.

Environmental Protection Agency (EPA)

Percent Furloughed: 93%

Concerns: Core functions continue, but approvals of pending state requests, including EPA permits for freight-related projects, could be suspended.

Food and Drug Administration (FDA)

Percent Furloughed: 20%

Concerns: Core functions continue.

Consumer Product Safety Commission (CPSC)

Percent Furloughed: All non-essential employees

Concerns: Limited capacity in ports to assist CBP with imports, automated CPSC “May Proceeds” expected to continue.

Fish and Wildlife Service (FWS)

Percent Furloughed: 0%

Concerns: Most permits and licenses will not be issued during a government shutdown.

National Oceanic and Atmospheric Administration (NOAA Fisheries)

Percent Furloughed: 98%

Concerns: Toothfish imports are unlikely to clear customs during a shutdown.

USDA Animal and Plant Health Inspection Service (APHIS)

Percent Furloughed: 20%

Concerns: Potential delays and holds expected, pre-clearance and fruit and vegetable inspections will continue along with animal quarantine import and export procedures.

USDA Agricultural Marketing Service (AMS)

Percent Furloughed: 10%

Concerns: Grading, inspections, and lab operations will continue.

Alcohol, Tobacco, Firearms and Explosives (ATF)

Percent Furloughed: All non-essential employees

Concerns: Import applications will not be processed unless they are identified as resources for critical activities.

NEED HELP WITH SHIPMENTS?

Contact [email protected] to speak with Green’s freight experts.

Stay up-to-date on freight news with Green’s Weekly Freight Market Update by following us on Facebook, Instagram, and LinkedIn. For continuous updates, make sure to check out our website at greenworldwide.com.