Flexible transport options to US are key while tariffs on EU wines and spirits are still a reality
Between tariffs on selected wines and spirits from Europe to US and the disruption from COVID-19, it has been an unusually challenging year for beverage importers. With more trade uncertainty ahead over digital service taxes, exploring creative transport options will be your key to navigating the peak season.
Wine imports to US down the first half of the year
The industry numbers just released show how big of an impact tariffs and COVID-19 has had on EU wine imports. According to the US Commerce department data, table wines from France dropped 31% in volume from January to the end of June1 and imports from Italy, Spain and Germany were also down. Part of the decline could be contributed to the inventory surges late last year before the tariffs took effect in October.
Creative Transport Solutions
Hillebrand US customers importing from these countries have increasingly been relying on flexible transport solutions for their products. To keep inventory and cash flow needs balanced, they have turned to groupage, our custom less-than-container consolidation program. Consider it like a ride-sharing model for wines and beverages, except for a bit longer of a ride across the ocean. What makes it different from traditional co-loader programs? There are two main things: regularly scheduled departures to make deliveries more predictable, and most importantly for wines, temperature protection options with reefer or insulated service from Europe to preserve the quality and freshness on arrival. This is aimed at beverage-only services in order to avoid the risk of cross contamination.
Tariffs extended and the threat of more
Despite industry pushback, the existing 25% tariffs on selected wines and spirits from Europe did not change during the scheduled review period this August. In addition, we are monitoring developments in the trade investigation over digital service taxes (DSTs). In the first round, French sparkling wines were not affected by DST between the US and France. However the US Trade Office has initiated a separate, and broader, investigation2 that covers the European Union (including Italy and Spain) as well as the Turkey, Brazil, India and Indonesia. At time of posting, it is not clear whether this will escalate into new tariffs or another form of trade action.
Adapt your strategy for the new normal
Hillebrand understands that planning shipments with existing and potential tariffs, a worldwide pandemic, is undoubtedly a daunting task right now. We are here to help you find the best transport options for the rest of the year as well as longer term planning scenarios. Whether it be navigating the world of tariffs or consolidating a shipment, we’re here to guide you along the way.
1Banaag, Juan and Marsteller, Daniel. “Tariffs Take a Toll on Imported Wine Shipments, But Retail Growth Stays Strong”. 21 Aug 2020 Shanken News Daily
2Initiation of Section 301 Investigations of Digital Services Taxes. Fed.Reg. § 85 FR 34709 (June 5, 2020)