Market Update

Freight Market Update: April 20, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of April 20, 2021.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: No change.
  • GRI Apr 15: East Coast impacted by Suez Canal Capacity: Recommended advance booking notice at least 21 days prior to CRD.
  • Notes: Carriers are starting to look ahead to the 2021 contract year in the midst of extreme challenges to the USEC and inland locations. Premium remains the entry point to the market on almost all lanes. Transloading services are becoming more essential to avoid challenges to the USEC.

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI Apr 15: Rate increases from most carriers as a result of tight space and equipment due to Suez Canal situation
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Ripple effect from Suez Canal blockage will become very visible in the next few weeks with quite a number of blank sailings from Ocean Alliance and The Alliance. Capacity is severely reduced in weeks 16/17/19/21. Equipment shortage has become very serious again especially out of Shanghai and outports. Both space and equipment will be very challenging in the coming month.

Europe → North America (Transatlantic Westbound)

  • Rates: Increased
  • GRI April 15: Implemented
  • GRI May 1: Likely implemented
  • Capacity: Recommend advanced booking notice at least 5 weeks prior to CRD.
  • Notes: Market expected to remain dynamic through Q2 as capacity stays heavily constrained. Booking early is key to securing space. Use Premium products for the urgent cargo needing higher reliability.
  • EQ supply is extremely tight across Europe as port congestion and lower vessel capacity hinder empty-container repositioning, particularly at inland depots. Allow flexibility in routing and empty pick up from the port.
  • Capacity development: There are 2 upcoming blank sailings: week 17 EMA (MED to USEC) and week 19 AL1 (NEU to USEC). Expect more void sailings and change of port rotation / port omissions announced at short notice in the mid term as carriers try to recover weekly schedule integrity.

India → North America

  • Rates: Increased
  • GRI April 15: Some carriers implemented 2nd half April GRI. Increases to both East and West coasts.
  • Capacity: Space is extremely tight out of the ISC with signs of capacity relief coming from Bangladesh and Sri Lanka. Suggested booking remains at 15-20 days prior to CRD.
  • Equipment: Inventory at many of the largest ports is starting to ease although we still expect equipment to be an issue for the next few months due to additional covid lockdowns and lingering effects of the Suez Canal blockage.
  • Notes: We continue to recommend booking urgent cargo on Premium no-roll services.
  • COVID Updates—ISC region is facing a new wave with 100K+ new cases daily. Bangladesh has announced a one-week full lockdown (originally until 4/21 extended to 4/28) while much of India is starting to enforce restrictions. These restrictions in both Bangladesh and India so far do not affect manufacturing and logistics services directly, but delays will arise from labor shortages.

North America → Asia

  • Rates: Increasing
  • GRI May 1: Three carriers intend to implement a GRI for all Asia destinations.
  • GRI May 15: GRI notification received from one carrier
  • Capacity: Recommend advanced booking notice 10-14 days prior to CRD at Port.
  • Capacity: Recommend advanced booking notice 10-14 days prior to CRD at Rail Ramp.
  • Chassis availability is tight at most major ports and rail ramps. Kansas City ramp has very difficult congestion issues and chassis shortages. Recommend more lead time for truckers to procure chassis.
  • Severe vessel congestion at both US coasts continues to move vessel cut-off dates and earliest return dates.

North America → Europe

  • Rates: Steady
  • Port congestion along the US East Coast and in North Europe impacts vessel-schedule integrity for all services, causing capacity loss week to week as ships make up time. We urge booking sooner to help ensure coverage.
  • Capacity: Recommend advanced booking notice 10–14 days prior to CRD at port.
  • Capacity: Recommend advanced booking notice 10–14 days prior to CRD at rail ramp.
  • Chassis availability is tight at most major ports and rail ramps. Anticipate more lead time for truckers to procure chassis.

Air Freight Market Update


Asia

  • The export market from Asia took another step up this week as demand continues to surge and capacity remains extremely tight. Yields have risen to their highest point of the year with rates rising alongside. The FEWB is in relatively better shape from most origins to major gateways in Europe. All capacity departing Asia is solidly booked until early May.
    • In welcome news, HKG CAD has agreed to soften the quarantine rules for pilots allowing Cathay Pacific (CX) to resume a large part of their freighter schedule by mid May.
    • At the same time 2 China Airlines (CI) pilots tested positive for Covid prompting calls for stricter rules. The regulatory situation remains quite fluid.

Europe

  • European export demand shows continued strength to the Americas and Asia. Space to the U.S. West Coast is the most constrained. ORD, JFK and ATL had a slight influx of new capacity from PAX and freighter carriers, providing some relief. Space to Asia remains very well utilized with carriers on TAWB and FEEB reporting load Factors in the 90% range.
  • Major airport hubs in central Europe are reporting normal throughput on the import and export side, while some secondary airports report some minor backlogs in breaking down freight.

Americas

  • Export capacity remains tight due to continued lack of belly capacity. It still takes several days from booking to uplift into European key destinations. Capacity from West Coast gateways is the most constraint to Europe, while the Midwest and East Coast are manageable. Capacity from the West Coast to Asia is seeing increased demand for perishables.
  • Many US carriers have delayed the start of transatlantic passenger services as surges in Covid cases lead European countries to re-impose lockdowns and close borders to tourists with no end date.
  • With high number of freighter flights from Asia and Europe, LAX and ORD airports still have large backlogs of import freight. Ground handlers are reportedly <10 days behind in breaking down freight from arriving flights. In addition trucking is scarce for airport recoveries and local deliveries.

Factory Output News

Thailand Bangkok and 17 other provinces declared areas where restrictions will be imposed. Restaurants and cafes in the red zones will be able to operate until 11pm. Dining in is only allowed until 9pm and alcohol consumption is prohibited. Schools are generally closed. [Source]

Philippines warns of flash floods and landslides as Surigae, the first super typhoon of 2021, gathers strength offshore. While not expected to hit land, it will bring heavy rain and strong winds. [Source]

India’s government has declared a complete lockdown on weekends until further notice in all regions in India. Logistics will not completely halt but you can expect delays across ocean wet ports, airports, ICDs and CFSs with workers will reduced to a skeleton crew to limit COVID spread.[Source: Flexport]

Bangladesh’s government is enforcing a strict lockdown in which all factories, offices and transports will be closed from April 14th to April 28th. There will be reduced air capacity, but all logistics (air/ocean/truck) will still remain open.[Source: Flexport]

Sri Lanka In February, export earnings nearly reached pre-pandemic levels. Textile and garment exports in February 2021 was US$ 443.3 million, compared to US$ 468.1 million a year ago [source]

Taiwan’s TSMC says chip shortage will improve in 3rd quarter as the company prioritizes automotive chips [source]


Updates from Flexport's Customs & Compliance Team

Department of Treasury Declines to Name Currency Manipulators

The Department of Treasury published a report saying there is no evidence that Switzerland, Taiwan, and Vietnam manipulated their currency to gain an unfair trade advantage. As a result of the designation, for now, the government will withhold punitive tariff action. However, the three countries exceeded Treasury Department thresholds to identify potentially unfair currency practices. Treasury officials engaged with their Vietnamese and Swiss counterparts to address the underlying issues with their respective currencies and emphasized that similar talks should occur with their counterparts in Taiwan.

USTR Tai’s First Public Speech Connects the Environment and Trade

In a substantially environmentally-centric speech, the US Trade Representative Katherine Tai said countries with lower environmental standards fuel what she called “a race to the bottom.” She did not mention how the federal government should treat goods produced in those countries for customs purposes, nor if the US would reopen negotiations for an environmental goods agreement with other World Trade Organization (WTO) members. Importers should monitor statements from Ambassador Tai to see if they evolve into concrete tariff action from the office of the USTR.

New Senate Bill Aims Reform How Commerce Department Administers AD/CVD Laws

US Senators Rob Portman (R-OH) and Sherrod Brown (D-OH) have introduced the Eliminating Global Market Distortions to Protect American Jobs Act of 2021 (S. 1187) aiming to improve the administration of the US’s anti-dumping and countervailing duty laws. The bill provides for expedited “successive investigations” when a product subject to a trade-remedy order sees an import surge from a new country after the penalty is imposed. The bill would also address “cross-border subsidization, where foreign governments subsidize their own manufacturers not only at home but in third country markets as well.” Importers should monitor this bill’s progress as it goes through the Senate, as its passage could result in more antidumping and countervailing duties (AD/CVD).


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • China GDP growth depends on measurements. Growth was either excellent or mediocre in 2021:Q1. If compared to 2020:Q1, the Chinese economy grew by 18.3%, the highest since China began reporting quarterly growth in 1992. If compared to 2020:Q4, growth was 0.6%, a deceleration.
    • The discrepancy will be an issue for year-over-year numbers in the wake of 2020’s sharp Covid shock.
    • Chinese exports rose 30.6% in March from a year earlier, somewhat below forecasts.
  • Japanese exports climb by 16.1% over a year earlier, beating expectations. The value of exports was the highest in three years.
  • Euro Zone retail sales rise, stronger than expected, by 3.0% in February. That still left them down 2.9% from February 2020. The comparable yearly February number for the US was up 9.9%.
  • US consumer prices are up. The main Consumer Price Index rose 0.6% in March, the biggest monthly jump since 2012. The CPI was up 2.6% over the preceding 12 months. The latest jump was heavily driven by energy prices (up 5.0%). Excluding food and energy, CPI was up 0.3% for the month and 1.6% for 12 months.

Freight Market News


Can Ever Given Remove Cargo? While the Ever Given, which ran aground in the Suez Canal on March 23, is being held by the Suez Canal Authority until certain financial claims are resolved, customers want to know when they’ll receive their cargo. The Wall Street Journal reports the ship operator is considering removing cargo to get the goods moving.

Ports Remain Congested Worldwide Global congestion is snarling ports in the US, Europe, and Asia. According to the Detroit News, US West Coast congestion has shifted from Los Angeles to Oakland, while, in Europe, some port hours are extended to help clear cargo. In Singapore, last month’s throughput was the highest on record.

FMC Says Cargo Can Move Sooner The Federal Maritime Commission amended a rule on contract-filing times to allow carriers up to 30 days to submit contracts. Freight Waves explains the flexibility now allows carriers to receive and move cargo under contract terms before contracts are filed.


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Please note that the information in our publications is compiled from a variety of sources based on the information we have to date. This information is provided to our community for informational purposes only, and we do not accept any liability or responsibility for reliance on the information contained herein.

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