Market Update

Freight Market Update: November 3, 2020

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 3, 2020. Today, we also prove that not all the news is political.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Increased
  • GRI November 1: Initially implemented, indication that some carriers are adjusting rates.
  • Capacity: Recommend advanced booking notice 14 days prior to CRD.
  • Widespread equipment shortage issues worsen on the TPEB trade. Import and export imbalances persist, contributing to prolonged issues at origin in finding containers. Expectations are that these issues will persist through the end of the calendar year.

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI November 1: Implemented
  • GRI November 15: Likely implemented
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Peak Season Surcharge of USD 150/TEU effective November 1
  • Port Congestion Surcharge for Felixstowe & Southampton of USD 150/TEU effective November 1
  • Notes: Market expected to be very strong through the end of November. Very severe equipment shortage may require equipment substitution (40’ST, 40’NOR and 20’DC instead of 40’HC). In the UK, the serious port congestion in Felixstowe is spreading to other UK ports, e.g. Southampton. Further delays and port omissions are taking place. Carriers are looking to reduce cargo into the UK due to slow turnaround of containers and haulage limitations. They have put various restrictions in place.

Europe → North America (Transatlantic Westbound)

  • Rates: Steady
  • GRI October 1: Implemented
  • GRI November 1: Unlikely implemented
  • Capacity: Recommend advanced booking notice 21 days prior to CRD
  • Notes: Ongoing market strength with full vessels and cargo rolling. Space crunch on direct USWC sailings, recommend advanced booking notice 4 weeks prior to cargo readiness, please also consider alternative routes (e.g. transshipment / inland move to USWC). Capacity development: the 2M alliance will upgrade the TA1 and TA2 services to US East Coast / Gulf with larger ships increasing their pro-forma capacity in November by 11%, while THE Alliance will be operating at 84% with 2 blank sailings scheduled in week 46 and 48 on the AL1 and AL4 service to US East Coast and Gulf destinations.

India → North America

  • Rates: Increased
  • GRI November 1: Initially implemented, indication that some carriers are adjusting rates while others will still implement GRI
  • GRI Nov 15: Likely to happen as Diwali is approaching mid-November
  • Capacity: Containers are rolling—please make bookings in advance and provide forecasts to Ocean Team / Dart
  • Widespread equipment shortage across India. Import and export imbalances persist, contributing to prolonged issues at origin in finding containers. ICD’s are most affected especially in Northern India. Expectations are that these issues will persist through the end of the calendar year and possibly into ISC peak season through April 2021.

North America → Asia

  • Rates: Increase
  • GRI November 15: None
  • GRI December 1: The Agri segment is seeing the most pressure with GRI’s as high as $300 for rail origins. We have one indication for General Cargo at $80/20’ and $100/40’ increases for December 1.
  • Capacity: Recommend advanced booking notice 7-10 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. Recommend factoring in more lead time for truckers to procure chassis.
  • 40’ container shortages reported at Detroit and Minneapolis rail ramps.

North America → Europe

  • Rates: Steady
  • GRI November 15: None
  • GRI December 1: None
  • Capacity: Recommend advanced booking notice 7 to 10 days prior to CRD at Port
  • Capacity: Recommend advanced booking notice 10 to 14 days prior to CRD at Rail Ramp
  • Chassis availability is tight at most major ports and rail ramps. Recommend factoring in more lead time for truckers to procure chassis.
  • 40’ container shortages reported at Detroit and Minneapolis rail ramps.

Air Freight Market Update


Europe

Situation in EU similar to previous weeks:

  • Tight capacity on the TAWB and rates remain at high levels.
  • FEWB is significantly under pressure and rates continue to climb week by week
  • Delays in transit and as well on the ground to be taken into consideration, when planning transit times.

Americas

  • TAEB remains balanced between demand and offered capacity with no big spikes. Load factors from LAX/ORD/JFK to central European hubs remain high. Few PAX carriers are introducing new capacity on select routes.
  • TPWB remains under pressure in terms of yield, as capacity still outpaces demand, especially to HKG/PVG/ICN.
  • LATAM trades are seeing spikes of demand. The Northbound trade has increased output of perishables and the Southbound trade has increased Exports from the U.S. and transit cargo, while still suffering from a capacity crunch.

Updates from Flexport's Customs & Compliance Team


Executive Order Changes Duty-Free Treatment of Several Goods Under GSP

On October 30th, President Trump signed an executive order changing reduced tariff applicability for certain goods under the Generalized System of Preferences (GSP). Among the changes, fresh-cut roses (HTS 1006.30.10) have been added to GSP-eligible goods for all Beneficiary Developing Countries (BDCs) as of November 1, 2020 and several products from Thailand will no longer be eligible for preferential treatment under GSP as of December 30, 2020. Adjustments were also made to the Competitive Need Limitations (CNLs) of certain GSP-eligible goods.

Proclamation Reinstates Canadian Aluminum Exclusion from Section 232

President Trump issued a Presidential Proclamation on October 27th reinstating the exclusion of imported aluminum of Canadian origin from additional 10% duties under Section 232. Imports of non-alloyed unwrought aluminum articles from Canada provided for in subheading 7601.10 will no longer be subject to additional duties under HTS 9903.85.21 when entered for consumption or withdrawn from warehouse for consumption starting 12:01 AM EST September 1, 2020.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

Eurozone Q3 GDP growth was stronger than in the US, increasing 12.7% on a quarterly basis, after a steeper fall in Q2. But new pandemic measures led one survey to predict a 2.3% contraction in Q4.

Mixed US data beyond GDP shows consumer spending rose in September by 1.4%, while personal income was up 0.9%, each somewhat better than expectations. In more recent data, weekly unemployment claims were 751K, the lowest figure of the pandemic, but historically high.


Freight Market News


Restocking Stays Slow Due to Space As merchants prepare for the holiday season, a long-brewing container shortage and limited vessel capacity are slowing the supply chain, according to the Wall Street Journal. Once goods arrive in the US, the issue is compounded by congestion in West Coast ports.

Freight Contract Talks Start Early After a year of extreme volatility, some shippers and carriers are beginning contract negotiations earlier than usual, reports the Journal of Commerce. A key trend is shorter contracts that could help support better forecasting.

FMCSA Plans Automated Truck Demos The Federal Motor Carrier Safety Administration (FMCSA) announced its intention to provide hands-on demonstrations and gather public comments about automated driving systems (ADS) FreightWaves reports.


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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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