Market Update

Freight Market Update: January 5, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of January 5, 2021.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Increased
  • GRI January 1: Implemented
  • GRI January 15: Too early to tell
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: January market remains extremely strong from both a rate level and booking perspective. Carriers are choosing to implement a strong GRI to start the new year reflecting the growing booking backlog heading into Chinese New Year. Premium services are facing the same backlog as the FAK (Freight All Kinds) market.

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI January 1: Implemented
  • GRI January 15: Will be implemented
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Rates have increased significantly during December and 1st half of January. They will continue to go up in the 2nd half of January. The severe equipment shortage has not improved and will be a major challenge through CNY. It is still necessary to be flexible on equipment substitution. Urgent shipments should be booked on premium directly, as even premium offerings have become more limited. There are widespread restrictions for UK cargo due to port congestion and haulage limitations and there will be further delays and port omissions. Shipments from feeder ports in China should be diverted to main ports instead.

Europe → North America (Transatlantic Westbound)

  • Rates: North Europe: Steady; Mediterranean: Steady
  • GRI December 15: Implemented ex-North Europe origins
  • GRI January 1: Likely Implemented (North Europe and Med)
  • Capacity: Recommend advanced booking notice 21 days prior to CRD.
  • Notes: Premium options remain available for booking placed at shorter notice. The strong market is expected to continue through February as carriers report full vessels 3-4 weeks ahead of expected departure. Expect further rate increases in January.
  • Equipment shortages in Germany, Italy, Spain and Portugal in particular for 40’ dry and reefer containers. Ongoing severe EQ shortages in Turkey.
  • Port congestion: North Europe and North America are vexed by congestion that shows no signs of easing soon. UK ports face gridlock related to congestion in continental European port hubs. Rotterdam and Hamburg, in particular, are heavily congested with some terminals not accepting export containers for gate-in ahead of CY cutoff. North American port infrastructure struggles with record high import volumes, specifically in LA/LB.
  • Capacity development: No blank sailings have been announced after week 2. Larger vessels will be deployed from NEU to US Gulf.

India → North America

  • Rates: Increasing
  • GRI January 1: Implemented
  • GRI January 15: Pending
  • Capacity: Tight due to limited equipment and high demand
  • Equipment: Continues to be an issue—please make bookings in advance so freight forwarders can plan for container availability at your local ICD/wet port. Equipment is especially limited in South India ports. Recommend utilizing premium services to secure equipment faster.
  • Demand is expected to increase in Q1 as we approach the end of the Indian fiscal year.

North America → Europe

Rates: Steady 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. Anticipate more lead time for truckers to procure chassis. UK port congestion causing extensive delays both in cargo arrival times at the port and container movement on the ground in and out of the ocean terminals. These vessel delays are now impacting arrival times and causing further delays and minor congestion at the ports of Rotterdam and Antwerp.


Air Freight Market Update


Asia

  • The market has been slower than anticipated this week as production lags and an increase in charters causes temporary overcapacity. This is expected to normalize over the weekend and into next week as production levels for many large shippers return to normal levels. With massive demand for new product launches including gaming consoles and smart phones the market is expected to stay quite hot right up until CNY. Expect capacity to take a roughly 2-week break during the holiday period and resume towards the end of February.
  • Belly capacity continues to be very scarce as further lockdowns and other Covid-related restrictions make flying more challenging.

Europe

  • Capacity ex Europe to Asia, North and South America is readily available, with the exception of the U.K., which is hampered by another lockdown and reported cancellations of PAX flights.
  • Main airports in E.U. had reported some backlogs during the holidays. They continue to be busy but are not reporting any delays.

Americas

  • TPWB trade appears to be stable with a balance between capacity and underlying demand.
  • LATAM SB has capacity availability and only some destinations (mainly Central America) are constrained.
  • TAEB capacity is available to Continental Europe, but the UK is facing new constraints as carriers make cancellations in the face of another full lockdown.
  • Main airports in USA worked through backlogs during the holidays and are somewhat up to speed, as cargo-flows from Asia that caused much of the backlog decreased.

Factory Output News

Japan’s economy expected to recover quickly from pandemic toward the end of 2021 and is projected to grow 3.42 percent in the next fiscal year. [source]

Bangladesh Last year’s exports are the lowest of the previous five years, contracting 14.6% year-on-year to $33.6 billion in 2020. [source]

Thailand Daily new COVID-19 cases reached a record high of 745. Twenty eight provinces, including Bangkok, were declared high-risk zones. People are asked to work from home and avoid gathering or travelling beyond their province. [source]

Malaysia Over 6,500 people displaced due to Johor floods. There are currently 56 relief centres. A man was reported to have been swept away while in his car. [source]

Updates from Flexport's Customs & Compliance Team

USTR Announces Additional 301 Tariffs on EU Goods

The office of the U.S. Trade Representative (USTR) released a notice (and an accompanying news release) on December 30th announcing additional Section 301 tariffs on goods imported from the European Union (EU) in response to a continued dispute between the cross-Atlantic trading partners regarding aircraft subsidies. The products subject to the additional tariffs include aircraft manufacturing parts from France and Germany, certain non-sparkling wine from France and Germany, and certain cognac and other grape brandies from France and Germany. The increase affects merchandise entered on or after January 12th.

CBP Issues WRO on Malaysian Palm Oil

On December 30th, CBP issued a new release announcing a Withhold and Release Order (WRO) on palm oil and products containing palm oil produced by Sime Darby Plantation Berhad and its subsidiaries, joint ventures, and affiliated entities in Malaysia. The WRO means that these products will be detained by CBP personnel at all U.S. ports of entry. The WRO was issued based on information that reasonably indicates the presence of all 11 of the International Labour Organization’s forced labor indicators in Sime Darby Plantation’s production process.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • US personal income and consumption fell in November. Real disposable income dropped 1.3% for the month, with real personal consumption down 0.4%.
  • Goods trade up in November. US exports rose 0.8% for the month, with imports up 2.6%. Compared to a year earlier, exports were down 6.6% with imports up 5.5%.
  • US weekly jobless claims decreased in each of the last two weeks of December, but remained high, at or above November levels (806K and 787K).

Freight Market News


Vaccine Supply Chain Needs More Staff The largest pharmaceutical rollout in history is struggling to build a large enough workforce to meet demand, reports the Wall Street Journal. Pharma companies have turned to contractors to aid with lift, but thousands of roles remain open.

Airlines Add Freighter Capacity FreightWaves reports a wave of Boeing 777 freighters has entered the market as major airlines expand their cargo capacity in response to demand created as a result of the Covid-19 pandemic.

Shipping Groups Allege Carrier Breaches Two European shipping groups have filed a protest letter with the Competition Directorate of the European Commission, asserting carrier contract violations. The Loadstar notes the shipping groups claim unreasonable conditions for booking and rates in excess of agreements.


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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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