Market Update

Freight Market Update: August 3, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of August 3, 2021.

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Ocean Freight Market Update


Asia → North America (TPEB)

  • Capacity remains constrained on TPEB, despite additional vessels/ charters being fully utilized by carriers due to blank sailings and the accumulation of delays/ sliding schedules. Meanwhile, demand continues to ramp up in peak season.
  • Rates August 1 GRI implemented, August 15 GRI and September 1 PSS expected
  • Space Critical
  • Capacity/Equipment Critical/Severe under capacity
  • Recommendation Continue to book well in advance (at least 4-6 weeks) prior to CRD for best chance of hitting it. Encourage suppliers to support departures from different origin ports. Consider terminating cargo at destination coastal ports to prevent intermodal delays.

Asia → Europe (FEWB)

  • Space and equipment crunch continues. Market demand exceeds supply as rates skyrocket. Situation is worsened by blank sailings and poor equipment availability. Carriers are overcommitted and are limiting booking acceptance or rolling shipments. Schedule reliability is low.
  • Rates Rates remain at a record high level and have a marginal increase on August 1. This is also reflected in the continued increase of the SCFI (Shanghai Container Freight Index)
  • Space Extremely critical space situation
  • Capacity/Equipment Severe equipment shortage across all Asia origins.
  • Recommendation Book at least 4-5 weeks prior CRD. Consider the limited premium options. Adopt flexibility on equipment.

Europe → North America (TAWB)

  • Service disruptions to USWC and rail network to continue in the mid-term. North Europe ports are becoming more congested.
  • No further blank sailings were announced after week 32, but capacity remained the same despite the demand boom.
  • Rates Aug 1 GRI implemented.
  • Space Critical
  • Capacity/Equipment Tight and guaranteed only with Premium rates.
  • Recommendation Book 5 or more weeks prior to CRD. Request Premium service for higher reliability/no roll

India → North America

  • Rates continue to increase on a biweekly basis as available capacity has decreased due to omissions of the ISC region
  • Rates increased for 1H August. Expecting rates to continue to increase through September
  • Space is critical to USWC from all ports of loading in the ISC region. Carriers are omitting the region in an effort to re-align schedules. Expect to see more omissions on key services in late August / early September
  • Capacity/Equipment Equipment is an issue across India. Inland container depots are also facing critical shortages, as it is much more difficult to reposition equipment to these areas.
  • Recommendation Use premiums on urgent shipments and shipments with CRD approaching. Book out as far as possible to increase the chance of a timely shipping order (SO) release from the ocean carriers.

North America → Asia

  • Vessel delays and void sailings continue to diminish West Coast capacity. The US West Coast continues to experience delays in LA while both Oakland and Seattle have seen schedule delays and bunched-up sailings worsen in recent weeks.
  • Rates One carrier has announced GRI intentions for mid-August for all dry exports to Asia. There has also been multiple carriers with GRI notices announced for September.
  • Space Tight from the US West Coast. The US East Coast is showing signs of improvement in available space. In the US Gulf, space has increased with capacity more readily available.
  • Capacity/Equipment Capacity tightest from the US West Coast. Equipment and chassis are tight at most ports and all ramps.
  • Recommendation Book 4+ weeks out.

North America → Europe

  • US to Europe capacity in transition Still some delays as one of the major alliances restructured their Transatlantic capacity from the US East Coast.
  • Rates Steady.
  • Space Very tight from the US West Coast. The US East Coast is being managed more tightly by a few ocean carriers but with proper lead time procuring capacity is more manageable.
  • Capacity/Equipment Containers at US EC ports are available but certain rail ramps are tight. Chassis very tight at both ports and rail ramps.
  • Recommendation Recommend 4+ weeks lead time on bookings from the US East Coast and 5 to 6+ weeks for the US West Coast.

Air Freight Market Update


Asia

  • PVG TPEB market rate grows a bit partly due to the impact from Typhoon In-Fa. Remaining lanes and other major origins like HKG, TPE see market rates at similar levels to last week.
  • Market conditions in the rest of Asia vary from country to country and even city to city. Two countries are prime examples. In Vietnam, HAN space is tight because of Samsung, while SGN remains in lockdown. In India, MAA is in lockdown while DEL has resumed manufacturing.
  • Outlook is for a very strong end to the year as normal airfreight demand will be supplemented with ocean to air conversions. Capacity is almost fully deployed so rates and transit times will continue to increase.

Europe

  • Volume this week is still steady from Europe. Some factories are beginning to calm production for August holidays
  • Plenty of capacity in the market to support this demand, expect to see a PAX injection from the UK opening borders to fully vaccinated tourists from the US/EU
  • Airlines are still able to offer innovative solutions soon the transatlantic westbound with road feeder services into the main US hubs. Advice is to build in extra lead time to take advantage of these solutions, at cheaper rate levels
  • LATAM more strained than US for capacity
  • Terminal congestion for imports into AMS improved last week, but some delays due to heavy inbound volume. Some strain on road feeder services into the UK, but no other significant backlogs reported for import/export across the Europe
  • Forecast for the following weeks is for the situation to remain stable (demand, capacity and rate levels)

Americas

  • 100% screening for all airfreight cargo for U.S. exports is in effect as of July 1st, 2021! Ground Handlers, now almost 4 weeks into the new requirement, still report long lines for cargo throughput. Many have implemented new, earlier close outs for exports to accommodate for the additional time and are still finding the right rhythm.
  • Export demand from the U.S. remains very steady and stable while no meaningful capacity is added. Large shipments, from all major outbound gateways in the U.S., may take 2-3 days from booking to uplift into key European destinations. Capacity from the West Coast and Midwest Gateways is most constrained to Central Europe (AMS/CDG/FRA) and Asia (PVG/HKG/NRT/TPE) while East Coast capacity remains balanced and is very manageable.
  • Space to India opens up, even as Nepal, Bangladesh and Indonesia remain very constrained as aid and relief efforts into the COVID-struck region continue.
  • LAX/ORD/JFK ground handlers facing large backlogs are using off-airport facilities to manage the flood of cargo. Ground handlers report 2-5 days of backlog to break down import freight. Export cargo can not be tendered earlier than 2 days before departure as a result.
  • Trucking remains scarce for airport transfers and local pickup and deliveries across the nation and especially around major international in- and outbound hubs.

Updates from Flexport's Customs & Compliance Team

CBP Clarifies Rules about Powers of Attorney Signatures

Answering a request from the National Customs Brokers and Forwarders Association of America (NCBFAA) regarding whether electronic signatures on powers of attorney (POAs) are valid, CBP stated such documents are valid at the federal level. However, they note restrictions might exist at the state level. CBP encourages importers to ensure their POAs “meet the requirements for the applicable state law.”

CBP to Increase User Fees

CBP announced they are increasing Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) fees in Fiscal Year 2022 by 11.009% to adjust for inflation. The COBRA fees include the merchandise processing fee, informal entry fee, surcharge for manual entry or release, and the dutiable mail fee. A full list of fees is available here.


Factory Output News

China China is facing a new Covid outbreak, it’s reported that this outbreak has spread to 8 provinces. The first case was reported in Jiangsu Province on July 20th, now the number of cases has reached 250. [source]

South Korea S.Korea July exports jump to record though growth pace slows [Source]

Vietnam Regional lockdown in the South extended for an additional 2 weeks [Source]

Cambodia China sends 3.2mil Sinovac shots to Cambodia [Source], as China affirms strong ties between the two nations [Source]

Indonesia Indonesia’s biggest budget airline LionAir to lay off 8,000 (25-35%) of its employees [Source]

Indonesia 5 of 6 provinces in Java Island report drop in number of Covid cases [Source], similarly positive news in capital Jakarta [Source]

Malaysia 17,510 new Covid cases reported on Aug 1, total infections over 1mil [Source]

Thailand Export volumes increased in June, but expected to decline July with Covid situation worsening [Source], further affected by shortage of migrant workers in labor intensive sectors [Source]

India India and Bangladesh resume regular services of freight trains along the Haldibari-Chilahati rail route after almost 56 Years. This rail link will provide northeast India an opportunity to enter the international market. [Source]

Bangladesh Japan is expected to set up 2 more special economic zone in Bangladesh which will depend on the success of the existing one which are already being developed at Araihajar. [Source]

Pakistan Karachi to enter lockdown for a week to curb the spread of Covid. There are a ban on stuff entering public offices,school, restaurant, transport, shopping mall and air travel for non vaccinated people. Only 2.7% of the population has been vaccinated so far. [Source]

Freight Market News


Covid Resurgence Throttles Asia As the Delta variant of Covid spreads globally, parts of Asia are reinstating restrictions that are likely to impact supply chains globally. The Maritime Executive reports Vietnam’s largest port, Ho Chi Minh City, has partially suspended operations, while Splash 247 reports testing and quarantine requirements for ships arriving in China.

Read More: A Field Guide to Southeast Asia Supply Chain Options

Air Cargo Volume Hits Highs FreightWaves reports air cargo demand increased 8% for the first six months of the year, hitting a 4-year high. Demand is likely to continue as ocean transit times drag and inventory-to-sales ratios sink. As a result, rates are currently up more than 90% from midway through 2019.

Read More: Bring in the Dogs: New 100% Air Cargo Screening Rules Take Effect

Economic highlights from Flexport Chief Economist Dr. Phil Levy

US real GDP strong in Q2. The preliminary estimate was for 6.5% growth in the quarter (annualized rate), up from 6.3% growth in Q1. If one wants to see this as a strong number, one notes that real GDP just surpassed its pre-Covid peak and that the rate is substantially above most estimates of the economy’s long-run sustainable rate. If one wants to see it as a weak number, one notes that it was significantly below analyst estimates and that the economy has not yet gotten back to its pre-pandemic trend line.

The growth was driven heavily by increased personal consumption expenditures, with the effect tempered a little in GDP accounting by increased imports and inventory draw-down.

Euro area GDP even stronger. The EU reports quarterly rates of change, which allows for two different ways of getting a comparable annual number. If the Q2 rate obtained for a full year, it would be 8.2% growth. Or, if we compare Q2 of 2021 to 2020, GDP was up 13.7%.

Mixed signals on US inflation. The GDP deflator showed a 6.1% rate. The PCE deflator showed 4.0%; 3.5% excluding food and energy. The “Trimmed Mean” PCE shows 2.0%.


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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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