Market Update

Freight Market Update: November 17, 2020

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 17, 2020.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Increased
  • GRI November 15: Soft GRI implemented by carriers on Nov 15.
  • Capacity: Recommend advanced booking notice 21 days prior to CRD. This increase over previous guidance of 14 days is due to the worsening equipment and space situation in Asia.
  • To ease equipment shortages, carriers are introducing discounts on non-40GP equipment to incentivize the movement of those containers. 20s, 45s, and NORs could be easier to find than 40s—please reach out to your CS teams to see if that is possible on your lanes.

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI November 1: Implemented
  • GRI November 15: Implemented
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Significant Peak Season Surcharge increase effective December 1
  • Port Congestion Surcharge for Felixstowe & Southampton effective November 1
  • Notes: Very strong market and severe equipment shortage expected to last through CNY 2021. Important to keep options open for equipment substitution (40’ST, 40’NOR and 20’DC instead of 40’HC). Urgent shipments should be booked on premium where necessary. There are widespread restrictions for UK cargo due to port congestion and haulage limitations. Some carriers have stopped booking acceptance for the UK while others have increased UK add-ons and UK specific PSS. More delays and port omission are expected in the coming period.

Europe → North America (Transatlantic Westbound)

  • Rates: North Europe: Steady; Mediterranean: Increase
  • GRI November 1: Not implemented
  • GRI December 1: Likely Implemented ex-Turkey origins
  • Capacity: Recommend advanced booking notice 21 days prior to CRD
  • Notes: Strong market outlook with full vessels and cargo rolling. Equipment shortages in Italy, in particular for 40/HC containers, and Turkey. Ongoing congestion at the Ports of LAX/LGB/OAK, please consider alternative routes (e.g. inland move to US West Coast). Congestion at transshipment ports in Sines / Valencia. Capacity development: new blank sailings announced by THE Alliance in week 50 and 53 on the AL1 and AL4 service to US East Coast and Gulf destinations, representing a reduction of approx. 12% and 18% of capacity in the respective weeks.

India → North America

  • Rates: Increased
  • GRI November 15: Most carriers have extended rates through the month, few have implemented a slight GRI.
  • GRI December 1: Very likely to be implemented due to post-Diwali demand
  • Capacity: Space expected to be tight post-Diwali—please make bookings in advance and provide forecasts to Ocean Team / Dart
  • Widespread equipment shortage continues 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.
  • Tuticorin port has been significantly impacted by heavy rain and flooding in Tamil Nadu. Most areas are without electricity and internet.

North America → Asia

  • Rates: Increased
  • GRI December 1: The Agri segment is seeing the most pressure with significantly high GRIs.
  • GRI December 15: Increase announced by one major carrier.
  • 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, Kansas City 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.

Air Freight Market Update


Asia

  • Asia markets are steady this week with rates holding firm from last week. Shippers have confirmed that major product launches are progressing well and the high-intensity shipping cycle should continue all the way to CNY with little break for the holiday period.
  • Ground-handling issues are beginning to intensify in the US with major delays tied to breaking down freight reported at all major gateways. Delays of 3-5 days are becoming common especially in ORD and LAX. Flexport is doing all possible to avoid the worst terminals.

Europe

Situation in EU similar to previous weeks:

  • Tight capacity on the TAWB with rates remaining at high levels. EU to SFO, in particular, saw peak rates, while rates to ATL & ORD also increased.
  • FEWB capacity is still tight but we see a slight drop in rates compared to the last weeks.
  • Delays in transit and on the ground should be factored in when planning transit times.

Americas

  • TAEB sees some constraints from the West Coast to central Europe and rates are increasing in the week ahead of Thanksgiving. Load factors from LAX/ORD/JFK to central Europe remain high and are expected to remain high for the remainder of November.
  • TPWB also seeing volume increases and even constraints, which result in higher yields to PVG and HKG from the West Coast. From ORD and JFK capacity is readily available and yields remain under pressure.
  • LATAM trades are still 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.

Factory Output News

RCEP (Regional Comprehensive Economic Partnership) Agreement was signed on Nov 15th by 15 Asia Pacific countries, suggesting tighter collaboration between China and Southeast Asia countries. [source]

Typhoon Vamco hit the Philippines causing the evacuation of 200,000 people while knocking out power to 2 million. [Source]

The South Indian state Tamil Nadu is experiencing heavy rainfall. Many areas in Tuticorin lack electricity and internet service.

60 workers at Colombo Port in Sri Lanka have tested positive with COVID-19. The ocean port is operating at 60-70% efficiency and is expected to be fully operational by next week.

Ireland Effects of COVID on Irish economy blunted by activity of multinational corporations. Output forecast to recover from pandemic by 2021 but real economy in far worse state [source]

China Strong demand from China for Europe’s luxury goods alleviates some economic effects of coronavirus. Manufacturing and exports rebound in wake of strong Chinese recovery from pandemic [source]

Updates from Flexport's Customs & Compliance Team


Regional Comprehensive Economic Partnership Signed by 15 Nations

China and 14 other nations simultaneously signed the Regional Comprehensive Economic Partnership (RCEP)—the member nations of the Association of Southeast Asian Nations (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam), as well as Australia, China Japan, New Zealand, and South Korea. China originally proposed the Partnership as a counter to the Trans-Pacific Partnership (TPP), which became the Comprehensive and Progressive Agreement on the Trans-Pacific Partnership (CPTTP) after the United States withdrew from the TPP in 2017. While the agreement covers an area with 2.2 billion people, it is a more limited trade agreement than the CPTPP and includes many of the same countries. The Joint Leaders’ Statement can be found here.

CBP Issues Guidance on Refund Process for Sec. 232 Duties and Warns of Delays

On November 12, 2020, CBP issued CSMS #44838240 – GUIDANCE: Section 232 Exemption for Canadian Unwrought Aluminum – Entry Summary and Post Summary Correction Processing. The guidance provides that importers may file Post Summary Corrections (PSCs) to correct entries filed from September 1, 2020 through October 27, 2020 that may be eligible for refunds due to the October 27 Presidential Proclamation (see 85 FR 68709) reinstating the exemption for products of Canada subject to 232 duties on non-alloyed wrought aluminum items. The guidance further provides that, due to the significant number of entry summary lines filed during the effective period, there may be a delay in processing the post summary corrections and any protests.

Antidumping and Countervailing Duty Investigations into Imported Wind Towers from Several Countries

The Department of Commerce has initiated antidumping and countervailing duty investigations covering Utility Scale Wind Towers From India, Malaysia and Spain (AD Only). Merchandise covered by these investigations is currently classified under subheadings 7308.20.0020 or 8502.31.0000. Wind towers of iron or steel are classified under HTSUS 7308.20.0020 when imported separately as a tower or tower section(s). Wind towers may be classified under HTSUS 8502.31.0000 when imported as combination goods with a wind turbine (i.e., accompanying nacelles and/or rotor blades). Additional duties may be imposed as early as January 13, 2021 (India and Malaysia) and March 29, 2021 (Spain).


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • The International Energy Agency sees soft oil demand and has revised its global estimates down for Q4 of 2020 and Q1 of 2021, based on the resurgence of Covid-19 in the US and Europe. The agency did not foresee a significant boost to energy demand from vaccines until “well into next year.” Energy demand often correlates with broader economic activity.
  • US consumer sentiment weakened unexpectedly in the two weeks surrounding the election. According to the survey, post-election interviews showed a negative shift among Republicans, but no gain among Democrats.
  • Japan’s economy partially rebounded in Q3. GDP was up 5% in the quarter (annualized 21.4%), beating expectations and surpassing all quarters since 1968.

Freight Market News


Holiday Rush Drives Box Imbalances In an ongoing struggle to move containers quickly, carriers continue to deprioritize US exporters. The Wall Street Journal explains US holiday restocking makes it more lucrative to return boxes to Asia, as opposed to waiting weeks to load soybeans, lumber, cotton and other products inland.

Petition May Tee Up Shipping Act Update A group of truckers, shippers, and customs brokers sent a letter to the US Federal Maritime Commission requesting the temporary suspension of detention and demurrage fees related to congestion in certain ports. The Journal of Commerce reports the petition may set up changes under a Biden administration to the 1984 Shipping Act.

Holiday E-Commerce Spikes Recent cargo surges worldwide are closing in on seasonal peak volumes from last year, with e-commerce replacing brick-and-mortar retail. According to Bloomberg, some carriers are already deploying more capacity than during the 2019 holiday season.


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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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