Freight Market Update: August 10, 2021
Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of August 10, 2021.
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Join us on August 18 at 9:00 am PT: The State of Trade: Filling Those Return Containers - What’s Up with US Exports? The current import boom is affecting everyone, but what opportunities are out there for exporters? We talk with a former Under Secretary of Commerce for International Trade about exporting approaches that work.
Ocean Freight Market Update
Asia → North America (TPEB)
- Peak season and congested related surcharges, which reflect both the high levels of demand that carriers are facing and the overall capacity levels in the market, have been implemented by several carriers. At the same time, moving freight rates on TPEB remain at premium levels.
- Rates August 15 GRI implemented.
- 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 announced but capacity remained the same despite the demand boom.
- Rates Sep 1 GRI likely to be 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 are increasing even as capacity to USWC continues to worsen due to port omissions, and equipment at ICDs are becoming an increasing issue
- Rates increased for 2H 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. Carriers are prioritizing routing to USEC.
- 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. If routing to USWC, consider rerouting to USEC and transload to truck.
North America → Asia
- Vessel delays and void sailings continue to diminish West Coast capacity. The US West Coast continues to experience delays at all ports and with increasing vessel congestion at the port of LA the vessel schedules will be extremely fluid in upcoming weeks.
- Rates One carrier has announced GRI intentions for mid-August for all dry exports to Asia. There have also been multiple carriers with GRI notices announced for September including substantial increases from the US West Coast to India.
- 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 stabilizing 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
- We see some last minute urgent shipments on the market this week, but expect less volume for the next 10-14 days on the market due to Summer holidays across EU hubs. No new capacity introduction as the current capacity can meet the current slack demand. Rate levels remain stable.
- LATAM still more strained than the US for demand and capacity.
- Far East Eastbound volume is stable, rate levels also stable.
- Given the constraints on the Trans-pacific and reduced capacity due to Covid, we do see some European carriers offering solutions into the US via Europe to better optimise their flight network.
- Terminal congestion is better for both import/export this week from Europe. More delays are being seen at US ground handler terminals in ORD/JFK/LAX. Utilise secondary airports such as IAD/BOS/DTW if the lead time can allow.
- 100% screening requirement for all US export airfreight is in effect as of July 1st, 2021! Ground Handlers are still reporting 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 US air export capacity has temporarily decreased. Large shipments, from all major outbound gateways in the U.S., may take 2-4 days from booking to uplift into key European and Asian 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 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 cannot be tendered earlier than 2 days before departure as a result. The most congested carriers' terminals started to restrict or embargo US export freight until further notice.
- 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 Extends Section 321 Pilot
Under a current pilot program, CBP is proposing that for those seeking to import goods under Section 321 and receiving an electronic release, importers must submit a handful of data elements. Some of those data elements could include price, country of origin, and on what website the product was sold, among others under consideration. CBP has not announced when the pilot will end.
AD/CV Enforcement Increases
CBP acknowledged that enforcement of new anti-dumping/countervailing (AD/CV) orders is growing tremendously. CBP has already outpaced the 45 AD/CV orders from 2020 and have begun enforcing an additional 83 orders. Of the over 625 active AD/CV orders, over half of all orders involve steel or steel-related products.
Factory Output News
China As of August 8, China has reported 125 confirmed cases, of which 94 were locally transmitted. Many cities have conducted 3 to 6 rounds of mass testing. [Source]
Taiwan Taiwan Covid cases are down with only 8 reported new cases [Source]
Japan Tokyo confirms its highest case count at 4066 for a Sunday [Source]
India Canada will extend a ban on arrival flights from India until September 21. The initial ban was first introduced on April 22, but has since extended multiple times. [Source]
India Fuel consumption rose to its highest level since April as pandemic restrictions and lockdowns unwound in most states. [Source]
Sri Lanka Sri Lanka Airlines has uplifted a total of 16.3 million Sinopharm vaccines since March and has just uplifted the largest batch of 4 million doses in August. [Source]
Pakistan The UAE will lift a ban on transit flights from Pakistan. Flights will be able to transit through their airport from August 5 onwards. [Source]
Freight Market News
The World’s Newest Largest Ship Sets Sail Evergreen Marine’s Ever Ace arrived in Taiwan this week. The Maritime Executive reports the vessel has a whopping total container capacity of 23,992 TEU, edging out the previous record holders’ 23,964 TEU. New features, like a flared bow design, keep the ship efficient.
US West Coast Volumes Keep Growing The Port of LA and Port of Long Beach are projected to process 19M TEUs in 2021, reflecting increased consumer demand in the US, according to the American Journal of Transportation. The Port of Long Beach also announced a 4.2% increase in TEUs in July YOY. Imports grew 1.6%, while exports decreased 20.7% YOY. The rate of empties moved out of the Port increased by 22.8%.
Climate Report Implicates LNG Fuel A recent climate report from The Intergovernmental Panel on Climate Change (IPCC) rings just about every alarm bell it can, warning of rapidly warming temperatures. The report also shifts attention towards the role of methane, used as fuel for some vessels in its liquified natural gas (LNG) form. Splash 247 reports that depending on other marine technologies, LNG fuel could still reduce greenhouse gas emissions compared to the carbon emissions of current oil-based marine fuels.
Economic highlights from Flexport Chief Economist Dr. Phil Levy
US Real Interest Rates Set Low. The benchmark 10-year Treasury bond had an interest rate as low as 1.19% this past week. That’s not so exceptional, though it’s a dramatic drop from the 1.74% rate of March 31. That’s the nominal rate; the record is for the real rate, which subtracts off expected inflation. It touched a new low of negative 1.19% this week, before rebounding to -1.10% on the jobs report.
Very low interest rates can show pessimism about the economy, or very aggressive monetary policy if the Fed is buying longer-term instruments directly.
US Household Debt Climbs. The additional spending is not all coming out of income. Aggregate debt balances rose 2.1% from Q1 to Q2, the highest rate since the last quarter of 2013. Meanwhile, delinquency rates have been low and declining.
US Trade Flows Grow in June. Imports were up 2.1% over May with exports up 0.6%. In each direction, services trade grew faster than goods trade, bucking the pandemic trend. Comparing January-June for 2021 over 2019 (and annualizing): goods imports grew 4.2%; goods exports grew 0.8%; services imports fell 7.9%; services exports fell 9.4%.
Chinese Exports slow in July.
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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.