Market Update

Freight Market Update: January 12, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of January 12, 2021.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Steady
  • GRI January 1: Implemented
  • GRI January 15: Too early to tell
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Carriers have not indicated their position regarding a January 2H GRI, although booking demand across all services continues to grow between standard services and premiums.

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI January 1: Implemented
  • GRI January 15: Likely Implemented
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Rates have increased significantly during December and January and will remain at a high level until at least CNY. 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: Increased; Mediterranean: Increased
  • GRI January 1: 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 the end of February as carriers report full vessels 3/4 weeks ahead of ETD. Expect further rate increases in February driven in part by higher bunker prices.
  • Equipment shortages in Germany, Italy, Spain and Portugal in particular for 40’ dry and reefer containers. Ongoing severe EQ shortages in Turkey.
  • Port congestion: Vessel delays from Asia are causing vessel slides and cut and run in North Europe base ports. No easing in sight for North America west coast ports congestion.
  • Capacity development: New blank sailings have been announced by THEA in week 5 on the AL1 service, reducing weekly trade capacity by approx. 5%.

India → North America

  • Rates: Increasing
  • GRI January 1: Implemented
  • GRI January 15: Pending
  • Capacity: Space is full and rolling to both USEC and USWC.
  • 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. Consider moving 20GP instead of 40GP/HC. Recommend utilizing premium services to secure equipment faster.
  • Demand is expected to increase through Q1 as we approach the end of the Indian fiscal year.

North America → Asia

  • Rates: Increasing
  • GRI January 15: Some carriers have announced an increase for mid-January.
  • GRI February 1: Initial advisory is for a significant increase for all US origins to Asia with larger increases for Indian Subcontinent and exempt commodities to Southeast Asia.
  • 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.
  • Port of LA situation remains very fluid. Vessel schedule integrity is completely off which has led to vessel bunching and smaller windows for vessel operations once imports are discharged from vessels.
  • Suspension of bookings for South China destinations currently in place to avoid arrival during CNY.

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 is still impacting vessel operations and the delays are now impacting arrival times1 at the ports of Rotterdam and Antwerp.

Air Freight Market Update


Asia

  • FEWB demand started off strong and rates are holding at December levels. However, the TPEB Air Market got off to a very slow start from Mainland China and HKG markets as overcapacity and a slow return of manufacturing caused rates to fall and many flights to depart with available capacity.
  • The market is now rebounding and demand and capacity are in balance for this coming week and we are anticipating a sharp peak ahead of CNY.
  • One wild card is the Covid outbreaks in China and if the central government encourages workers not to travel home for the holiday then there is a chance that factories may continue producing even over the holiday period. In this case, there may be a smaller pre-CNY peak accompanying somewhat steady production through the traditional holiday period.

Europe

  • Capacity ex Europe to Asia, North and South America is readily available, still with the exception of the U.K.
  • Main airports in E.U. are fully operational and report back strong demand for exports out of the E.U. to the U.S. and LATAM driven by manufacturing and pharma.

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 still constrained.
  • TAEB capacity is available to Continental Europe. The UK remains a challenge but integrators and some freighter operators are providing capacity, while PAX capacity is almost back down to zero.

Factory Output News

China There have been more than 100 new confirmed cases in the northern city Shijiazhuang in Hebei province, China. The city is currently in a lockdown. [source]

Sri Lanka plans to reach a final decision for opening airports for commercial flights on Jan 15th. [source]

Vietnam and the UK have signed a trade agreement on 29 Dec, 2020. The UKVFTA will come into effect from Dec 31, 2021.[source]

Cambodia exports to the US are rising with a year-on-year growth rate of 17% from Jan to Nov 2020. In Nov, the year-on-year growth rate was 32%. [source]

Thailand The Centre for Covid-19 Situation Administration (CCSA) panel identified ways for the 5 provinces under lockdown to allow locals to continue interprovincial trade. One class of permit issuers are owners or supervisors of private businesses and organisations who transport goods regularly across the provinces. [source]

Malaysia Health minister raises potential restrictions on inter-state, inter-district travels in light of record high COVID-19 cases and deaths. An announcement is expected to follow on Jan 11. [source]

Indonesia to impose curbs on Bali and Java with 75% of workforce in non-essential business to work from home. [source]

Updates from Flexport's Customs & Compliance Team

USTR Suspends Retaliatory Tariffs on Goods from France.

A January 7th news release from the office of the U.S. Trade Representative (USTR) announced that the 25% tariff increase on goods from France that was to go into effect January 6th has been canceled. The tariff increase was originally announced in July 2020 as retaliation against France’s digital services tax (DST). The USTR has “decided to suspend the tariffs in light of the ongoing investigation of similar DSTs adopted or under consideration in ten other jurisdictions.”


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • A weak US jobs report shows December nonfarm payrolls declined by 140k, a number substantially weaker than expected. The declines were concentrated in leisure and hospitality, private education, and government. It was the first monthly decline in jobs since the enormous plunge in April.
    • December nonfarm employment was 9.8m jobs below its February level.
    • The employment-population ratio (57.4%) and the unemployment rate (6.7%) were unchanged from November.
    • In a separate report, weekly initial unemployment claims were 787K, little changed from the week before and at a historically high level.
  • World Bank Global Economic Prospects forecast tamped down expectations for 2021. While raising its prediction for final 2020 global GDP figures (to -4.3%), it cut its estimate of 2021 growth to 4.0%.
    • There is little difference in the 2021 forecast for advanced economies (3.3% GDP growth) and emerging economies outside China (3.4% GDP growth). China is the outlier with positive growth in 2020 (2.0%) and a forecast of 7.9% in 2021.
    • World trade volume (goods and services) was estimated to have fallen by 9.5% in 2020 and to rise by 5.0% in 2021 and 5.1% in 2022.
    • The bank emphasized downside risks, particularly with greater virus spread.
  • Eurozone indicators weaken. November retail sales fell more than expected and the ECB estimated a 2.2% contraction in Q4.

Freight Market News


Biden Plans to Speed Up Vaccines President-Elect Joe Biden announced a plan to speed a sluggish Covid vaccine supply chain by releasing a larger amount of available doses, reports Bloomberg. Once distributed, pharmaceutical manufacturers would have to meet demand to ensure a second dose, recommended for full efficacy, is available in a few weeks’ time.

Logistics Shows Jobs Growth Despite an overall weakening job market, the logistics sector added more than 52,000 jobs in package delivery, warehousing, and trucking last month. The Wall Street Journal reports the demand stems largely from the recent shift to e-commerce, a result of travel and dining restrictions.

LNG Ship Sets Rate Record A ship transporting liquefied natural gas (LNG) broke a prior world record for the highest rate with a $350,000 day. American Shipper reports that LNG prices in Asia are so much higher than the US that shippers can still profit while paying high rates.


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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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