Market Update

Freight Market Update: February 2, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of February 2, 2021.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Extended
  • GRI Feb 1: None.
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Although a February GRI was expected, carriers decided not to implement a rate increase. Equipment and space remains the biggest challenge and has not gotten significantly better. Almost all available space pre CNY has been assigned.
  • See Flexport’s Blog for more information on COVID outbreaks at Ports of LA and Long Beach.

Asia → Europe (Far East Westbound)

  • Rates: Extended
  • GRI January 15: Partially implemented (some extensions by carriers)
  • GRI February 1: Mostly extended
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Rates remain stable at a high level and are expected to stay that way until the end of February. The severe equipment shortage has not improved and will be a major challenge through CNY, if not until the end of Q1. It is still necessary to be flexible on equipment substitution. There are eight CNY blank sailings announced so far (four by Ocean Alliance, three by 2M and one by The Alliance). 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: Increased
  • GRI February 1: Implemented
  • GRI February 15: Likely implemented (North Europe and Med)
  • Capacity: Recommend advanced booking notice 21 days prior to CRD.
  • Notes: We recommend requesting premium service for bookings placed at shorter notice. The strong market is expected to continue through the end of Q1 as carriers report full vessels up to 4 weeks ahead of ETD with no sign of demand slowing down, while high cargo demand from Asia continues to pose a strain on equipment availability in Europe. Expect further rate increases in March.
  • Supply remains extremely tight across Europe. There are equipment shortages of Reefer containers and 40’/HC dry, in particular in Germany, Italy, Spain and Portugal, plus severe equipment deficit in Turkey. Book as early as possible to secure empty equipment.
  • Port congestion: New restrictions imposed by Hamburg terminals for all export containers to alleviate port congestion: gate-in window narrowed down to 48-72 hours prior vessel arrival.
  • Capacity development: Upcoming blank sailing in week 6 on the EMA service from Med to USA (approx. 6% weekly capacity reduction).

India → North America

  • Rates: Increasing
  • GRI February 1: Confirmed
  • GRI February 15: Expected
  • Capacity: Space is extremely full and rolling to USWC. Space is tight to USEC. Transhipment at SIN/CMB has 1-3 week delays.
  • 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 strong and quickly increasing in February as we approach the end of the Indian fiscal year.

North America → Asia

  • Rates: Increasing
  • GRI February 1: GRI pushed in full for Southeast Asia and India Subcontinent destinations from all US origins.
  • GRI February 15—Several rate increases announced. Exempt commodity and hay segments have GRI’s specific to their segments announced as well.
  • 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 containers to be delivered.
  • See Flexport’s Blog for more information on COVID outbreaks at Ports of LA and Long Beach.

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 also impacting arrival times at the ports of Rotterdam and Antwerp.

Air Freight Market Update


Asia

  • Capacity ex Asia tightening up less than 2 weeks ahead of CNY
  • Rates ex TW, CN, HK and Southeast Asia are experiencing a steep increase, due to the capacity constraints, coupled with the lasting situation on the Ocean freight side
  • Uncertainty around potentially imposed stricter testing protocols for pilots and crews of Hong Kong based carrier Cathay Pacific is spreading and could potentially decrease availability.

Europe

  • Capacity ex Europe to Asia, North and South America is available in form of freighter capacity and/or dedicated PAX-freighters.
  • Cargo Operations (freighters and PAX freighters) for KLM Group continues, while Passenger flights are mostly suspended due to newly imposed regulations.
  • Main airports in E.U. are fully operational and continue to show strong demand for exports out of the E.U. to the U.S. and LATAM driven by manufacturing and pharma.

Americas

  • TPWB trade is stable into all Asia hubs and balanced between capacity and underlying demand. There will be cancellations during CNY and carriers are still working out the cancellations. The situation around stricter imposed regulations in HKG needs to be monitored and evaluated.
  • LATAM SB has capacity availability and only some destinations (mainly Central America) are still constrained.
  • TAEB capacity is available to Continental Europe and the U.K., but some capacity is being temporarily taken out to Europe, due to a shift of some capacity into the perishable market ahead of Valentine’s Day.

Factory Output News

Myanmar President detained as the military government declared state of emergency for a year in response to its claim of “election fraud”. [source]

China Ford will start to produce electronic Mustangs in China for the first time. Car makers are aggressively targeting China, As EV car sales are expected to increase in China. [source]

Vietnam A COVID 19 outbreak is reported to infect 100s in 8 different cities and provinces including Hanoi, where authorities have closed all schools and some residential areas. A factory in Hao Duong, the outbreak epicenter, has also been closed. source]

Cambodia The Government has approved 11 investment projects worth over $43 million, including five garment factories and other production sites relating to footwear, bags and printing. Economy set to bounce back with +4% growth in 2021. [source]

Malaysia Recovery in the manufacturing sector faced roadblocks due to renewal of MCO. PMI scores fell further below 50. [source]

India Government cuts Internet near Delhi as hundreds of farmers begin hunger strike after a week of clashes with authorities that left one dead and hundreds injured. [source]

Updates from Flexport's Customs & Compliance Team

FDA Places Import Detention on Mexico Hand Sanitizers

On January 26th the Food and Drug Administration (FDA) announced they were placing an import alert on all alcohol-based hand sanitizer products from Mexico. Throughout the pandemic, the agency has seen a sharp increase in hand sanitizer products from Mexico labeled as containing ethanol, but tested positive for methanol contamination, which can be toxic when absorbed through the skin and life-threatening when ingested. The import alert means that these products are “subject to heightened FDA scrutiny, and FDA staff may detain the shipment” if they see fit. This is the agency’s first-ever country-wide import alert for any category of drug product.

Commerce Delays Aluminum Import Monitoring System

In a January 27th Federal Register posting, the Department of Commerce announced it had delayed the effective date of the Aluminum Import Monitoring and Analysis (AIM) System until March 29, 2021 and would accept public comment on the final rule until then. The delay was in response to the Biden Administration’s January 20th regulatory freeze. AIM will require aluminum importers to input information related to their products’ origin in an online portal to obtain an automatically issued license to submit to Customs along with entry documentation.

Customs WROs and Impacts on U.S. Apparel Imports

In the past three months, Customs & Border Protection (CBP) has issued two Withhold and Release Orders (WROs) on cotton and cotton products from China’s Xinjiang Uyghur Autonomous Region (XUAR). According to CBP, the WROs were issued based on information that reasonably indicates the use of detainee or prison labor and situations of forced labor in the production of these goods in this region. The Workers Rights Consortium estimates that American brands and retailers import more than 1.5 billion garments that use Xinjiang materials every year, representing more than $20 billion in retail sales. Since the first WRO went into effect November 30, 2020 CBP has already detained 43 shipments valued at more than $2 million.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • US GDP grew 4.0% in Q4 (annual rate), according to the first estimate. This completed a whipsaw year in which GDP plunged 31.4% in Q2 and then partially rebounded at a 33.4% rate in Q3. For the full year, GDP shrank by 3.5%, which was better than some estimates at the onset of the pandemic recession, but marked the biggest annual drop since 1946.
    • For the full year 2020, the BEA breaks down the annual change to percentage point (pp) changes in the component parts of GDP. The -3.5% growth consisted of: -2.63pp in personal consumption expenditures; -0.94pp in gross private domestic investment; +0.19pp in government spending; and -0.13pp in net exports.
    • Within personal consumption, the decline in services consumption accounted for -3.44pp, while goods consumption partially offset with 0.81pp growth. The goods broke down further into +0.45pp for durables and +0.36pp for non-durables.
  • Global 2020 GDP comparisons show Germany contracted 5.0% and Spain 11.0%; France shrank 8.3%. In Asia, China grew 2.3% and Vietnam 2.9%.
  • US December saving rises. Personal income rose 0.6% for the month, while personal consumption dropped 0.2%. That halted a slide in personal saving, which had dropped every month since April. It was also the first month since April that government benefits rose, having fallen 43% from their April peak.

Freight Market News


California Asks FMC for Congestion Help California’s lieutenant governor has sent a letter to the Federal Maritime Commission, requesting action on port congestion. The Journal of Commerce reports suggestions include reduction or cancellation of certain charges and ways to improve container flow.

Covid Grounds More Air Capacity Quarantine restrictions and government requests to ground flights are limiting airfreight capacity, although the reduction has yet to cause major shock to Transpacific flights, reports American Shipper. The situation could change quickly as Chinese New Year approaches.

Undersea Rail Tunnel Plans Revive Bloomberg reports financing is in the works for the world’s longest undersea rail tunnel, spanning the distance between Tallinn and Helsinki, after planning paused last year.


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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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