Market Update

Freight Market Update: September 23, 2020

Ocean and air freight rates and trends; customs and trade industry news plus COVID-19 impacts for the week of September 23, 2020.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Increase
  • GRI September 15: Implemented (300-400 per 40’HC)
  • GRI Oct 1: Likely Implemented
  • Capacity: Recommend advanced booking notice 21 days prior to CRD
  • Notes: The market remains strong, with additional pressure from equipment shortage issues and increased demand from pre-Golden Week shippers (1H October). No more bookings on sailings with ETD September due to impacts of other current factors: extra loaders (supply increases), equipment shortages (supply reduction), and pre-Golden Week rushes of cargo (demand increases). Due to the equipment imbalances and associated cost differentials, carriers are setting 40HC and 40GP rates differently.

Asia → Europe (Far East Westbound)

  • Rates: Increase
  • GRI September 1: Implemented
  • GRI September 15: Partially Implemented
  • GRI October 1: Likely Implemented
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD
  • Notes: Market space is full in the lead up to China’s Golden Week and expected to continue to be strong until end of October. Carriers have announced blank sailings for post–Golden Week so capacity will be tight. Equipment shortages continue. Recommend equipment substitution where possible (40’ST and 40’NOR instead of 40’HC, which has the most severe shortage).

Europe → North America (Transatlantic Westbound)

Rates: Steady GRI September 15: Not Implemented GRI October 1: Likely Implemented Capacity: Recommend advanced booking notice 21 days prior to CRD Notes: Space is full with high risk of cargo rollings. Recommend booking as early as possible and requesting premium product for urgent shipments. Space will remain tight throughout October as carriers continue to blank sailings: AL1 and AL4 will be voided in week 41 and 43, leading to a reduction of approx. 5% and 11% of capacity in the respective weeks.

India → North America

  • Rates: Steady
  • GRI September 1: Implemented
  • GRI September 15: Not Implemented
  • Capacity: Recommend advanced booking notice 14 days prior to CRD
  • Notes: Equipment shortages persist across India especially at local ICD’s. Space is still very tight due to demand across the Asia / ISC region.

North America -> Asia

  • Rates:
  • GRI September 15: Not announced
  • GRI October 1: Not announced
  • Capacity: Recommend advanced booking notice 21 days prior to CRD

North America → Europe

  • Rates:
  • GRI September 15: Not announced
  • GRI October 1: Not announced
  • Capacity: Recommend advanced booking notice 21 days prior to CRD

Air Freight Market Update


Asia

  • The air market exit China is rebounding quite strongly this week as many smaller product launches have started to ship including the next generation iWatch and iPad. The iPhone launch being delayed 30 days means a major capacity crunch will be coming mid-October.
  • As a result of stronger demand, rates exit China began moving north with spot rates close to $6.00 per kilo to the US West Coast for this coming weekend. HKG-origin rates are slightly lower due to an influx of charter capacity this week.
  • Markets in SE Asia, especially TPE, continue to be overheated with rates over $8.00/kg to USWC and close to $9.00/kg to USEC.
  • Pilots at major Chinese carriers are already being vaccinated with the Chinese Covid-19 vaccine.

Americas

  • TAEB/TPWB have not seen any significant changes week over week. It’s too early to tell if the bit of softening on both tradelanes is a trend.
  • Latam SB and NB are seeing reintroduction of capacity in some markets as the major US airlines restart flights suspended for several months.
  • Pharmaceutical companies are beginning to enquire about capacity for large vaccine movements from the US to Europe, LATAM and Asia. While capacity will be tight the bigger issue is finding suitable containers to carry these extremely temperature-sensitive shipments, many of which require frozen conditions.

Europe

  • Overall the market remains status quo week over week with little change to capacity or rates on most trade lanes. The only exception is FEWB, which is picking up steam heading into the Golden Week holidays. The end od Golden Week marks the traditional start of the peak season, which is expected to be quite strong.

Factory Output News


Thailand Tens of thousands of anti-government protesters filled the streets in front of the royal palace over the weekend in the largest demonstration in Thailand since the military coup in 2014. The activists called for reforms to the monarchy’s power as well as the removal of PM Prayut who was endorsed by the king in last year’s election. [Source: Reuters]

Philippines In a recent resolution, the EU threatened to revoke trade preferences with the Philippines in response to alleged human rights violations attributed to the administration of President Rodrigo Duterte. Duterte’s representatives have vehemently denied the allegations. [Source: The Diplomat]

France Emmanuel Macron faces return of strikes in France. Ministers and trade unions outraged by plan to close Bridgestone tyre plant [Source: EU economy]

UK unemployment rose in July despite lockdown lifting, with more job losses likely [Source: CNBC]


Updates from Flexport's Customs & Compliance Team


Section 301 Lists 1 & 2 Exclusions Expired On September 20th the USTR allowed 317 exclusions to expire. On the USTR notice for Section 301 List 1, the USTR granted extensions to 62 exclusions while letting 248 expire. On the USTR notice for Section 301 List 2, the USTR granted 17 extensions, and let 69 exclusions expire.

CBP Increasing COBRA Fees CBP issued a CSMS message stating that COBRA fees for users will be increasing on October 1st, 2020. The most notable change is with the MPF where the max will now be $528.33 and the minimum will now be $27.23.

USTR Changes Direction on Canadian Aluminum Tariff The USTR stated that they were going to rescind the 10% Section 232 tariff on Canadian "non-alloyed, unwrought aluminum". There is a chance if the volumes of the aluminum imports exceed certain thresholds that the tariffs can be re-imposed. They will re-evaluate at the end of 2020 and again in 2021.


Economic Highlights from Flexport Chief Economist Dr. Phil Levy


  • The US current account deficit ballooned in Q2, hitting 3.5% of GDP, up from 2.1% in Q1. As a share of GDP, the deficit has not been as large since Q4 of 2008. The current account is the broadest measure of international transactions.
    • The change included a Q1 to Q2 drop in goods exports of $114.6bn (28.4%) and in imports of $87.1bn (14.6%).
  • August data show slowing US expansion. Retail sales rose 0.6% vs. 0.9% in July. Industrial output was up 0.4% vs. 3.5% in July.

Freight Market News


US FMC Reviews for Collusion The US Federal Maritime Commission follows China in responding to high rates caused by blanked sailings and other factors with a warning to carriers. The ocean regulator is reviewing reports for possible infringements of competition law and will seek injunctions in federal court as needed, according to The Loadstar.

Port Volumes Shift East With a rise in e-commerce and transshipment, larger container ships are entering East Coast ports more frequently. The Wall Street Journal reports SE Asia cargo stops in Europe or Africa before crossing the Atlantic, while a recent 15,000-container ship arrival in New York broke the East Coast record.


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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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