Freight Market Update: May 25, 2021
Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of May 25, 2021.
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Ocean Freight Market Update
Asia → North America (Transpacific Eastbound)
- TPEB Market - No Slowdown in Sight: The market continues to heat up even further as demand remains strong and blank sailings remove capacity across all TPEB lanes. Southeast Asia and North China remain the hardest hit origin region for equipment shortages and growing backlogs of bookings. Bookings out of China base ports have continued to increase as more shippers turn to flexible routing options in order to secure equipment. Rail congestion remains an issue at destination, drawing out transit times on IPI routings.
- Rates: 1H June GRI expected
- Space: Extremely tight
- Capacity / Equipment: Extreme shortages in North China, Southeast Asia, and Taiwan
Asia → Europe (Far East Westbound)
- Extremely Serious Space Crunch and equipment shortage across the entire FEWB trade caused by high demand, too many blank sailings / reduced capacity, and insufficient equipment repositioning following schedule delays. Carriers are building up backlog, restricting new booking acceptance and rolling more cargo. These trends are expected to intensify through May and June with additional delays across the board.
- Rates: Increased
- GRI May 15: Rate increases by all carriers
- GRI Jun 1: Further rate increases will be implemented by all carriers
- Capacity: Recommend advance booking notice 3 or more weeks prior to CRD.
Europe → North America (TAWB)
- Rates: Increasing. Further GRI and PSS expected for July
- GRI June 1: Likely implemented
- Capacity: Fewer blank sailings but port rotations and port omissions continue to affect capacity out of Europe due to port congestion. Carriers confirm sailings for beginning/mid July only. Recommend booking 5 or more weeks prior to CRD to secure space. Use Premium products for urgent cargo that needs higher reliability.
- Equipment supply is tight across Europe, particularly at inland depots. Allow flexibility in routing and empty pick up from the port.
- 2 upcoming blank sailings from North Europe in week 24 to USEC (AL1) and week 25 to US Gulf (Victory Bridge).
India → North America
- GRI May 15: Implemented
- GRI June 1: Expected in conjunction with TPEB rate increase
- Capacity: Blank sailings due to schedule reliability/congestion continue to affect capacity out of the ISC region. Cyclone Tauktae shutdown port operations for about 48 hours before returning back to service. The only port still not working is Hazira, which has notified the local government that it will not open up due to ongoing power grid issues. Another tropical cyclone, Cyclone Yaas, is expected to make landfall later tonight near the port of Kolka in West Bengal. Operational delays are expected. Demand continues to outweigh capacity, similarly to tradelanes like TPEB, which ISC relies on for shipments to the USWC. Suggested booking remains at 15-20+ days prior to Cargo Ready Date (CRD).
- Equipment: Carriers indicate the ISC region is and will remain a priority for repositioning of empty equipment. India in particular is importing significantly less than 2019 numbers (2020 data not used, due to Covid lockdown) while exporting much more. This difference in imports vs exports deepens the equipment shortage.
- Notes: Recommending booking urgent cargo on Premium no-roll services. Expect delays in response time from suppliers and other stakeholders in the region as workers continue to transition back to work from home. Social distance/headcount restrictions on a state level are affecting manufacturers and logistics providers in some regions.
North America → Asia
- Rates: Increasing
- Reefer Container rate increases for June are likely to be implemented by multiple ocean carriers.
- Capacity: Recommend advanced booking notice 14-21 days prior to CRD at Port.
- Capacity: Recommend advanced booking notice 14-21 days prior to CRD at Rail Ramp.
- Capacity availability from the Port of LA to all Asia destinations remains tight due to voided sailings. Recommend at least 3 weeks lead time on new bookings.
- Chassis availability is tight at most major ports and rail ramps. Recommend more lead time for truckers to procure chassis.
- Severe vessel congestion at both US coasts continues to move vessel cut-off dates and earliest return dates.
North America → Europe
- Rates: Steady—Only one carrier has announced a small GRI for June 1.
- Port congestion along the US East Coast and in North Europe impacts vessel-schedule integrity for all services, causing capacity loss week to week as ships make up time. We recently learned that 2 ocean carriers will be implementing service allocations to manage space due to tightened constraints.
- The limited capacity for all-water service from the US West Coast to Europe has grown increasingly tight. Would strongly suggest placing bookings with at least 3-weeks lead time.
- Capacity: Recommend advanced booking notice 14-21+ days prior to CRD at port.
- Capacity: Recommend advanced booking notice 14-21+ 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.
Air Freight Market Update
- European export demand shows continued strength to the Americas and Asia. Space to the U.S. West Coast remains constrained. No meaningful capacity into North America was added over the past week. Space to Asia remains very well utilized, especially to China and Japan.
- Space to India and Bangladesh is very constrained, due to aid and relief shipments into the COVID-struck region.
- Major airport hubs, as well as secondary airports in Europe are reporting normal throughput for air imports and air exports.
- Export capacity remains well utilized due to continued lack of belly capacity. It can take 2-5 days from booking to uplift into key European destinations. Capacity from West Coast gateways is the most constrained to Europe, while the Midwest and East Coast are manageable. Capacity from the West Coast to Asia is filling quickly with dry cargo and perishables.
- Space to India and Bangladesh are very constrained, due to aid and relief shipments into the COVID-struck region—currently space is booked out until early June to India
- US and European carriers have not added meaningful capacity on their transatlantic routes as they wait for details of the newly proposed E.U. travel regulations for summer.
- With a high number of freighter flights from Asia and Europe, LAX and ORD ground handlers facing backlogs have started to use off-airport facilities to manage the flood of cargo. Ground handlers are reportedly 3-6 days behind in breaking down freight from arriving flights.
- __Trucking remains scarce __for airport recoveries and local deliveries, especially on the US West Coast.
- Perishable season kicked off with high expectations for US fruit and vegetable exports. Rates off the WC to Asia go up rather significantly and space is constrained but manageable during a busy perishable season.
Updates from Flexport's Customs & Compliance Team
Senator Wyden introduces GSP and MTB renewal bill with some changes
Last week, the chairman of the Senate Finance Committee, Senator Ron Wyden (D-OR) announced he introduced a bill that would renew GSP through 2027 and MTB through 2023, providing relief to importers who previously utilized these tariff measures. The bill would also make the renewal retroactive to when GSP and MTB expired.
USMCA Trade Officials seek Cooperation on Forced Labor
On May 18, the top trade officials for the US, México, and Canada reiterated the USMCA’s commitment to preventing products made with forced labor from entering their countries, signaling a regional wide effort to combat forced labor globally. Other topics on their meeting’s agenda included the environment and a focus on worker’s rights in their domestic economies.
Factory Output News
Taiwan reported over 700 new confirmed cases on May 22 (8th consecutive day of 100+ cases). The island is currently in level 3 out of 4 lockdown, which includes school & gym closures, indoor gatherings capped at 5 people and only essential services and public/gov’t services open [Source: Network Partner]
Japan opens state-run mass COVID vaccination centers in Tokyo, Osaka. The centers will operate for three months from 8 a.m. to 8 p.m. including weekends and national holidays utilizing the Moderna vaccine [Source]
Vietnam’s total infections hit 5013 as fourth wave of pandemic, the most severe one yet, hits [Source] 4 industrial parks in Bac Giang temporarily shut down until further notice due to Covid outbreak. Three of the four parks house Foxconn production plants. [Source]
Cambodia receives 1mil Sinovac shots as Phnom Penh speeds up vaccination programme [Source]
Thailand’s exports rose by over 10% in April compared to the same month last year. [Source]
Malaysia Additional precautions for the Movement Control Order will be implemented from 25 May. Operating hours are limited from 8am to 8pm, and more workers are mandated to work from home. [Source]
Singapore Changi Airport became the largest active cluster with a total of 100 cases. Terminal 1, Terminal 3 and Jewel will be closed to the public. The airport will still be open for air travel. [Source]
Indonesia posts 11 year record high export volume, supported by high commodity prices [Source]
Myanmar inhabitants face concerns over supplies and shelter. There are not enough shelters, oil, fuels, food and medical supplies. It is hard to access groceries even with money. [Source]
India Lockdowns to control virus spread continue [Source]
Bangladesh extends virus lockdown to May 30. Operations unaffected [Source]
Freight Market News
Automation Helps Fill Warehouse Jobs As warehouses struggle to hire ahead of peak season, automated equipment allows companies to recruit from a broader geographic area. The Wall Street Journal reports remote-controlled forklifts and other retrieval machinery are helping to resolve ongoing labor gaps.
New Port Spurs East African Infrastructure Kenya’s new Lamu port is receiving cargo in the first of 32 planned berths. Bloomberg reports the new port will increase service to hinterland countries as Kenya constructs highways from Lamu to its inland borders with Ethiopia and South Sudan.
Ever Given Isn’t Going Anywhere Yet An Egyptian court rejected a shipowner claim for losses and an appeal to release the Ever Given from detention by the Suez Canal Authority. [The Loadstar] reports the SCA went on television to say the ship would be freed if the shipowner would pay an initial amount towards a reduced claim.
Read: A Salvage Master’s Life: Saving Ships, Restoring Trade, and Getting Paid
Economic highlights from Flexport Chief Economist Dr. Phil Levy
European GDP Contracts
In Q1, Euro Area GDP fell 0.6%, following a decline of 0.7% in Q4 of 2020.
Growth was uneven across major European economies in Q1: France grew 0.4%, Italy shrank 0.4%, Spain and the Netherlands were down 0.5%, and Germany fell 1.7%.
Euro Area employment dropped 0.3% in Q1, following two consecutive quarters of growth.
Europe Trade Revives
Comparing 2021:Q1 with 2020:Q1, intra-Euro Area trade was up 6.2%, imports from outside the Euro Area were up 0.3%, and exports to outside were down 0.6%. The year-over-year March numbers showed stronger growth, however. Exports outside the Euro Area were up 8.9% and imports up 19.2%.
Euro Future More Promising
IHS Markit Purchasing Manager Index numbers for Euro Zone composite output hit a 39-month high in May, though the strength was concentrated in services.
US Output Gauge Hits Record
The comparable US May PMI was 68.1, up from 63.5 in April. Both manufacturing and services numbers set records.
UK Retail Spending Up
UK retail spending is up for April by 9.2%, roughly double estimates.
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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.