Market Update

Freight Market Update: May 11, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of May 11, 2021.

Ready to Get Started?

Flexport makes shipping your cargo transparent, reliable, and affordable

5/19/2021 WEBINAR ¦ State of Trade: Pandemic-Pressurized Trade Policy

In crises, policymakers usually re-commit to trade. But the COVID crisis may prove to be an anti-trade pandemic. We’ll look at barriers going up and what the data show. Join on May 19th at 8:30 am PT. Watch now.

5/25/2021 WEBINAR ¦ Logistics Rewired: Ocean Market Update

Join Lars Jensen of Vespucci Maritime and Flexport’s Sanne Manders and Anders Schulze as they talk through the extreme scarcity in ocean—and what’s needed to bring balance back to this very stressed market. Join us May 25th at 11:30 am PT. Watch now.

Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • TPEB Crunch Pushes into June: The crunch being felt on TPEB continues to tighten, as demand continues to move well beyond available capacity in the market. Carriers indicate an extremely strong backlog of bookings that are already pushing well through May and into mid-June.
  • Rates: 2H May GRI expected
  • Space: Extremely tight
  • Capacity / Equipment: Extreme shortages in North China, Southeast Asia, and Taiwan

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI May 1: Rate increases by all carriers
  • GRI May 15: Rate increases by all carriers
  • Capacity: Recommend advance booking notice 3 or more weeks prior to CRD.
  • With blank sailing impact in consecutive weeks and severe equipment shortage across Asia there is now a very serious space crunch on FEWB trade. Carriers are building up backlog and rolling more cargo due to capacity constraints and high demand.

Europe → North America (Transatlantic Westbound)

  • Rates: Increasing
  • GRI May 1: Implemented
  • GRI June 1: Likely implemented
  • Capacity: Recommend advanced booking notice at least__ 5 weeks prior to CRD__.
  • Notes: Rate increase announced for June by GRI and new/amended surcharges. Market expected to remain hot through the summer with increased pressure on equipment availability in the short term. Booking early is key to securing space. Use Premium products for urgent cargo needing higher reliability.
  • Equipment supply is extremely tight across Europe as port congestion and lower vessel capacity hinder empty-container repositioning, particularly at inland depots. Allow for flexibility in routing and empty pick up from the port.
  • Capacity development: Fewer blank sailings on North Europe services but schedule reliability still hurt by port congestion in North Europe and North America, particularly on the USWC.
  • 3 blank sailings on the EMA service in May and June will restrict capacity from East and West Med to USEC in week 20, 23, 26.

India → North America

  • GRI May 1: Implemented by most carriers
  • GRI May 15: Expected
  • Capacity: Blank sailings due to schedule reliability/congestion continue to affect capacity out of the ISC region. Demand is outweighing 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 India is and will remain a priority for repositioning empty equipment. Local government in India is pushing for domestic manufacturing of containers but with a timeline unlikely to mend the current situation. We expect equipment shortages for the foreseeable future.
  • Notes: Recommending booking urgent cargo on Premium no-roll services.
  • COVID Updates—
  • Bangladesh - extended lockdown until May 16th. Infection rates are lowering as lockdowns appear to work.
  • Sri Lanka - 2k 7-day new infection average rising with introduction of India variant last week.
  • India - 391k 7-day infection average and rising. Calls for nationwide lockdown are increasing with no decision yet made.

North America → Asia

  • Rates: Increasing
  • GRI May 15: Anticipate 2 carriers to implement rate increased for US West Coast origins.
  • Reefer Container rate increases for June likely to be implemented but 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 urge booking sooner to help ensure coverage with alternate carriers as necessary.
  • 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


Asia

  • Air exports from Asia continue to surge with demand up over 40% year over year.
  • Demand exit China has ramped up nicely since the May Day–holiday period.
  • Yields continue to increase given the widening gap between demand and capacity. Rates are up double digits in most origins in Asia to the US.
  • Capacity is extremely tight with the situation worsening this week as Taiwan CDC grounds a large percentage of CI pilots following a Covid outbreak at the quarantine hotel in TPE. CI has announced that 20% of their entire schedule will be cancelled as a result, including many freighter flights to USEC as well as intra-Asian services mainly to SE Asia.

Europe

  • 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. Carriers across the board report very high load factors.
  • 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.

Americas

  • Export capacity remains fairly tight due to continued lack of belly capacity. It can take 2-5 days from booking to uplift into key European destinations. Capacity from WC gateways is the most constrained to Europe, while the Midwest and EC are manageable. Capacity from the WC to Asia is filling quickly with dry cargo and perishables.
  • Space to India and Bangladesh is very constrained, due to aid and relief shipments into the COVID-struck region.
  • 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 USWC.
  • Perishable season kicks off the week of May 10th with expectations for a strong year of US fruit and vegetable exports. Cherry season will commence the week of May 10th with high demand from Asia. During the busy perishable season rates off the WC to Asia go up rather significantly and space is constrained but manageable.

Factory Output News

Taiwan's flag carrier China Airlines (CI) to reduce cargo flights amid local coronavirus infections. There are temporary cut backs to cargo services with 200 pilots in quarantine due to a recent COVID-19 cluster involving 12 CAL crew members. [source]

Japan speeds up COVID vaccine rollout for elderly amid virus surge. The government will send vaccines to municipalities to administer to over 9 million people in two weeks from Monday. [source]

Vietnam 77 new daily cases confirmed on Sunday bring a total tally of 333 cases since April 27. [source]

India In 24 hours, 410k cases and 3,980 deaths have been recorded, the highest such numbers from any country except the United States. The second wave is expected to also impact neighboring countries of Bangladesh and Nepal. [source]

India and its vaccine maker (Serum Institute of India) stumble over their pandemic promises. Serum has suffered production problems that have kept it from expanding output at a time when India needs every dose. [source]

Updates from Flexport's Customs & Compliance Team

USTR Katherine Tai Returns to Capitol Hill

This week, US Trade Representative (USTR) Katherine Tai returns to Congress, but her appearances are likely to provide little clarity on next steps towards resuming Section 301 exclusions on Chinese products and when productive trade talks with the UK and EU will resume. Ambassador Tai will testify before both the Senate Finance Committee on Wednesday and the House Ways and Means Committee on Thursday, especially concentrating on President Biden’s 2021 Trade Policy Agenda.

CBP Gets Tough on Forced-Labor Enforcement

On May 4, CBP seized 3.97 million nitrile disposable gloves from Malaysia manufactured by Top Glove Corp., signaling a broader use of enforcement powers to crack down on goods CBP suspects are made with forced labor. An inspection revealed that a subsidiary of Top Glove unmentioned in CBP’s March 2021 Withhold Release Order produced the goods.

Members of Congress Seek More Funds for CBP’s Forced-Labor Division

In a show of increased governmental interest in responding to forced labor, 17 Democratic Members of Congress publicly advocated for increased funds of $50 million for CBP’s Office of Trade, with half those funds going towards forced-labor enforcement.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

US Trade Growth Shoots Up

A burst of US trade growth in March set new records. Imports of goods and services were up 6.3% over February, while exports were up 6.6%.

Within those seasonally adjusted numbers, goods trade grew faster, with imports up 7.0% and exports up 8.9%. March goods imports at $233b were the highest on record, while goods exports at $142b were the highest since May 2018.

On an unadjusted census basis, imports and exports each grew by 22% from February.

US Manufacturing Index Grows, but Slowly

The Institute for Supply Management's US Manufacturing Index shows slower expansion than expected in April. One of the biggest monthly component drops was in imports, showing only slow growth.

Chinese Exports Surge in April

Chinese exports went up 32.3% from a year earlier, easily beating analyst estimates.

US Productivity Rises in Q1

US labor productivity was up 5.4% (seasonally adjusted annual rate). The implicit price deflator was up 4.4% (one measure of inflation). For the year, productivity was up 4.1%.

Freight Market News


Container Rollover Rates Climb Carriers are rolling far higher numbers of containers than last year, according to The Loadstar. Even the best-performing carriers rolled approximately one-third of containers in April.

Read More: On the Hunt for Cargo Space, Smarter Consolidation Could Ease the Way

Suez Canal Lowers Claim Amount The Suez Canal Authority (SCA) lowered its claim for damages, arising from a 6-day container ship blockage, from $916 million to $600 million. The adjustment is an attempt at a quick settlement, but insurers say the amount is still high. Reuters reports an Egyptian court rejected an appeal to release the ship while negotiations continue.

Read More: A Salvage Master’s Life: Saving Ships, Restoring Trade, and Getting Paid

Taiwan Quarantines Pilots Taiwan will quarantine all China Airlines pilots for at least 14 days after an outbreak linked to pilots in an airport hotel. US News reports the airline will experience a short-term reduction in capacity, but pilots who test negative will be released at the end of the quarantine period.


Freight Market Update is a free service from Flexport, the modern freight forwarder. If you're not already a subscriber, we invite you to subscribe here.


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.

Share the Article

arrowImagearrowImage

Ready to Get Started?

Sign up for a Flexport account or ask to see our platform in action.

Get Free Weekly Supply Chain News Updates

Subscribe for the latest news on trade lanes, customs and tariff changes, and expert economic insight.

I agree to the storing and processing of my personal data by Flexport as described in the Terms of Service and Privacy Policy.