Freight Market Update: July 22, 2020
Ocean and air freight rates and trends; customs and trade industry news plus COVID-19 impacts for the week of July 22, 2020.
How will demand recover from COVID-19? And how can you ensure your cargo is moving to keep up with it? Visit Flexport’s COVID-19 Trade Insights for information and analysis.
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Ocean Freight Market Update
Air Freight Market Update
Freight Market News
Flooding Overwhelms Yangtze Ports Days of rain have impacted key ports along China’s Yangtze River as the country’s flood alerts hit red, its most severe warning level. Multiple ports suspended operations, but are now returning online with delays, according to Supply Chain Dive.
Product Releases Crunch Air Capacity After a period of stabilization, airfreight may again be in high demand as the new iPhone 12 and Playstation 5 are scheduled to launch ahead of holiday shopping. American Shipper points to a new wave of PPE demand compounding the issue.
Silk Road Trains Break Records China-Europe freight trains have increased by 48% at Khorgos, the city on the Chinese border known as the furthest from any ocean. With demand comes delay, according to The Loadstar, as westbound routes are far more popular, causing a shortage of cars in China.
Meanwhile, this week, Flexport Chief Economist Dr. Phil Levy noted the following economic highlights:
- Banks foresee economic trouble. In their quarterly earnings reports, the six largest US banks reported that they had added $36 billion in loan loss provisions. A key tenet of optimistic scenarios for recovery from the COVID-induced recession was that most businesses would survive a short, sharp downturn. The banks’ actions, instead, were based on an assessment that the recession would be more protracted and severe.
- The International Monetary Fund slightly upgraded its US economic outlook in its regular review. It predicted US GDP shrinking 6.6% in 2020 overall, as compared to 8.0% predicted in June; yet, it cited the danger of a pandemic resurgence as the biggest risk, warned of growing debt, and called for a reversal of trade restrictions.
- The US budget deficit has ballooned, according to CBO estimates. In the first 9 months of fiscal 2020, the deficit was $2.7 trillion versus a comparable $0.7 trillion in FY19.
- US retail sales rose 7.5% in June. This followed an even stronger rebound in May. Sales for April-June 2020 were down 8.1% from the same period a year before.
- China reports positive Q2 numbers with GDP up 3.2% over the year before, after a 6.8% Q1 contraction. For June, China reported exports up 0.5% and imports up 2.7% over the year before.
- Japan’s exports slumped 26.2% in June from a year earlier.
- Eurozone industrial production climbed in May, up 12.4% from April, but still down 20.9% from a year earlier.
Customs and Trade Updates
USTR Grants More Exclusions to Tranche 4
The USTR issued a set of product exclusions to Section 301 List 4 of goods from China. There were 11 full HTS numbers and 53 specifically prepared product descriptions. They apply retroactively to the September 1, 2019 implementation date and will be in effect until September 1, 2020.
DOC Adds 11 New Entities
The Department of Commerce has added 11 new Chinese entities to the "Entities List," due to their human rights violations. Nine were identified as using forced labor from Muslim minority groups, while the remaining two were seen as conducting genetic analyses that repressed minorities. All exports from these entities will now need licenses that will be reviewed and approved by the EAR and BIS.
FTC Requesting Comments on New "Made In USA" Requirements
In June, the FTC published its proposed new rules around "Made in USA" labeling requirements. The rule increases the authority they have in issuing penalties for label violators. They are now accepting comments on the new rules until September 14, 2020.
For a roundup of tariff-related news, visit Tariff Insider.
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.