Freight Market Update: June 26, 2019
Ocean and air freight rates and trends; trucking and customs news for the week of June 26, 2019
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Ocean Freight Market Updates
Maersk Launches No-Roll Guarantee Product
Maersk launched Maersk Spot this week, a new product that guarantees cargo booked on a vessel won’t be rolled. If a booking is canceled the customer will be charged a cancelation fee, and if the cargo is still rolled, Maersk will provide compensation.
Weight Restrictions on Panama Canal Shipments
The Panama Canal restricts the draft (how deep the hull goes into the water) of vessels based on the amount of water available in Gatun Lake, which varies based on rainfall, amount of vessels and other factors. Ships must be lighter to meet the draft requirement, so they need to carry less cargo/ballast/fuel or offload cargo to the Panama Canal Railway.
The Panama Canal Authority has again postponed the further reduction to allowable vessel draft for the Neopanamax locks and Panamax locks from June 26, 2019 to July 3, 2019 due to increased rainfall.
Impact of New IMO ECA Regulations
The International Maritime Organization (IMO) has mandated under new Emission Control Area regulations that by 2020, all merchant vessels must reduce their sulfur emissions from 3.5% to 0.5%.
Whether they install scrubbers, build new vessels, or use higher-quality fuel, carriers will need to make significant changes to comply with the new regulations, and those changes will come at a cost to shippers. Freight rates may climb between now and 2020 as a result.
For an in-depth look at the regulation and how to prepare, read our blog post: IMO 2020: What Shippers Need to Know Now
Air Freight Market Updates
Trucking Market Updates
*Rail Dwell Increasing at Prince Rupert *
Rail dwell is expected to increase in the next two weeks due to CN Rail operational issues. The line has been experiencing a shortage of rail cars, and a derailment on the main line took a couple of days to clear.
Expect July Fourth Delays
Most West Coast terminals will be closed July 4th and 5th, causing a backlog. Expect 1-2 weeks of constrained capacity and potential delays.
Customs and Trade Updates
*USMCA Ratified in Mexico *
The Mexican Senate is the first government to ratify the new USMCA deal in a landslide vote 114 to 4. Canada lawmakers have until the end of this week to approve a deal before a summer recess, but it seems there is a clear path to ratification. The U.S. ratification seems far more cloudy at this time.
For a roundup of tariff-related news and the latest on the Mexico tariffs, read our Tariff Insider.