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Market Update

Freight Market Update: January 26, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of January 26, 2021.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Steady
  • GRI January 15: Soft/not implemented, depending on lane and carrier.
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Most space for pre-CNY shipments has been assigned, as carriers look to provide assignments after CNY when indications are that demand will remain strong.

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI January 1: Implemented
  • GRI January 15: Partially implemented (some extensions by carriers)
  • GRI February 1: Mostly extended
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Rates remain at a very high level that mostly looks to continue into February. The severe equipment shortage has not improved and will be a major challenge through CNY, if not until the end of Q1. It is still necessary to be flexible on equipment substitution. Urgent shipments should be booked on premium directly, as even premium offerings have become more limited. There are widespread restrictions for UK cargo due to port congestion and haulage limitations and there will be further delays and port omissions. Shipments from feeder ports in China should be diverted to main ports instead.

Europe → North America (Transatlantic Westbound)

  • Rates: North Europe: Steady; Mediterranean: Steady
  • GRI January 15: Implemented (North Europe and Med)
  • GRI February 1: Likely Implemented
  • Capacity: Recommend advanced booking notice 21 days prior to CRD.
  • Notes: Premium options remain available for bookings placed at shorter notice. The strong market is expected to continue through the end of Q1 as carriers report full vessels up to 4 weeks ahead of ETD with no sign of demand slowing, while high cargo demand from China continues to pose a strain on equipment availability in Europe. Expect further rate increases in February.
  • Supply remains tight. There are equipment shortages of Reefer containers and 40’/HC dry, in particular in Germany, Italy, Spain and Portugal, plus severe equipment shortages in Turkey. Book as early as possible to secure empty equipment.
  • Port congestion: UK congestion and vessel delays are causing vessel slides and cut and run in North Europe base ports. No signs of congestion easing in North America West Coast ports.
  • Capacity development: Upcoming blank sailings by THEA in week 5 on the AL1 service (approx. 5% weekly capacity reduction).

India → North America

  • Rates: Increasing
  • GRI February 1: Confirmed
  • GRI February 15: Pending
  • Capacity: Space is full and rolling to both USEC and USWC. Transhipment at SIN/CMB has 1-3 week delays.
  • Equipment: Continues to be an issue—please make bookings in advance so freight forwarders can plan for container availability at your local ICD/wet port. Consider moving 20GP instead of 40GP/HC. Recommend utilizing premium services to secure equipment faster.
  • Demand is expected to increase through Q1 as we approach the end of the Indian fiscal year.

North America → Asia

  • Rates: Increasing
  • GRI February 1: Initial advisory is for a significant increase for all US origins to Asia with larger increases for Indian Subcontinent and exempt commodities to Southeast Asia.
  • GRI February 15—Several rate increases announced at $100 per container. Exempt commodity and hay segments have GRI’s specific to their segments announced as well.
  • Capacity: Recommend advanced booking notice 7-10 days prior to CRD at Port.
  • Capacity: Recommend advanced booking notice 10-14 days prior to CRD at Rail Ramp.
  • Chassis availability is tight at most major ports and rail ramps. Recommend factoring in more lead time for truckers to procure chassis.
  • Port of LA situation remains very fluid. Vessel schedule integrity is completely off which has led to vessel bunching and smaller windows for containers to be delivered.

North America → Europe

  • Rates: Steady
  • Capacity: Recommend advanced booking notice 7–10 days prior to CRD at port.
  • Capacity: Recommend advanced booking notice 10–14 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.
  • UK port congestion is still impacting vessel operations and the delays also impacting arrival times at the ports of Rotterdam and Antwerp.

Air Freight Market Update


Europe

  • Capacity ex Europe to Asia, North and South America is available in form of freighter capacity and/or dedicated PAX-freighters.
  • Cargo Operations (freighters and PAX freighters) for KLM Group continues, while Passenger flights are mostly suspended due to newly imposed regulations.
  • Main airports in E.U. are fully operational and continue to show strong demand for exports out of the E.U. to the U.S. and LATAM driven by manufacturing and pharma.

Americas

  • TPWB trade is stable into all Asia hubs and balanced between capacity and underlying demand. There will be cancellations during CNY and carriers are still working out the cancellations. The situation around stricter imposed regulations in HKG needs to be monitored and evaluated.
  • LATAM SB has capacity availability and only some destinations (mainly Central America) are still constrained.
  • TAEB capacity is available to Continental Europe and the U.K., but some capacity is being temporarily taken out to Europe, due to a shift of some capacity into the perishable market ahead of Valentine’s Day.

Factory Output News

China has reported 124 newly confirmed COVID cases, including 7 imported cases and 117 local cases. [source]

Taiwan's export orders reached US$533.66 billion last year driven by electronics as well as communication devices [source]

World's largest garment producers—China, Bangladesh, Vietnam, Pakistan, Myanmar and Cambodia—unite to negotiate better terms with Western fashion brands, whose cancelled orders devastated Asian garment workers early in the pandemic. [source]

Malaysia is preparing to shut the economy if infection cases do not improve after the current movement control order expires on Feb 4. [source]

A 7.0 earthquake hit the South Philippines on January 21. No tsunami warning was issued. [source]

Updates from Flexport's Customs & Compliance Team

New Administration Announces Regulatory Freeze

On January 20th, president Joe Biden’s administration announced a regulatory freeze on rules that have been published but not have taken effect, postponing the rules’ effective dates for 60 days from January 20th. This is fairly common practice for incoming administrations, allowing them a period to review these rules for “fact, law, and policy”. The freeze may have an impact on several key agency rules including the new licensing requirements for aluminum products that was to go into effect January 25th, and Food and Drug Administration’s (FDA) proposed rule on additional recordkeeping requirements for certain foods. Other potentially impacted rules include the proposal to end de Minimis exemptions from Section 301 duties and the interim final rule for a “General Approved Exclusion” for steel and aluminum imports.

U.S. and UK Conclude Arrangement on AEO’s

A January 21st Customs news release announced that the United States and United Kingdom have concluded an arrangement to formally recognize one another’s Authorized Economic Operator (AEO) programs. AEO programs allow members of the trade community to access trade facilitation benefits, such as faster and fewer customs examinations, in return for meeting internationally-recognized supply chain security standards. “Under this arrangement, U.S. Customs and Border Protection will accept the validation of UK Authorised Economic Operators (AEO) and grant them approval status in the Customs Trade Partnership Against Terrorism (CTPAT). Her Majesty’s Revenue and Customs will likewise accept the validation of CTPAT members and grant them approval status as AEOs.”


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • Initial US jobless claims stay high at 900K. The number is elevated, both historically and relative to recent months.
  • Signs of US economic strength appear with the IHS Markit US Composite PMI for January at 58.0, up from 55.3 in December. Manufacturing PMI was stronger than that for services. Among the strong components was a rise in new export orders.
  • China leads as FDI host. New figures from the United Nations indicate that China has become the leading recipient of foreign direct investment, overtaking the US. While flows to North America and the world fell by roughly 45% in 2020, FDI into China rose by 4%. There is often a correlation between expanded investment and expanded trade.
  • Research on supply chain robustness, including a recent World Bank working paper, shows that vulnerability depends very much on the nature of the economic shock. Retracting global supply chains does little to help in the face of domestic shocks.
  • China trade war hurt the US—and did so without achieving US goals—according to a study by the US-China Business Council, which tried to quantify the damage. The study argues the conflict reduced US growth and cost 245K US jobs.

Freight Market News


Rough Seas Send Containers Overboard Halfway through a transpacific route, the 13,000-container ship Maersk Essen lost 750 containers to harsh winter weather. The Wall Street Journal reports an investigation is ongoing, but that a recent spate of containers lost at sea may be due to the stability of container stacks on larger vessel sizes.

Carriers Announce CNY Blank Sailings Carriers scheduled to head to Northern Europe for Chinese New Year have announced cancellations, after weeks of encouraging news of additional services, reports The Loadstar.

Neptune Declaration Aims to Aid Seafarers A group of global organizations rallied yet another cry for the relief of seafarers, according to the Maritime Executive. The Neptune Declaration on Seafarer Wellbeing and Crew Change calls for universal protocols to let seafarers disembark, after a year-plus at sea, due to Covid restrictions.


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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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