Freight Market Update: July 29, 2020
Ocean and air freight rates and trends; customs and trade industry news plus COVID-19 impacts for the week of July 29, 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
Cargo Ship Orders Hit Lows Operators are holding off on new cargo ships with shipbuilders reporting a dearth of new orders and current orders placed on hold. The reasons, according to the Wall Street Journal, include long-term trade uncertainty due to COVID-19 and insufficient innovation to cut greenhouse gas emissions ahead of approaching deadlines.
IATA Pushes Out Recovery Time The International Air Transport Association predicts short-haul flights will recover more quickly than long haul, but pre-pandemic levels of belly capacity are unlikely until 2024, one year later than its initial forecast. American Shipper notes the new timeline reflects June’s modest growth and other factors.
Hurricane Stalls US-Mexico Freight Category 1 Hurricane Hanna pummeled Texas and northern Mexico this week, causing route and yard closures. Supply Chain Dive reports repairs of bridges and other infrastructure could take weeks, leading to a chain reaction of delays along the border and beyond.
Meanwhile, this week, Flexport Chief Economist Dr. Phil Levy noted the following economic highlights:
- PMI data show US private sector stabilization. Purchasing Manager surveys from IHS Markit registered 50.0 for Composite Output, exactly at the dividing line between growth and contraction. The reading marked a 6-month high and balanced a weaker services number against a stronger manufacturing number. Manufacturers expressed concern about higher transportation costs.
- Europe PMIs show relative strength. The corresponding Composite Output number was 54.8 for the Eurozone, a 25-month high. For the UK, it was 57.1, a 61-month high.
- South Korea’s economy shrinks as GDP fell 3.3% between April and June, after falling 1.3% in the first quarter. South Korean exports fell 16.6% from the first to second quarters.
- Mexico’s economic activity contracts sharply with an overall economic indicator from May down 21.6% from a year earlier. The IMF recently predicted that Mexican GDP will shrink 10.5% in 2020, the worst in Latin America.
Customs and Trade Updates
EU Says Airbus Subsidies Resolved
The EU Commission issued a press release stating that Airbus has agreed to refund the money that was provided by EU member states to resolve the ruling that went against the EU from the WTO. Germany and the UK have already been paid back. France and Spain are expected to get their funds shortly. Airbus is calling for the USTR to now remove the tariffs that were put in place on EU goods (10% on civil aircraft, 25% on various food, apparel, and tools).
Mali Added to AGOA FTA
The USTR announced that Mali has taken the measures necessary to join the AGOA free trade agreement starting on August 4, 2020: "Mali has adopted an effective visa system and related procedures to prevent the unlawful transshipment of textile and apparel articles and the use of counterfeit documents.” It’s also more closely following the customs procedures required by the AGOA trade agreement, the USTR added.
US ExtendsTravel Restrictions on Canada and Mexico
As anticipated, the US has extended travel restrictions for the Canadian and Mexican borders through August 20, 2020. As with past restrictions, the ban only pertains to travelers and will not impact cargo.
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.