Ocean and air freight rates and trends; customs and trade industry news for the week of March 11, 2020.
As the WHO declares COVID-19 a global pandemic, the effect on supply chains deepens even as China may be showing progress in its human and economic health. To help you plan your response, Flexport publishes a weekly blog by our Chief Economist focused on how the virus affects supply chains and economies.
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TransPacific Containers Held Up in China A shortage of 40-foot shipping containers is disrupting the flow of US agricultural goods to China as US produce and meat suppliers await containers stayed in China or idling in the Pacific, according to WSJ. The setback is another hit for US farmers who struggled during the US-China trade war.
Scrubber Savings Wiped Out by Coronavirus Historic dips in crude oil prices due to Coronavirus have surprised ship owners by resulting in IMO 2020-compliant Very Low-Sulphur Fuel Oil (VLSFO) that costs less than High-Sulphur Fuel Oil cost one year ago. Ship owners who installed scrubbers based on the original price spread between the two fuel types saw their strategy pay off in Q1 2020 with nets of $10K-$25K more than non-scrubber ships, reports American Shipper, but those fuel savings are now less than $1500 per day on average.
Meanwhile, this week, Flexport Chief Economist Dr. Phil Levy noted the following economic highlights:
Section 301 Exclusions on Medical Products
The USTR released an exclusion list for products that were under list 4 of the Section 301 tariffs with China. All 8 of the tariff numbers stated did not have additional requirements to qualify for the exclusion. The list appears to be focused on supplies tied to the Coronavirus outbreak, but there was no official word that was the reasoning. These exclusions will apply retroactively to the September 1st, 2019 implementation date and will stay in effect until September 1st, 2020.
USTR Calls China's Compliance Poor
The US Trade Representative recently issued its annual report to the World Trade Organization detailing many of the same problems noted in previous annual reports. New topics include the enforcement of the Phase One portion of the recent trade deal and the issue of forced labor and how to gain unrestricted access for inspections of prison labor camps where the products destined for the US may be made.
US-Brazil Trade Agreement
After a recent meeting in Florida, the US and Brazilian presidents issued a joint statement expressing interest in a bilateral trade agreement that would benefit both countries and be completed by the end of year.
For a roundup of tariff-related news, visit Tariff Insider.
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