Freight Market Update: August 19, 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

Oil Tankers Idle Off China A glut of oil leaves tankers floating outside northern Chinese ports, causing severe congestion. The Wall Street Journal reports approximately 80 ships have waited a month or more to make deliveries, while others act as floating storage until oil prices rise.

Platoon Trucks Make Debut Delivery A synced platoon of trucks made the first commercial delivery ever, carrying toilet paper and other goods from Portland, Oregon to Nampa, Idaho. FreightWaves explains that platooning links trucks, led by a driver, and is a step towards autonomous vehicles. In this case, the platoon was engaged autonomously for about half the trip.

Meanwhile, this week, Flexport Chief Economist Dr. Phil Levy noted the following economic highlights:

• Japan’s GDP dropped in Q2 by 7.8% from Q1. While the quarterly result for the world’s third largest economy was the worst in at least 40 years, the drop was somewhat less sharp than the Q2 results for the US and major Western European countries.
  • The UK fared far worse with its economy shrinking by a quarterly 20.4% in Q2, the worst on record, and worse than any other top economy. Beyond the pandemic, the UK faces continued uncertainty about the terms of its trade with the EU after the current transition period ends with the calendar year.
• US retail sales grew for the third straight month in July, increasing by 1.2%. The good news was that this rebound brought retail sales past their previous peak. The bad news was that the increase was less than expected, marked a dramatic slowdown from 8.4% growth in June, and may have depended on expired stimulus measures.
  • Chinese retail sales fell 1.1% in July from a year earlier, following a 1.8% fall in June.
• US industrial production rose by 3.0% in July, beating expectations, but leaving industrial output 8.2% below its level a year earlier. Capacity utilization for the industrial sector rose to 70.6%, well above its April low of 64.2%, but below the 77.5% it averaged in the year through February.
• US initial unemployment claims fell below 1m for the first time since March.
• The World Trade Organization report on COVID trade impact emphasized airfreight tumult and extreme policy uncertainty.

Customs and Trade Updates

Section 301 Updates

• Scheduled talks between USTR and the China Vice Premier to discuss progress on the US-China trade deal were postponed from this past weekend.
• Hong Kong–origin goods are not subject to Section 301 tariffs, as stated on an FAQ posted on CBP's website.
• USTR issued a notice stating that, due to Airbus subsidies, it was modifying the list of items that are subject to the WTO authorized tariffs. It removed some products from Greece and the UK and added equivalent import values on items from France and Germany. Items listed here will be subject to additional tariffs starting on September 1, 2020.

Suggested Certificate of Origin Template CBP posted a CSMS message with suggested templates for a certificate of origin under the US-Japan and the USMCA agreements. This was shared as a fillable PDF, but there is no mandatory format as long as the required data elements are captured.

CBP Fines Importer for Forced Labor CBP issued a press release that it has collected a fine of $575,000 from an importer using forced labor. CBP found that the importer had been using prison labor for at least 20 of their shipments of stevia out of China. This was the first forced-labor penalty issued since TFTEA was passed in 2015.

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.