Freight Market Update: August 5, 2020
Ocean and air freight rates and trends; customs and trade industry news plus COVID-19 impacts for the week of August 5, 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
Warehouse Demand Shifts Pre-Holiday An expected shift to online holiday shopping is driving temporary warehouse demand, especially in major population centers, according to the Wall Street Journal. By maintaining inventory across additional warehouses, retailers hope to speed delivery.
COVID Flares Squeeze Airfreight Migrating COVID spikes continue to prevent the return of airfreight capacity, reports American Shipper. Coupled with an increase in China exports and rising jet fuel prices, some shippers are beginning to favor the spot market.
Port Growth Projections Shrink Operators and port authorities are reviewing plans for port expansions, according to Hellenic Shipping News. New reduced forecasts for port throughput due to COVID-19 are scaling back investment.
Meanwhile, this week, Flexport Chief Economist Dr. Phil Levy noted the following economic highlights:
- European GDP plunged by 12.1% quarterly (40.3% annualized) in Q2. For the four largest eurozone economies, quarterly drops were: Germany 10.1%, France 13.8%, Italy 12.4%, and Spain 18.5%.
- It is the deepest recession on record for the region, dropping output to levels last seen in 2005. The drop was more severe than that of the United States, reflecting the more thorough shutdown in response to the COVID-19 pandemic.
- Mexican GDP fell 17.3% from Q1 to Q2. The largest drop on record reflected big falls in tourism, transport, and dining.
- In June, Mexico’s trade surplus blew past forecasts, as year-over-year exports fell 13% and imports dropped 22%. This provides a stark illustration of why trade balances are nothing like a national P&L account. It is an extreme version of a common phenomenon—trade balances rise in bad times and fall in good times.
- US unemployment claims are on the rise for the second week in a row. The weekly initial insurance filings for late July were 1.43m.
- China indices show expansion. Both official and private purchasing manager indices showed increasing manufacturing activity in July, each beating forecasts.
Customs and Trade Updates
Section 301 Updates
- Most of the exclusions for the third tranche are set to expire this Friday, August 7.
- USTR has requested comments on extensions for the first tranche of tariffs to be extended past the current October 2, 2020 expiration date. Comments are due by August 30, 2020.
- Wine comments dominate the docket with nearly 30k comments submitted for the proposed additional EU Airbus retaliatory tariffs.
FDA Proposes New Regulations on Veterinary Equipment
In a Federal Register Notice, the FDA has requested comments (due October 19, 2020) on a new regulation concerning veterinary equipment. The proposed data fields are the same as fields currently used for items that come in contact with food, drugs, biological products, cosmetics, tobacco products, radiation-emitting electronic products, and medical devices.
COBRA Fee Increase
As of October 1, 2020 CBP will increase the Consolidated Omnibus Budget Reconciliation Act "User Fees." The increase for 2021 is 8.933%. Merchandise processing fee, vessel arrival fee, truck arrival fee, informal entry fees, and broker permit fees are among the most commonly seen fees which will increase.
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.