Freight Market Update: December 1, 2020
Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of December 1, 2020.
Ocean Freight Market Update
Asia → North America (Transpacific Eastbound)
- Rates: Steady / slight increase
- GRI December 1: Rates have increased slightly due to equipment imbalance issues persisting in Asia. Carrier backlog for cargo is growing, and it’s becoming increasingly difficult to secure containers in Asia.
- Capacity: Recommend advanced booking notice 21 days prior to CRD. In addition to Ningbo, Southeast Asia and Busan are among POLs with greatest equipment shortages.
- Please ask your dedicated Client Solutions team about alternative equipment solutions offered on select lanes.
Asia → Europe (Far East Westbound)
- Rates: Increased
- GRI December 1: Implemented
- GRI December 15: Will be implemented
- Capacity: Recommend advance booking notice at least 21 days prior to CRD.
- Significant Peak Season Surcharge increase effective December 1.
- Port Congestion Surcharge for Felixstowe & Southampton effective November 1.
- Notes: Very strong market and severe equipment shortage expected to last through CNY 2021. All carriers will apply a big December rate increase. Important to be flexible on equipment substitution (40’ST, 40’NOR and 20’DC instead of 40’HC). Urgent shipments should be booked on premium as necessary. Widespread restrictions for UK cargo due to port congestion and haulage limitations. Expect delays and operational issues. Some carriers have stopped booking acceptance for the UK. Only premium services are suggested for the UK now.
- Turn here for further details on FEWB.
Europe → North America (Transatlantic Westbound)
- Rates: North Europe: Steady; Mediterranean: Increased
- GRI December 1: Implemented ex-Turkey origins
- GRI December 15: Likely Implemented ex-North Europe origins
- Capacity: Recommend advanced booking notice 21 days prior to CRD
- Notes: Strong market expected to continue through December with no sign of downtime into the new year. All carriers report vessel space fully utilized with high risk of cargo rolls expected to persist through year end. Premium options available with some carriers across the main ocean alliances.
- Equipment shortages in Italy, in particular for 40/HC containers, and Turkey. Ongoing congestion at US and Canada West Coast ports; please consider alternative routes (e.g. inland move via the East Coast). Anticipate delays in picking up containers at New York, Charleston, Savannah terminals as well as major rail facilities in the Chicago, Cleveland, Columbus, Louisville, Nashville and Atlanta areas due to congestion, chassis shortages, and reduced trucking capacity.
- Capacity development: due to the holiday closures over Christmas and New Year, carriers will implement several blank sailings for December:
- W50: AL4 by THE Alliance (-12% weekly space capacity)
- W52: TA5 by 2M Alliance (-10%)
- W53: AL1/AL4/AT2 by THE Alliance (-22%)
- W1: AT1by THE Alliance (-10%)
- Turn here for more details on TAWB.
India → North America
- Rates: Increase
- GRI December 1: Most carriers have implemented increases
- GRI December 15: Pending
- Capacity: Tight as many factories are coming back online after Diwalii celebrations.
- Equipment: Continues to be an issue—please make bookings in advance so we can plan for container availability at your local ICD/wet port.
- Colombo congestion and work shortages are significantly delaying transhippments. Feeders from South India to Colombo are decreasing in frequency due to the congestion. Carriers are redirecting cargo to other transshipment ports such as Mundra or Port Klang.
North America → Asia
- GRI December 1: Increased
- GRI December 15: Increased
- 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.
- Space constraints increasing from US Gulf ports.
- Vessel bunching at the Port of Los Angeles is creating capacity issues due to tight turn times to get vessels back out of port. We have seen a vessel-string with 3 different vessel departures scheduled in the span of 4 days.
North America → Europe
- Rates: Steady
- GRI December 1: None
- GRI January 1: A major ocean carrier has announced a large Congestion Surcharge for all shipments destined to the UK effective 1/1/2021.
- 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 ports continue to be heavily congested. Carriers are implementing ad-hoc port omissions and discharging containers at North Europe ports causing delays to arrival times.
Air Freight Market Update
- Market on the TPEB and FEWB continues to be strong with demand and rates essentially holding steady from last week. This trend should hold up until the Christmas holiday.
- There is almost no charter capacity left in the market for any last-minute large-project movements.
- We are anticipating a strong start to 2021 and Flexport will be increasing its dedicated freighter capacity by 50% in order to serve our customers capacity requirements.
- Market remains steady week over week.
- Strong volumes over the transatlantic especially to support the automotive industry.
- First vaccine shipments moved from BRU to ORD late last week on behalf of Pfizer. Expect vaccine charter flights to increase dramatically over the next few months as FDA approvals for use begin to be granted. Once the initial pipeline is filled, expect far more regional production and fulfillment, potentially making other modes of transport viable.
- Airline terminals are experiencing significant congestion due to a sharp influx of charter activity. Ground delays for loose freight should be expected. Truckers reporting lines of 4-6 hours LAX terminals.
- Some terminals still report shortages caused by Covid outbreaks, worsening an already challenging operational environment.
- Normal flight schedules have resumed, though some Asian carriers report cancellations to LAX and/or flight diversions to the Midwest from Asia. Connectivity/Capacity to and from Europe and LATAM is back on pre-Thanksgiving schedule.
Factory Output News
Taiwan’s forecast was pushed lower, but GDP still predicted to grow by 2.5% in 2020 even with COVID Pandemic [source]
South Korea’s major industrial factories see virus outbreaks causing slowdowns in production [source]
India experienced the first recession in decades due to COVID. Manufacturing returned to growth, however, the service sector is seeing double-digit decline [source]
To minimize risk from concentrating manufacturing in China, Foxconn to shift part of Apple iPad and Macbook production to Bac Giang, Vietnam [source]
Thailand keeping track of 200 people as returnees who tested positive break protocol and skip COVID-19 quarantine [source]
Malaysia 1,315 new COVID-19 cases were reported on Nov 28. Five were imported and others were local infections. Four more fatalities, bringing total to 354. Six clusters identified - four in Sabah, one each in Selangor and Kuala Lumpur. [source]
Indonesia, the country with the most reported infections and deaths, records daily high with 6,267 Coronavirus cases. [source]
Covid restrictions weigh on eurozone prices and Spanish factory output. Inflation stuck in negative territory for the fourth month in a row. [source]
Italian hotels attract foreign investors as pandemic bites. Crisis threatens to force sales in a fragmented and debt-laden sector. [source]
Updates from Flexport's Customs & Compliance Team
CBP Revokes Rulings, Reclassifying Nonwoven Wipes
Customs & Border Protection (CBP) released a headquarters ruling (HQ H303126) on August 20th that revoked several previous rulings and reclassified nonwoven wipes containing soap or detergent under US Harmonized Tariff Schedule (HTS) heading 3401.11.50 (duty-free). Under previous rulings, nonwoven wipes were classified under various 3402 headings. This new ruling was published in the Vol. 54, No. 38 Customs Bulletin on September 30th and goes into effect November 30th.
CBP Ruling Classifies Hangers Imported With Clothes Under HTS Heading of Garment
On November 30th, CBP published a September 22nd headquarters ruling (HQ H310124) that determined plastic hangers imported along with garments are classifiable under the HTS heading of the garment. Among the factors considered in this determination, CBP identified that the plastic hangers were not clearly intended for repetitive use. While the plastic hangers have the potential to be used repeatedly, the importer must prove “there exists a commercial viability for that repetitive use.”
Economic highlights from Flexport Chief Economist Dr. Phil Levy
- US exports and imports rise as advance data from the Census Bureau shows October imports rose 2.2% and exports rose 2.8% from September.
- Inventories climb by 0.9% for wholesale and 0.8% for retail.
- US consumer sentiment dips with two separate measures declining from October to November. The University of Michigan index declined slightly, while the Conference Board measure hit a 3-month low.
- US jobless claims went up for the third straight week to 778K. For the first 11 weeks of 2020, claims averaged 218K.
- The ECB warns on the eurozone. The European Central Bank, in its newly published minutes, saw a risk of double-dip recession and additional retail closures in Europe. The outlook dimmed due to worsening pandemic conditions.
- The ECB’s Chief Economist saw a potential “adverse loop” as supply and demand for loans both contract.
- ECB members expressed concern about possible negative side effects from additional monetary loosening (interest rates are already negative). This is prompting calls for a greater fiscal response instead.
Freight Market News
Vaccine Plans Unfold in Parts As the world awaits an approved Covid-19 vaccine, the supply chain industry is only able to plan logistics based on partial information. Supply Chain Dive reports freight forwarders still don’t know facts like exact required transit temperatures or dose and pallet volumes.
China Alleges Crew Confrontations The simmering trade war between the US and China flared in November with China’s Foreign Ministry making complaints to Washington about political questioning of shipping crews upon arrival at US air and maritime ports. The Wall Street Journal reveals China has threatened retaliation, potentially impacting air more than ocean.
Asia-Europe Rail Hit by Space Crunch A domino effect of capacity crunches across ocean and air makes its way to Asia-Europe rail routes, recently heralded for their efficiency in making new connections between the continents. The Loadstar reports shippers are now looking to truck transport instead.
Freight Market Update is a free service from Flexport, the modern freight forwarder. If you're not already a subscriber, we invite you to subscribe here.
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.