Market Update

Freight Market Update: December 15, 2020

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of December 15, 2020.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Through the end of the year, rates have increased slightly due to continuing equipment imbalance issues in Asia.
  • Due to planned carrier stoppages of feeder ports in South China, new bookings from South China feeder ports will be halted / not accepted. South China base port locations will remain in operation.
  • Capacity: Recommended advanced booking notice remains 21 days prior to CRD. Ningbo, Southeast Asia and Busan are among POLs with greatest equipment shortages.
  • Equipment and space-release issues continue to push out planned departure: flag urgent cargo as early as possible to your CS team so they can present the best options available.

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI December 1: Implemented
  • GRI December 15: Implemented
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Rates have increased significantly during December and will continue to do so in January in the lead up to CNY. There will be severe equipment shortages through CNY and equipment substitution is advised where relevant. Urgent shipments should be booked on premium directly, as even premium offerings have become more limited. There are widespread restrictions for UK cargo due to port congestion and haulage limitations and there will be further delays and port omissions. Service from feeder outports in East and South China has been suspended until further notice and shipments should be diverted to main ports.

Europe → North America (Transatlantic Westbound)

  • Rates: North Europe: Increased; Mediterranean: Steady
  • GRI December 15: Implemented ex-North Europe origins
  • GRI January 1: Likely Implemented (North Europe and Med)
  • Capacity: Recommend advanced booking notice 21 days prior to CRD.
  • Notes: Premium options remain available for booking placed at shorter notice. The strong market is 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. Expect significant rate increase in Q1.
  • Equipment shortages in Germany, Italy, Spain and Portugal in particular for 40 dry and Reefer containers. Ongoing severe EQ shortages in Turkey.
  • Port congestion: Rotterdam and Hamburg heavily congested. Some terminals are not accepting export containers for gate-in ahead of CY cutoff.
  • Capacity development: New blank sailings announced by THE Alliance in week 1 (ATA service) due to expected downfall in demand over the Christmas and New Year holidays.
  • Turn here for further details on TAWB.

India → North America

  • Rates: Steady
  • GRI December 15: Rates extended with most carriers
  • GRI January 1: Likely implemented
  • Capacity: Tight due to limited equipment and feeder port omissions
  • Equipment: Continues to be an issue—please make bookings in advance so we can plan for container availability at your local ICD/wet port. Equipment is especially limited in South India ports.
  • Colombo congestion continues to impact the ISC feeder network. Carriers are continuing to redirect cargo to other transshipment ports such as Mundra or Port Klang.

North America → Asia

  • GRI December 15: Increased
  • GRI January 1 : Likely implemented for certain commodity segments.
  • 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.
  • Port of LA situation remains very fluid. Vessel schedule integrity is completely off which has led to vessel-bunching and smaller windows for vessel operations once imports are discharged from vessels.
  • Pearl River barge service to be closed for January to avoid arrivals during the Chinese New Year. In response, all major carriers have ceased export bookings effective immediately.

North America → Europe

  • Rates: Steady
  • GRI January 1: Carriers announcing Congestion Surcharges as high as $150 per TEU 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 port congestion which initially centered around Felixstowe is now affecting the ports of Southampton and London Gateway. There are extensive delays both in cargo arrival times at the port and container movement on the ground moving in and out of the ocean terminals.

Air Freight Market Update


Europe

  • Automotive/Manufacturing Industry Verticals keep having strong output out of Europe, driving air freight rates ex central Europe and the U.K. higher. Vaccine shipments ex Europe to the U.S. are being conducted, but since output is still fairly low, the impact will be limited.

Americas

  • Airline terminals in LAX continue to deal with an operationally challenging environment, due to high cargo volumes and labor shortages caused by COVID. ORD/JFK/ATL/MIA are facing similar high influx of cargo activity, but do not report labor shortages as severe as LAX.
  • Carrier offerings stay stable and outbound capacity to Asia, LATAM and Europe are readily available. The reported cancellations of some rotations into LAX from certain asian carriers have not yet negatively impacted the market’s capacity.

Factory Output News

Germany anticipates that hard lockdowns may trigger double-dip recession. Strict new curbs could take 4 percentage points off the country's daily growth rate, a leading economist warns. [Source]

Business reacts to a lack of clarity on UK-EU trade terms. Companies cite uncertainty as an issue as retailers caution the public against stockpiling food. [Source]

U.S. manufacturing output surpassed expectations in November, helped by motor vehicle production, increasing 0.8% last month after larger gains of 1.1% in October, the Federal Reserve said. Factory production is still 3.8% below its pre-pandemic level. [Source]

China Container freight rate from Asia to Europe soared to 10-Year high. The average spot market of a 20- foot box from Asia to Europe this week is $2,091, surpassing the high mark in May 2010 which was $2,000. The rate has more than doubled from $1,029 in Aug, 2020. Experts expect that this upward momentum will be sustained into Jan 2021. [Source]

Vietnam makes clear its commitment to cutting import tariffs under a series of free trade agreements (FTAs) [source]

Updates from Flexport's Customs & Compliance Team

Joe Biden Selects Katherine Tai to be Next U.S. Trade Representative

On December 10th, President-Elect Joe Biden announced he’s selecting House Ways and Means Committee Chief Trade Counsel Katherine Tai as the next U.S. trade representative, saying that her experience will “harness the power of our trading relationships to help the U.S. dig out of the COVID-induced economic crisis and pursue the President-Elect’s vision of a pro-American-worker trade strategy.”

Commerce Revises Section 232 Steel & Aluminum Tariff Exclusions Process

In an interim final rule published December 14th, the U.S. Department of Commerce announced it is revising the Section 232 exclusion process by creating General Approved Exclusions (GAEs) that may be used by any importers to increase efficiency in the exclusion process. Commerce is also introducing certification requirements to the exclusion process to deter importers from applying for exclusions on products they do not import.

Bipartisan Letter Urges USTR to Renew All Section 301 Exclusions

On December 11th, 75 House members led by Rep. Jackie Walorski, R-Ind., Rep. Collin Peterson, D-Minn., Rep. Ron Kind, D-Wis., and Rep. Darin LaHood, R-Ill. sent a letter to current U.S. Trade Representative Robert Lighthizer urging him to extend all active Section 301 China tariff exclusions. In it, they cite the necessity of lower tariffs for maximizing U.S. supply of Personal Protective Equipment (PPE) and for allowing small businesses to save jobs in a time of uncertainty.

Proposal to End de Minimis Exemption for Section 301 on Treasury Department Regulatory Agenda

The U.S. Treasury Department fall 2020 regulatory agenda for CBP mentions a proposal to end the de minimis exemption for goods subject to Section 301 tariffs. Removal of de minimis—allowing for imported shipments of merchandise not exceeding $800 in value to be entered without the payment of duties and import taxes—from exemption from 301 tariffs could have a significant impact on the e-commerce economy.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • US prices tick up as the main consumer price index (CPI) rose 0.2% in November and was up 1.2% over the past year. Another measure, excluding volatile food and energy, was up 1.6% over 12 months. Both figures are below the Federal Reserve’s target of 2%.
    • Chinese CPI fell 0.5% over the year to November, but was heavily influenced by lower food prices.
  • US consumer sentiment measures show mixed results. One survey for Morning Consult (Dec. 8) showed a small decline, while the University of Michigan measure (Dec. 9) showed a small increase. The Michigan survey’s chief economist attributed the rise to a more favorable long-term outlook along with partisan reactions to the presidential election.

Freight Market News


Pharma-Equipped Trucks Deliver First Vaccines The first trucks carrying the Covid-19 vaccine are now traversing the nation, spotlighting a tight network of trucking companies and drivers that can provide the temperature-validated services the vaccine requires to remain stable. The Wall Street Journal reports an average of 53 trucks per month will be needed to meet current vaccine distribution goals with that figure rising if additional vaccines are approved.

Container Crash Racks up Losses The 14,000-TEU ONE Apus collided with severe weather off the coast of Hawaii, losing more than 1800 containers overboard and suffering the collapse of remaining container stacks. The Loadstar reports the final value of cargo losses could reach more than $200 million.

Ships Could Circumvent ETS Costs A European Union deal to cut greenhouse gas emissions by 55 percent by 2030 may hinge on how the EU imposes its Emissions Trading System. The Maritime Executive points out that some vessel operators may make stops in nearby non-EU nations, like Morocco, to shorten overseas voyages that incur additional costs based on length.


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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.

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