Market Update

Freight Market Update: February 9, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of February 9, 2021.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Extended
  • GRI Feb 1: None.
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Rates have held steady at initial February levels, as shippers plan to get as much cargo out before Chinese New Year closures. Post-CNY Demand expected to be strong, as carriers project current volume shipped to continue at its current pace until March.
  • Read Flexport's blog for a look at the factors behind container availability, and when the shortage may subside.

Asia → Europe (Far East Westbound)

  • Rates: Extended
  • GRI February 1: Mostly extended until end of the month
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Rates remain high, but stable and are expected to stay that way until the end of February. The continuing severe equipment shortage will be a major challenge through CNY, if not through Q1. It is still necessary to be flexible on equipment substitution. There are eight CNY blank sailings announced so far (four by Ocean Alliance, three by 2M and one by The Alliance). There are widespread restrictions for UK cargo due to port congestion and haulage limitations and there will be further delays and port omissions. Shipments from feeder ports in China should be diverted to main ports instead.

Europe → North America (Transatlantic Westbound)

  • Rates: Increased
  • GRI February 1: Implemented
  • GRI February 15: Likely implemented (North Europe and Med)
  • Capacity: Recommend advanced booking notice 30 days prior to CRD.
  • Notes: We recommend requesting premium service for bookings placed at short notice. The strong market is expected to continue through the end of Q1 as carriers report full vessels up to 4 weeks ahead of ETD with no sign of demand slowing down. Expect further rate increases in March.
  • Supply remains extremely tight across Europe. There are equipment shortages of Reefer containers and 40’/HC dry, in particular in Germany, Italy, Spain and Portugal, plus severe equipment deficit in Turkey. Book as early as possible to secure empty equipment.
  • Port congestion: Benelux and Germany ports heavily impacted by snowfall and icy conditions, which disrupted terminal operations. High water levels and snow in Germany causing major delays to road, barge and train transportation.
  • Capacity development: 2 new blank sailings announced in week 7 and week 11 on the AL6 service. Expect further void sailings towards the end of March / April.

India → North America

  • Rates: Increasing
  • GRI February 1: Confirmed
  • GRI February 15: Expected
  • Capacity: Space is extremely full and rolling to USWC. Space is tight to USEC. Transhipment at SIN/CMB has 1-3 week delays.
  • Equipment: Continues to be an issue—please make bookings in advance so freight forwarders can plan for container availability at your local ICD/wet port. Consider moving 20GP instead of 40GP/HC. Recommend utilizing premium services to secure equipment faster.
  • Demand is strong and quickly increasing in February as we approach the end of the Indian fiscal year.

North America → Asia

  • Rates: Increasing
  • GRI February 15—Several rate increases announced. Exempt commodity and hay segments have GRI’s specific to their segments announced as well.
  • GRI March 1—Multiple rate increases announced, concentrated on US West Coast ports. A few carriers have also announced significant GRI’s just for reefer containers.
  • 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, causing vessel bunching and smaller windows for containers to be delivered.
  • Read Flexport's blog for a look at the factors behind container availability, and when the shortage may subside.

North America → Europe

  • Rates: Steady
  • 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.

Air Freight Market Update


Asia

  • TPEB and FEWB trade lanes exit Asia have been very busy leading into the CNY holiday. The market is expected to slow down at the end of this week as factories go into a slow production cycle.
  • Many freighter flights will be cancelled for up to 2 weeks beginning around Feb 14th as demand cools.
  • New HKG quarantine rules impacting air crews start Feb 20th, negatively impacting HKG carriers. Cathay Pacific, which is still evaluating the total impact to its long haul network, will publish its March schedule the week of February 15th.
  • Post CNY, the market should stay relatively strong due to improving global economic activity (driven by stimulus measures) and expected reduced capacity.

Europe

  • Capacity ex Europe to Asia is available, however capacity to North and South America had been affected by very high demand driven by automotive and manufacturing industries.
  • The capacity constraints have also lead to increases of underlying air freight rates to North and South America
  • Main airports in E.U. are fully operational and continue to show strong throughput numbers.

Americas

  • TPWB trade is showing very high demand into all Asia hubs and even some backlogs are reported on the West Coast and Midwest into HKG and Japan. Expect cancellations during CNY at the backend of this week through next week, with most flights being reinstated at the end of February.
  • LATAM SB has seen increased activity with backlogs of up to 2 weeks at destinations such as Chile, Brazil, Argentina as carriers remove capacity to support perishable business for Valentine’s day. Capacity to Central America remains constrained.
  • TAEB capacity is available to Continental Europe and the U.K., but aircraft are flying at very high load factors!

Factory Output News

Japan Chip shortage to keep plaguing automakers in coming months. A global semiconductor shortage has already caused auto production to decline by over 500,000 vehicles globally with a further drop of nearly 300,000 vehicles expected this year. [source]

Malaysia Restrictions eased for Chinese New Year reunion dinners just days after new curbs were announced. Active COVID-19 cases exceed 50,000. [source]

Philippines A 6.0 magnitude quake hit the southern Philippines on Feb 7. No immediate reports of casualties or damages. [source]

India Dixon Technologies boasts a market value of more than $2.5 billion and the capacity to produce about 50 million smartphones this year, showing early indication of the country’s manufacturing potential in this sector. [source]

Myanmar Tens of thousands joined the protest against the military. Police have fired water cannons against protesters in the capital Naypyidaw. [source]

Updates from Flexport's Customs & Compliance Team

Proclamation Keeps Section 232 Tariffs on UAE Aluminum

In a Presidential Proclamation published February 1st, President Joe Biden reversed a decision from the Trump administration to move from 10% tariffs to quotas on aluminum imported from the United Arab Emirates (UAE). According to the proclamation, in 2019 there was a 25% reduction in aluminum imports from the UAE and domestic aluminum production increased by 22%. President Biden says that he believes “maintaining the tariff is likely to be more effective in protecting our national security than the untested quota”. A CSMS message published February 2nd by Customs & Border Protection (CBP) confirmed that the 10% Section 232 tariff would remain in place.

Customs Advises Importers to File PSCs on Applicable AD/CVD Entries

According to a CSMS message posted by CBP on February 2nd, from October 5, 2019 to October 28, 2020 Customs’ Automated Commercial Environment (ACE) did not allow importers to file anti-dumping and countervailing duty (AD/CVD) entries with third country case numbers. Third country AD/CVD case numbers allow importers to enter merchandise that have a CBP country of origin that differs from the country of the AD/CVD order. CBP is asking importers to review their entries during this period and determine if any of the entries should have been filed with AD/CVD case numbers listed in the attachment (“download the link to your computer to open”) included at the bottom of the CSMS message. Importers should file post-summary corrections (PSCs) within 60 days of the CSMS posting date to rectify any entries with missing third-country cases.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • A tepid US jobs report shows a 49K increase in non-farm payrolls in January and a fall in the unemployment rate to 6.3%.
    • A broader measure, the employment-population ratio, held nearly constant over the last four months; it blipped up to 57.5% in January after holding at 57.4% for all of Q4. That stasis compares to a high of 61.1% in February and a low of 51.3% in April. The current level is still below its lowest in the aftermath of the global financial crisis. The flattening suggests a partial and stalled recovery.
  • US benchmark bond yields rise as the rate for the 10-year Treasury closed at 1.186%, its highest level since last March. Comparing this yield with that on inflation-protected securities shows the highest expected inflation level since 2014, at 2.21%.
  • Hard times for small businesses continue. In a Fed study of pandemic impact on businesses with fewer than 500 employees, almost 90% said business had not returned to pre-pandemic levels, and 30% said their companies might not survive without government aid. The biggest concern was weak demand (59%), but 37% expected supply chain disruptions in the next 12 months.
  • EuroZone GDP dips. Output for the area fell by 0.7% in Q4 and 6.8% for 2020 as a whole. The Q4 result reversed a surge in Q3 as the Covid pandemic worsened.

Freight Market News


Ships Reroute to Skip LA In an effort to avoid congestion-related delays, The Wall Street Journal reports some carriers are rerouting ships away from Southern California. In some instances, sailings have been cancelled, due to difficulties in moving import gateways.

At-Sea Container Losses Spike American Shipper calls attention to a World Shipping Council report that reveals the number of containers lost at sea has spiked dramatically since November 2020. In the 2-month period between Nov. 30 and Jan. 31, almost double the annual average went overboard.


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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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