Freight Market Update: June 10, 2020
Ocean and air freight rates and trends; customs and trade industry news plus COVID-19 impacts for the week of June 10, 2020.
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Ocean Freight Market Update
Air Freight Market Update
Freight Market News
Blank Sailings Drift Into Peak Season As the traditional maritime peak season approaches, a 6-week period of stability ended in a week-over-week increase in blank sailings, with more planned for Q3. Supply Chain Dive notes the blankings, a capacity management technique to keep rates up as demand is down, could indicate there will be no actual peak season this year.
China-Europe Rail Transport Advances Between the rise of blank sailings and the continuous volatility of airfreight, rail transport is chugging through Russia, connecting China and Europe along a new Silk Road, according to The Loadstar. Services are increasing on existing routes, while new routes connect additional cities.
Meanwhile, this week, Flexport Chief Economist Dr. Phil Levy noted the following economic highlights:
- 2.5 million new US jobs in May stunned analysts, whose median forecast had been for 7.25 million jobs lost. The number reports the situation as of mid-May and accompanied a reported unemployment rate of 13.3%, down from 14.7% in April. Both unemployment numbers are worse than the worst of the Global Financial Crisis in the United States, and the Bureau of Labor Statistics reported that the real unemployment rate is several percentage points higher.
- For more on the economic implications of the May jobs rebound, see here.
- This past week, initial unemployment claims came in at 1.88 million, the first time since the week of March 14 that claims came in under 2 million. That means there have been millions of new unemployment claims since the data for the May jobs report were collected.
- Trade contracted sharply in April as US exports of goods and services fell 20.5% from March, while imports fell 13.7%. Both monthly decreases were the largest on record. April goods imports of $167.4b were the lowest since November 2010. April goods exports of $95.5b were the lowest since Sept. 2009.
- Chinese exports fell both to the United States (11%) and Europe (1%), over the first five months of the year. China’s overall exports rose just 1.4% year-over-year in May. China’s trade surplus expanded.
- Germany’s 2020 GDP growth forecast was revised downwards by government advisers to a 6-7% contraction, while Japan’s GDP appears to have shrunk less than first estimated for Q1 (2.2% vs. an initial 3.4%).
Customs and Trade Updates
USTR Initiates Section 301 Investigation on Digital Services Taxes The USTR issued a notice that they have initiated a Section 301 investigation on Digital Service Taxes (DST) for the following countries; Austria, Brazil, Czech Republic, European Union, India, Indonesia, Italy, Spain, United Kingdom, and Turkey. Over the last few years, DST's have grown in popularity as a way for foreign companies to target and tax revenue of large US tech companies. Comments from the trade community are being accepted until July 15, 2020.
BIS Issues Rule Changes Restricting Exports to China The Bureau of Industry and Security issued a final rule effective June 29 amending current Export Administration Regulations affecting China, Russia, and Venezuela. The change expands military end-use and military end-user restrictions with license requirements and additional controls. It also will eliminate the license exception (CIV) Civil End-Users and (NS) National Security for the three countries.
Section 301 List 4 Exclusions Granted The USTR released a new list of exclusions to the fourth tranche of Section 301 tariffs on goods from China. The exclusions cover two full 10-digit tariffs and 32 additional items with specific product descriptions. The exclusions apply retroactively from September 1, 2019 and will remain in effect until September 1, 2020.
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.