Freight Market Update: June 17, 2020

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Ocean Freight Market Update

Air Freight Market Update

Freight Market News

Ocean Carrier Trends Hint at New Normal As a wave of cancellations tightens ocean freight capacity, carriers are turning away from the rebound strategies of the last global financial crisis in 2008-9 and may be leaning into higher rates in return for greater long-term stability, reports the Journal of Commerce. The trend arises on the back of major carrier consolidations over the past five years.

ITF Vows to Relieve Stranded Seafarers With some seafarers clocking a year or more at sea, due to contract extensions arising from government mandates that prohibit passage during COVID-19, the International Transport Workers’ Federation stated a strong commitment to return seafarers home. The Loadstar reports crew changes are now allowed in Hong Kong and, to a lesser extent, Singapore.

Rejected Truck Tender Rates Rise FreightWaves reveals rejected truckload tender rates are high, hovering just below a tipping point that could flip the market into spot pricing for the summer.

Meanwhile, this week, Flexport Chief Economist Dr. Phil Levy noted the following economic highlights:

• The US Fed issues a bleak outlook on the US economy. After the regularly scheduled meeting of its policy-setting committee, Chairman Powell announced that the Fed had no intention of raising interest rates anytime soon. His statement accompanied a forecast with a median prediction of a GDP drop of 6.5% in 2020, followed by 5.0% growth in 2021 and 3.5% growth in 2022.
  • Cumulatively, that means 1.6% growth across the three years. In December, before the pandemic, the Fed had forecast 5.8% growth across the same period.
  • The median forecast for the unemployment rate was 9.3% in 2020, 6.5% in 2021, and 5.5% in 2022.
• The latest data show small improvement. Across a range of releases this past week, US numbers were weak by objective standards, but showed improvement from previous releases.
  • Consumer sentiment in June rose to 78.9 from 72.3 in May.
  • Weekly unemployment claims were 1.5m vs. 1.855m the week before. Pre-COVID, the record was .695m in 1982.
  • Consumer prices fell 0.1% in May, after falling 0.8% in April. The monthly drop—a sign of weakness—was the third in a row.
• The UK suffered record contraction in April. GDP fell 20.4% during the month, with exports dropping 14.9% and imports falling 21.9%.
• China factory prices fall. Producer prices were down 3.7% year-over-year in May. That was a sharper drop than in April and more severe than analysts had forecast.

Customs and Trade Updates

Miscellaneous Tariff Bill Preliminary Report Released The International Trade Commission (ITC) has recommended 2,632 of the 3,479 petitions that were filed for inclusion in the Miscellaneous Tariff Bill. It stated 42 petitions weren't eligible as they were incomplete. For the 805 rejected petitions, the ITC requests comments be made June 12 to June 22 in the MTB portal. Chemicals accounted for 1,857 petitions. Machinery and tools accounted for 715 petitions. Textile apparel and footwear made for 581 petitions. The rest were scattered across multiple areas. Congress will have the opportunity to pass the approved MTBs in August.

APHIS Announces Greenhouse Certification Program The Animal and Plant Health Inspection Service (APHIS) recently completed a pilot to establish a new program where non-US facilities can participate in the Offshore Greenhouse Certificate Program for uprooted plants and receive expedited clearances and fewer inspections. On-site inspections of these facilities will start in November 2020.

Updated USMCA Interim Instructions Posted Customs and Border Protection (CBP) posted updated interim instructions on USMCA covering the uniform regulations. However, the new version of General Note 11 still has not been released by the ITC.

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.