Market Update

Freight Market Update: March 16, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of March, 16 2021.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Lowered.
  • GRI Mar 15: None.
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Opportunities are opening as the end of the 2020 contract season meets the start of the 2021 contract season. Space from Greater China to / via PSW still remains open at FAK rate levels. The U.S. East Coast still remains tight, with carriers prioritizing premium. Southeast Asia, North China, and Taiwan remain similarly difficult, as equipment shortages remain.

Asia → Europe (Far East Westbound)

  • Rates: Extended (mostly extended until end of March with some slight reductions)
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: FAK rates have decreased somewhat in the market but remain at a high and stable level. Market outlook for Q2 is positive in terms of demand. Post CNY the volume has now recovered from week 11 onwards. Equipment shortage remains a challenge in the coming weeks. We have possibilities to take on more FAK cargo at FAK-rate levels. Some carriers are also accepting limited UK cargo again.

India → North America

  • Rates: Increased
  • GRI March 15: Implemented
  • GRI April 1: Pending
  • Capacity: Space is extremely full and rolling to USWC and USEC. Transhipment delays continue to persist due to congestion and high volumes on TPEB trade. Suggested booking 15-20 days in advance.
  • Equipment: Inventory shortages at Mundra, New Delhi, and Bangalore in particular.

North America → Asia

  • Rates: Increasing
  • GRI April 1—Multiple carriers have announced another GRI for the start of next month.
  • Capacity: Recommend advanced booking notice 10-14 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.
  • Vessel congestion remains severe at both US coasts continuously moving vessel cut-off dates and earliest return dates in the network.

North America → Europe

  • Rates: Steady
  • Port congestion along the US East Coast and in North Europe impacts vessel-schedule integrity for all services, causing capacity to be lost week to week as ships try to make up time. We urge booking sooner to help ensure coverage.
  • Capacity: Recommend advanced booking notice 10–14 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

  • The export market from China continued to show signs of strength heading into the end-of-the-quarter peak period. Rates have jumped between China and US Midwest and East Coast destinations. Rates to US Wc are lower. FEWB capacity remains tight and rates are holding.
  • SE Asian and TPE markets continue to be very tight with rates inching higher as demand grows.

Europe

  • European Export demand continues to show a lot of strength to the Americas and Asia. Rates are spiking and show levels which are 2x from prior months. Carriers are reporting booking backlogs of up to 10 days before cargo moves out on planes, unless express-level rates are paid to expedite cargo. This capacity-demand imbalance will likely test shippers’ patience going into April.

Americas

  • The US Export market remains strong to Europe, LATAM and Asia. Demand outpaces capacity in all markets but booking-backlogs of 7-10 days are reported to Asia and Europe. With the continued lack of belly capacity likely to remain we expect to see these conditions into April.
  • Ground handling in several US cities continues to face severe backlogs. The worst situation is in ORD where ground handlers have yet to recover from recent snowstorms and an ongoing deluge of import freight.

Factory Output News

Vietnam E-commerce/Digital-based businesses provided by overseas suppliers without an entity in Vietnam to be subject to tax regulations. Ecommerce revenue is estimated to account for 5.5% of total retail sales of goods and services in VN. [Source]

Cambodia, with the support of Japan International Cooperation Agency (JICA), is working to develop its workforce to meet growing market demand. [Source]

Malaysia The Johor govt in a bid to reopen their border with Singapore by May or June, aims to vaccinate over 100,000 Malaysians who hold jobs in Singapore. [Source]

Indonesia Sinabung volcano erupted on Thursday. An alert is maintained at the second highest level as authorities monitor the situation closely. No casualties were reported. [Source]

Philippines Local COVID-19 variant case from Brazil confirmed in the Southeast Asian nation. [Source]

Updates from Flexport's Customs & Compliance Team

CBP Publishes Fact Sheet on WRO Modification/Revocation

On March 8th, Customs & Border Protection (CBP) published a fact sheet outlining the Withhold & Release Order (WRO) modification and revocation processes. The fact sheet asks petitioners against the WRO “to provide certain information for modification/revocation requests, and emphasizes the need for evidence demonstrating that all identified ILO (International Labour Organization) indicators of forced labor are remediated.” If CBP determines all 11 ILO indicators have been remediated by the foreign entity subject to the WRO, the WRO will be lifted. Most notably, CBP issued two WROs on cotton and tomato products produced using forced labor in the Xinjiang Uyghur Autonomous Region.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • US prices rise, compared to 12 months before. Consumer prices (CPI) were up 1.7%, while producer prices (PPI) rose 2.8%. Higher energy prices helped drive the numbers.
  • US jobless claims stay high. Despite other signs of recovery, initial claims for unemployment benefits are only decreasing very gradually. The most recent initial claims were 712K, still above the pre-Covid record of 695K. Overall insured unemployment was 4.14M, compared to 1.78M just before the pandemic shock.
  • China GDP swings wildly. In year-over-year official data, the current strong recovery in January-February 2021 is compared with the sharp downturn a year ago. Industrial production was up 35.1% and retail sales up 33.8%.
  • Taiwan exports grow in February, for the eighth straight month. Shipments were up 9.7% for the month, led by electronics and semiconductors.
  • UK trade plunges. Official numbers for January show imports down by 21.6% and exports down by 19.3%. In each case, the drop was the largest since the current set of statistics began in 1997. The drops were also both led by decreases in trade with the EU, with imports down 28.8% and exports 40.7%.

Freight Market News


Container Availability Falters Again Just as container imbalances began to resolve, availability gains are quickly disintegrating due to US West Coast port congestion and the return of sailings blanked after Chinese New Year. The Loadstar reports pre-Covid container turnaround on Asia-North Europe trade was about 65 days; now, it’s 100 days.

Oil Rebound Sinks Tanker Rates A rebound in oil demand is impacting VLCC rates with prices dropping from historic highs in March 2020 to historic lows in March 2021. The Wall Street Journal reports the supertankers were in high demand as storage last year, but the outlook is still somewhat rosy as new emissions rules will remove older tankers from the market.

Rail Service Growth Explodes China-Europe rail services are expanding rapidly with multiple forwarders creating new connections, services, and routes over the past 6 months. The Journal of Commerce reports 2020 growth was up 50% YOY and current growth is a result of breakneck ocean and air demand spilling over and pressuring rail capacity, even as it increases.


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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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