Market Update

Freight Market Update: May 18, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of May 18, 2021.

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In “A Jump in Customs Enforcement Shows Data Can Create or Limit Risk,” Flexport’s VP of Customs and Trade Advisory shows why—as CBP enforcement rises—you should transmit and store data to withstand greater scrutiny. Read more.

Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • TPEB Market is Red Hot: The market keeps intensifying as the capacity crunch continues across all TPEB lanes. Southeast Asia and North China remain riddled with equipment shortages and mounting backlogs of bookings left without equipment. Bookings out of China Base ports have surged in the last week as more shippers choose to move volume to where there’s equipmentment. As demand continues to far outpace supply, there’s no slow down in sight.
  • Rates: 2H May GRI implemented
  • Space: Extremely tight
  • Capacity / Equipment: Extreme shortages

Asia → Europe (Far East Westbound)

  • Extremely Serious Space Crunch and equipment shortage across the entire FEWB trade caused by high demand, too many blank sailings / reduced capacity, and insufficient equipment repositioning following schedule delays. Carriers are building up backlog, restricting new booking acceptances, and rolling more cargo—trends expected to intensify through May and June.
  • Rates: Increased
  • GRI May 15: Rate increases by all carriers
  • Capacity: Recommend advance booking notice 3 or more weeks prior to CRD.

Europe → North America (TAWB)

  • Rates: Increasing, including Premium service fees for guaranteed equipment & space.
  • GRI May 15: Implemented
  • Capacity: Fewer blank sailings but port rotations and port omissions continue to affect capacity out of Europe due to port congestion. Recommend advanced booking notice at least 5 weeks prior to CRD to secure space. Use Premium products for urgent cargo needing higher reliability.
  • Equipment supply is extremely tight across Europe as port congestion and lower vessel capacity hinder empty-container repositioning, particularly at inland depots. Allow for flexibility in routing and empty pick up from the port.
  • 3 blank sailings on the EMA service in May and June will restrict capacity from East and West Med to USEC in week 20, 23, 26.

Asia → Europe (Far East Westbound)

  • Rates: Increasing, including Premium service fees for guaranteed equipment & space.
  • GRI May 15: Implemented
  • Capacity: Fewer blank sailings but port rotations and port omissions ,due to port congestion, continue to affect capacity out of Europe. Recommend advanced booking notice at least 5 weeks prior to CRD to secure space. Use Premium products for urgent cargo needing higher reliability.
  • Equipment supply is extremely tight across Europe as port congestion and lower vessel capacity hinder empty-container repositioning, particularly at inland depots. Allow for flexibility in routing and empty pick up from the port.
  • 3 blank sailings on the EMA service in May and June will restrict capacity from East and West Med to USEC in week 20, 23, 26.

India → North America

  • GRI May 15: Implemented
  • Capacity: Blank sailings due to schedule reliability/congestion continue to affect capacity out of the ISC region. Recent news of Cyclone Tauktae will impact container operations in Western India at ports such as Nhava Sheva and Mundra. Delays are expected and blank sailings / port omissions could be used by the carriers to mitigate these delays. Demand is outweighing capacity, similarly to tradelanes like TPEB, which ISC relies on for shipments to the USWC. Suggested booking remains at 15-20+ days prior to Cargo Ready Date (CRD).
  • Equipment: Carriers indicate the ISC region is and will remain a priority for repositioning of empty equipment. India in particular is importing significantly less than 2019 numbers (2020 data not used, due to Covid lockdown) while exporting much more. This difference in imports vs exports deepens the equipment shortage.
  • Notes: Recommending booking urgent cargo on Premium no-roll services. Expect delays in response time from suppliers and other stakeholders in the region as workers continue to transition back to work from home. Social distance/headcount restrictions on a state level are affecting manufacturers and logistics providers in some regions. For region-level covid impact updates please reach out to your Customer Service team.

North America → Asia

  • Rates: Increasing
  • Reefer Container rate increases for June are likely to be implemented by multiple ocean carriers.
  • Capacity: Recommend advanced booking notice 14-21 days prior to CRD at Port.
  • Capacity: Recommend advanced booking notice 14-21 days prior to CRD at Rail Ramp.
  • Capacity availability from the Port of LA to all Asia destinations remains tight due to voided sailings. Recommend at least 3 weeks lead time on new bookings.
  • Chassis availability is tight at most major ports and rail ramps. Recommend more lead time for truckers to procure chassis.
  • Severe vessel congestion at both US coasts continues to move vessel cut-off dates and earliest return dates.

North America → Europe

  • Rates: Steady—Only one carrier has announced a small GRI for June 1.
  • Port congestion along the US East Coast and in North Europe impacts vessel-schedule integrity for all services, causing capacity loss week to week as ships make up time. We urge booking sooner to help ensure coverage with alternate carriers as necessary.
  • The limited capacity for all-water service from the US West Coast to Europe has grown increasingly tight. Would strongly suggest placing bookings with at least 3-weeks lead time.
  • Capacity: Recommend advanced booking notice 14-21+ days prior to CRD at port.
  • Capacity: Recommend advanced booking notice 14-21+ 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

  • Asia export stays at super-peak levels with rates in some origins like TPE and BKK approaching the levels only seen in May 2020 during the height of the PPE frenzy. With demand outstripping capacity, flights are full across the board until middle of May at the earliest.
  • Current market conditions expected to continue through June based on large amount of cargo in pipeline.
  • Further impacting capacity are positive Covid tests from China Airlines flight crews. Nine crew so far have tested positive without the government yet tightening.

Europe

  • European export demand stays strong to the Americas and Asia. Space to the U.S. West Coast remains constrained. No meaningful capacity into North America was added over the past week. Space to Asia remains very well utilized, especially to China and Japan.
  • Space to India and Bangladesh is very constrained, due to aid and relief shipments into the COVID-struck region.
  • Major airport hubs, as well as secondary airports in Europe are reporting normal throughput for air imports and air exports.

Americas

  • Export capacity remains well utilized due to continued lack of belly capacity. It can take 2-5 days from booking to uplift into key European destinations. Capacity from West Coast gateways is the most constrained to Europe, while the Midwest and East Coast are manageable. Capacity from the West Coast to Asia is filling quickly with dry cargo and perishables.
  • Space to India and Bangladesh is very constrained, due to aid and relief shipments into the COVID-struck region - currently space is booked out until early June to India
  • US and European carriers have not added meaningful capacity on their transatlantic routes as they wait for details of the newly proposed E.U. travel regulations for summer.
  • Majority of carriers have cancelled their operations into Tel Aviv for the time being.
  • With a high number of freighter flights from Asia and Europe, LAX and ORD ground handlers facing backlogs have started to use off-airport facilities to manage the flood of cargo. Ground handlers are reportedly 3-6 days behind in breaking down freight from arriving flights.
  • Trucking remains scarce for airport recoveries and local deliveries, especially on the US West Coast.
  • Perishable season kicked off with high expectations for US fruit and vegetable exports. Cherry season started with high demand from Asia. Rates off the WC to Asia go up rather significantly and space is constrained but manageable during a busy perishable season.

Updates from Flexport's Customs & Compliance Team

USTR Sheds Light on Timeline for Section 301 Review

Last Wednesday, US Trade Representative Katherine (USTR) Tai acknowledged that her agency will complete a review of trade policy with China well before December 2021. Her revelation gives the trade community a clearer picture on when the USTR might reintroduce Section 301 exclusions and lessen the Section 301 tariff’s impact.

CBP Increases Forced Labor Enforcement

On May 12 in Kansas City, Missouri, CBP seized 4.68 million nitrile disposable gloves worth US$690,000 manufactured by Top Glove Corp., reinforcing CBP’s determination to use a broader set of enforcement powers to prohibit goods made with forced labor from entering the US. This seizure follows a similar action in the Port of Cleveland in May.

CBP Reinforces Strict Burden of Proof for Forced Labor

Sending a strong message to the trade community, CBP determined in a May 10 ruling that Uniqlo was unsuccessful in meeting CBP’s high level of scrutiny to disprove the presence of cotton harvested with forced labor in Uniqlo’s products.


Factory Output News

Vietnam reports a trade deficit of $1.22bn in April [Source]

Cambodia Blanket lockdown in Phnom Penh ends. ‘Red zones’ with a high number of cases will continue to be in lockdown, citizens banned from leaving their homes. [Source]

Thailand Record high of 9635 new cases reported today, 6835 of which are from prison clusters. Brings total tally to 111,082 cases in the country. [Source]

Malaysia Government strongly urged citizens to adhere to safe management regulation to minimize any further drastic increase in the number of cases. [Source]

Singapore Phase 2 (Heightened Alert) has taken effect due to the rising number of cases. Some measures include reduced gathering size, work-from-home as default and dining-in to cease. [Source]

Indonesia Magnitude 6.6 earthquake occurred on northwest Sumatra last Friday, no damage reported [Source]

India Cyclone TAUKTAE will be hitting Western India between 16th May to 18th May 2021. There may be delayed responses from shippers in this region (Mumbai / Pune / Ahmedabad) during this period as they anticipate internet service disruption [Source]

Italy to end quarantine for as of May 16th from other EU countries, the Schengen area, Great Britain and Israel if they have tested negative for COVID-19. [Source]

Freight Market News


Container Rates Still Have Room to Climb With year-over-year spot container rates up by triple digits, the market may still have plenty of room to run—and regulators can’t really intervene, according to FreightWaves. Federal Maritime Commission (FMC) Chairman Daniel Maffei clarified that high freight prices as a result of market forces are out of the agency’s purview. For now, rates are likely to cap only when they overwhelm profit margins for cargo owners.

The Suez Canal Will Be Widened The Suez Canal Authority plans to widen and deepen the Suez Canal to prevent another accident like the Ever Given blockage. According to Business Insider, the expansion will take around two years and increase an 18.6-mile stretch of the Canal by about 131 feet wide and 32 feet deep.

Read More: Tugs and Tides Free Ever Given, but Cargo Delays Are Just Getting Started

Rail Strategies Come Under Scrutiny Congress has asked the Government Accountability Office (GAO) to conduct a study of the impact of precision scheduled railroading (PSR). The request identifies ten specific metrics, including service reliability and demurrage fees. Supply Chain Dive reports various shippers testified about the negative impacts of PSR strategies in 2017.

Economic highlights from Flexport Chief Economist Dr. Phil Levy

Chinese Producer Inflation Is Up

Producer prices in April rose 6.8% from a year earlier, the fastest rate in over 3 years. Consumer prices were up a more modest 0.9%.

US Retail Sales Flat

After a revised 10.7% jump in March, seasonally-adjusted April figures were unchanged on the month. The biggest monthly increases were in food service (3.0%) and autos (2.9%). The biggest monthly decreases were clothing (down 5.1%) and general merchandise stores (down 4.9%).

US Industrial Production Rises

US industrial production is up 0.7% in April, with manufacturing up 0.4%. Industrial production was still 2.7% below its pre-pandemic level (Feb. 2020).

UK-EU Trade Rebounds in Part

March statistics showed increases in UK exports (8.6%) and imports (4.5%) with the EU from February. Still, comparing January-March 2021 with October-December 2020, UK-EU exports were down 18.1% and imports down 21.7%. For that quarterly comparison, UK exports with non-EU countries were up 0.4%, with imports down 0.9%.

Japan GDP Grows

The world’s 3rd largest economy grew at a 1.8% rate in March, but pandemic concerns prompted lower forecasts for Q2.


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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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