Market Update

Freight Market Update: November 10, 2020

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 10, 2020.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Mitigated
  • GRI November 1: Mitigated by most carriers.
  • Capacity: Recommend advanced booking notice 14 days prior to CRD.
  • Widespread equipment shortage issues persist on the TPEB trade. Demand continues to remain strong as pre-Holiday and pre-CNY cargo has begun to pick up.

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI November 1: Implemented
  • GRI November 15: Will be implemented
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Peak Season Surcharge of USD 150/TEU effective November 1
  • Port Congestion Surcharge for Felixstowe & Southampton of USD 150/TEU effective November 1
  • Notes: Market expected to be very strong through the end of November. Very severe equipment shortage may require equipment substitution (40’ST, 40’NOR and 20’DC instead of 40’HC). In the UK, the serious port congestion in Felixstowe has spread to other UK ports. Carriers are looking to reduce cargo into the UK due to slow turnaround of containers and haulage limitations. Nearly all carriers have increased UK add-ons and introduced specific PSS for UK cargo. Expect further delays and port omissions in the coming period.

Europe → North America (Transatlantic Westbound)

  • Rates: Steady
  • GRI November 1: Not implemented
  • GRI December 1: Likely implemented ex Turkey origins
  • Capacity: Recommend advanced booking notice 21 days prior to CRD
  • Notes: Strong market outlook with full vessels and cargo rolling. Equipment shortages in Italy, in particular for 40/HC containers, and Turkey. Ongoing congestion at the Ports of LA/LB. Please consider alternative routes (e.g. transshipment, inland move to US West Coast). Capacity development: No new blank sailings announced.

India → North America

  • Rates: Increased
  • GRI November 1: Initially implemented, indication that some carriers are adjusting rates while others will still implement GRI
  • GRI Nov 15: Likely to happen as Diwali is approaching mid-November
  • Capacity: Containers are rolling—please make bookings in advance and provide forecasts to Ocean Team / Dart
  • Widespread equipment shortage across India. Import and export imbalances persist, contributing to prolonged issues at origin in finding containers. ICD’s are most affected especially in Northern India. Expectations are that these issues will persist through the end of the calendar year and possibly into ISC peak season through April 2021.

North America → Asia

  • Rates: Increased
  • GRI November 15: None
  • GRI December 1: The Agri segment is seeing the most pressure with unusually high GRIs.
  • 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.
  • 40’ container shortages reported at Detroit and Minneapolis rail ramps.
  • Ocean carriers are implementing an Emergency Intermodal Surcharge for December 1 on containers moving over LA by rail that need to be trucked from the local rail ramp to the ocean terminal due to the congestion and truck-power issues.

North America → Europe

  • Rates: Steady
  • GRI November 15: None
  • GRI December 1: None
  • Capacity: Recommend advanced booking notice 7 to 10 days prior to CRD at port.
  • Capacity: Recommend advanced booking notice 10 to 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.
  • 40’ container shortages reported at Detroit and Minneapolis rail ramps.

Air Freight Market Update


Asia

  • Market continues to behave like the middle of peak season. On the TPEB, rates have been high but stable week over week. China and SE Asia running well above average. Capacity is scarce and only available at the highest price points as airlines seek to maximize their Q4 revenue.
  • With tight capacity, rates have also risen on the FEWB.
  • Peak season is expected to continue at this level up until the Holiday Season.

Europe

Situation in EU similar to previous weeks:

  • Tight capacity on the TAWB with rates remaining at high levels. EU to SFO, in particular, saw peak rates, while rates to JFK & LAX also increased.
  • FEWB is significantly under pressure and rates continue to climb on HKG-EU. But PVG-EU remains stable while at a high level.
  • Delays in transit and on the ground should be factored in when planning transit times.

Americas

  • TAEB remains balanced between demand and offered capacity with no big spikes. Load factors from LAX/ORD/JFK to central European hubs remain high. Few PAX carriers are introducing new capacity on select routes.
  • TPWB remains under pressure in terms of yield, as capacity still outpaces demand, especially to HKG/PVG/ICN.
  • LATAM trades are seeing spikes of demand. The Northbound trade has increased output of perishables and the Southbound trade has increased Exports from the U.S. and transit cargo, while still suffering from a capacity crunch.

Factory Output News

China A local COVID-19 case was confirmed in Shanghai on Monday, according to the city's epidemic prevention and control agency's press conference. The last time a local infection case was reported in the city was on March 23.[source]

South Korea begins to see growing downside risks due to resurgence in COVID cases amidst improvement in the manufacturing sector [source]

Thailand Protests focussed on the role of the monarchy, military, and constitution that began in January continued in Bangkok.[source]

Malaysia The conditional movement control order (CMCO) extended to 9 of 13 states until December 6 after record increase in new covid cases. [source]

Six Asean countries implement Asean Customs Transit System (ACTS) for land movement of goods. Goods can be transported by road under a single regime, subject to existing border measures imposed during the Covid-19 pandemic. [source]

India In a sign of the coronavirus’s economic impact, affluent Bangalore suburbs characterized as the Silicon Valley of India see far less local economic activity, according to CNBC.

Updates from Flexport's Customs & Compliance Team


EU Raises $4B Worth of Tariffs on U.S. Goods

Effective November 10th, the European Union (EU) will impose tariffs on $4B of U.S. imports into the bloc. The tariffs will include a 15% duty on imports of all Boeing models, which will make up 44% of the $4B tariff imposition. Other goods such as tobacco, food products, and agricultural machinery will have a 25% tariff levied against them.

Modification to Ruling Re-Classifies Access Points

The November 4th edition of the weekly Customs Bulletin, Vol. 54 (starting on page 4) announced Customs & Border Protection (CBP)’s decision to modify ruling N301462 pertaining to the tariff classification of certain network devices known as access points. In the original ruling letter, published November 20, 2018, Customs analysis classified access points under subheading 8517.62.0020. The modification now puts the access points under 8517.62.0090. Simultaneously with modifying the ruling, CBP is revoking any treatment previously accorded by CBP to substantially identical transactions. These changes are effective for merchandise entered or withdrawn from warehouses for consumption on or after January 3, 2021.

Antidumping Investigations into Imported Thermal Paper from Several Countries

The U.S. Department of Commerce announced in a press release published October 28th, the initiation of antidumping investigations into imported thermal paper (often used in cash registers and credit card terminals) from Germany, Japan, Korea, and Spain. The International Trade Commission (ITC) will be conducting an investigation on whether U.S. industry is materially injured by imported thermal paper from these four countries, with a preliminary decision expected by November 23.

CTPAT Defers On-Site Validations Until End of 2020

On November 6th, CBP published a letter from CTPAT director Manual A. Garza, outlining plans for the future of the Customs Trade Partnership Against Terrorism (CTPAT) program in the wake of the pandemic. CTPAT is a voluntary public-private sector partnership program where importers comply with certain supply chain security measures set by CBP in exchange for a variety of benefits including reduced numbers of CBP examinations and faster cargo inspections. In the letter, Garza announces that all on-site validations will be deferred until the end of 2020 and only resume “once conditions permit”. CTPAT will also continue to push and develop its virtual validation program.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • A strong US October jobs report showed 638K new jobs and the unemployment rate dropping to 6.9%. The employment-population ratio increased by 0.8 percentage points to 57.4%, which was still 3.7 percentage points below its February level. Long-term unemployment (more than 27 weeks) increased by 1.2m to 3.6m.
    • Initial unemployment claims remained historically high at 751K, down slightly from the week before.
  • US manufacturing grew in October, with the Institute for Supply Management index hitting a two-year high.
  • China’s exports rose sharply in October relative to a year earlier, up 11.4%. Chinese imports grew by 4.7%. In dollar terms, Chinese exports to the United States were up 22.5% over October 2019, while exports to the EU were down 7% over the same period.

Freight Market News


Vaccine Distribution Gears Up The maker of a Covid vaccine aims to distribute 100 million doses this year and 1.3 billion in 2021. While it awaits FDA approval, cold storage staging has started in the US. The Wall Street Journal reports transport, including an average of 20 flights per day and a cool box designed solely for the vaccine, will take three days from distribution center to point of use.

Asia-Europe Growth Aggravates Box Shortage As container volumes rise from Asia to Europe, new growth exacerbates an existing equipment shortage, according to the Journal of Commerce. In some cases, carriers continue to prioritize empty containers over certain goods, especially when delays due to port congestion can cause ships to miss berthing space further along the route.


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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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