Market Update

Freight Market Update: November 24, 2020

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 24, 2020.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Steady
  • GRI December 1: No information yet from carriers indicating a December rate increase.
  • Capacity: Recommend advanced booking notice 21 days prior to CRD. Special consideration should be paid to shipments originating in Ningbo, as it is quickly becoming the POL hardest hit by equipment shortages.
  • Please ask your dedicated Client Solutions team about alternative equipment solutions offered on select lanes.

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI November 15: Implemented
  • GRI December 1: Will be implemented
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Significant Peak Season Surcharge increase effective December 1.
  • Port Congestion Surcharge for Felixstowe & Southampton effective November 1.
  • Notes: Very strong market and severe equipment shortage expected to last through CNY 2021. All carriers will apply a big December rate increase. Important to be flexible on equipment substitution (40’ST, 40’NOR and 20’DC instead of 40’HC). Urgent shipments should be booked on premium as necessary. Widespread restrictions for UK cargo due to port congestion and haulage limitations. Expect delays and operational issues. Some carriers have stopped booking acceptance for the UK.
  • Turn here for further details on FEWB.

Europe → North America (Transatlantic Westbound)

  • Rates: North Europe: Steady; Mediterranean: Increased
  • GRI December 1: Likely Implemented ex-Turkey origins
  • GRI December 15: Likely Implemented ex-North Europe origins
  • Capacity: Recommend advanced booking notice 21 days prior to CRD
  • Notes: Strong market expected to persist for December with no sign of downtime after Christmas. All carriers report vessel space fully utilized with high risk of rolls expected to persist through year end. Premium options available with a number of carriers across the main ocean alliances.
  • Equipment shortages in Italy, in particular for 40/HC containers, and Turkey. Ongoing congestion at US and Canada West Coast ports; please consider alternative routes (e.g. inland move via the East Coast). Anticipate delays in picking-up containers at New York, Charleston, Savannah terminals as well as major rail facilities in the Chicago, Cleveland, Columbus, Louisville, Nashville and Atlanta areas due to congestion, chassis shortages and reduced trucking capacity.
  • Capacity development: due to the holiday closures over Christmas and New Year, several blank sailings for December are announced:
  • W50: AL4 by THE Alliance (-12% weekly space capacity)
  • W52: TA5 by 2M Alliance (-10%)
  • W53: AL1/AL4/AT2 by THE Alliance (-22%)
  • W1: AT1by THE Alliance (-10%)

India → North America

  • Rates: Steady
  • GRI December 1: No information yet from carriers indicating if rates will increase in December.
  • Capacity: Will be tight as many factories are coming back online after Diwalii celebrations.
  • Equipment: Continues to be an issue—please make bookings in advance so we can plan for container availability at your local ICD/wet port.
  • Cyclone Nivar is expected to hit India on Nov 23-25. This will affect Chennai & Tuticorin ocean ports, causing severe delays.

North America → Asia

  • Peak season continues unabated as demand holds steady and remains constrained. Shippers increasingly indicate that current demand patterns will remain in place through the holiday period until CNY.
  • Rates in many SE Asian origins continue to increase and are now consistently over North America and slightly less than Europe.
  • Vaccine peripherals like syringes and testing kits continue to ship in very large volumes, both as part of Operation Warp Speed and independently of it. Significant volumes expected to persist as multiple vaccines are readied for deployment. Greater China is the source of most vaccine peripherals.

North America → Europe

  • Rates: Steady
  • GRI December 1: None
  • 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.
  • UK ports are heavily congested. Carriers are implementing ad-hoc port omissions and discharging containers at North Europe ports causing delays to arrival times.

Air Freight Market Update


Asia

  • Peak season continues unabated as demand holds steady and remains constrained. Shippers increasingly indicate that current demand patterns will remain in place through the holiday period until CNY.
  • Rates in many SE Asian origins continue to increase and are now consistently over North America and slightly less than Europe.
  • Vaccine peripherals like syringes and testing kits continue to ship in very large volumes, both as part of Operation Warp Speed and independently of it. Significant volumes expected to persist as multiple vaccines are readied for deployment. Greater China is the source of most vaccine peripherals.

Europe

Situation in EU similar to previous weeks:

  • Tight capacity on the TAWB with rates remaining at elevated levels ex EU to the U.S. West Coast, ATL & ORD.
  • FEWB capacity remains tight and rates further increased on the trade compared to prior week.
  • Some delays are reported at terminals in the E.U. due to increased throughput for imports.

Americas

  • Airline terminals are experiencing significant congestion. Ground delays for loose freight should be expected.
  • Many terminals are also experiencing Covid outbreaks, worsening an already challenging operational environment.
  • Few cancellations of flights ex ORD and LAX on the TPEB during the Thanksgiving Holiday weekend. Normal schedules expected to resume the week after.

Factory Output News

Vietnam has achieved a positive growth rate since Oct 2020. Production for export has recovered, especially for factories in the leather, shoes and garment industry. Export value in Oct reached 26.7 billion USD (increased 9.9% vs 2019), YTD Oct value is 229.27 billion USD (increased 4.7% vs 2019). [source]

  • Mobile phone and electronic spare parts are the top export commodity contributing 18.3% of overall export value. The U.S. remains the largest export market for Vietnam in Oct with 24% growth vs 2019, following top trade lanes are China (growth at 14%) and EU (decrease 3%). [source]

In Malaysia, over 90% of Top Glove factories were shut after 1,889 workers (of 5,794 screened) tested positive for COVID. [source]

The Philippines will begin rebuilding after two deadly typhoons. The storms killed 73 people and affected nearly four million others. [source]

The Singapore-Hong Kong air-travel bubble sees a 2-week delay to implementation after COVID-19 cases spike in Hong Kong. [source]

Taiwan makes a COVID test mandatory for visitors, among many other new rules instituted as the country tightens its laws. [source]

South Korea’s major companies are taking preventative measures to minimize business risk due to COVID-19. [source]

Cyclone Nivar is expected to hit India’s Chennai region between November 23rd to 25th, impacting sea and airport operations. [source]

Updates from Flexport's Customs & Compliance Team


Talks for Canada-United Kingdom Trade Continuity Agreement Conclude Successfully

On November 21, 2020, Global Affairs Canada announced the successful conclusion of talks for the Canada-United Kingdom Trade Continuity Agreement (Canada-UK TCA)—an interim deal that will be in place as Canada and the United Kingdom work towards negotiating a comprehensive free trade agreement. The new agreement will provide continued access to the benefits of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) on a bilateral basis, including the elimination of tariffs on 98% of Canadian products exported to the United Kingdom. The agreement assures a continued competitive edge for Canadian exporters and businesses that will maintain preferential access to the United Kingdom market, even as the country exits the EU.

ITC Publishes Recommended Modifications to Harmonized Tariff Schedule

On November 17, 2020, the US International Trade Commission (ITC) published in the Federal Register a notice of proposed recommendations and solicitation of public comments on Investigation No. 1205-13, Recommended Modifications in the Harmonized Tariff Schedule. The proposed recommendations represent modifications in the HTS intended to conform with the World Customs Organization (WCO) amendments to the Harmonized System nomenclature, scheduled to enter into force on January 1, 2022. The ITC posted a copy of the WCO amendments.

Antidumping Investigation into Imported Polyester Textured Yarn from Several Countries

On November 23, 2020, the DOC published a notice of an antidumping investigation covering polyester textured yarn from Indonesia, Malaysia, Thailand, and Vietnam. The yarn is typically classified under subheadings 5402.33.3000 and 5402.33.6000 of the Harmonized Tariff Schedule of the United States (HTSUS). Under the current timeline, antidumping duties could be imposed on or around April 6, 2021.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • European consumer confidence falls in the UK and the euro zone as November confidence estimates hit 6-month lows amid worsened pandemic conditions.
  • The World Trade Organization sees an uptick in goods trade. Its Goods Trade Barometer rose to a neutral level in November, after a contractionary reading in August. Of the subcomponents, “export orders” was the strongest component and “air freight” the weakest.
  • Record global debt defines a forecast by the Institute of International Finance, as predictions of $277 trillion by year’s end pose a challenge for later deleveraging.

Freight Market News


FMC Investigates Container Shortage With the container crisis deepening in the US Midwest, the Federal Maritime Commission plans to investigate ocean carrier actions. The Wall Street Journal reports that agricultural shippers can’t access boxes, because carriers are returning them to Asia empty, rather than waiting to load them with exports.

IMO Questions Decarbonization Fund The World Shipping Council and other groups have proposed the creation of a $5 billion fund to speed research and development of decarbonization solutions. The Journal of Commerce notes the International Maritime Organization tabled approval of a compulsory contribution based on marine-fuel consumption.

Chassis Case Claims Overcharging Transport Topics reports a conference of the American Trucking Associations is suing the Ocean Carriers Equipment Management Association, alleging inflated intermodal chassis prices at ports across the US.


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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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