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Market Update

Freight Market Update: November 9, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 9, 2021.

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Ocean Freight Market Update


Asia → North America (TPEB)

  • Post-Golden Week lull leads into pre-Chinese New Year rush as TPEB demand outlook ramps up after some softening was seen over the last several weeks. Increased demand and reduced capacity keeps rates at elevated levels, as is expected to persist into contract negotiation season, which is set to occur earlier than in previous years. Congestion at LA/LB ports, as well as Savannah, remains severe. Vessel bunching and congestion outside of origin ports is also proving to be a persistent issue, contributing to the boomerang of pile-ups and schedule reliability issues that have become the new normal.
  • Rates Some carriers look likely to implement GRIs for 2H November. Rate levels remain elevated, and premium demand outlook is strong.
  • Space Critical
  • Capacity/Equipment Critical/Severe Undercapacity
  • Recommendation Continue to book well in advance (at least 4 weeks) from CRD to target ETD for best chance of hitting timelines.

Asia → Europe (FEWB)

  • Space and equipment crunches continue as market demand consistently exceeds supply with rates very high for a long period. The overall space situation is worsened by blank sailings and poor equipment availability. Carriers are overcommitted and are limiting booking acceptance or rolling shipments. With continuous vessel delays and shifts, schedule reliability is very low. Power shortages are affecting factory production up to a certain extent and causing more changes in shipping plans.
  • Rates Rates remain at a record high level. However, they have been stable throughout October and going into November. There are some slight downward rate revisions by a few carriers.
  • Space Extremely critical space situation
  • Capacity/Equipment Severe equipment shortage across all Asia origins.
  • Recommendation Book at least 4 to 5 weeks prior to CRD. Consider premium options, which may be limited. Be flexible in regard to equipment.

Europe → North America (TAWB)

  • USWC remains heavily congested with the ports of LA and LB now implementing a dwell fee to ease yard congestion. Congestion at USEC ports is still impacting mainly vessels going to Savannah. The situation in Houston is also worsening.
  • Rates November rates are set to remain strong for both USEC and USWC. PSS increase for USWC ports announced by some carriers
  • Space Critical
  • Capacity/Equipment Capacity remains tight for both North Europe and Mediterranean services. Better equipment availability at port; shortages remain at inland depots.
  • Recommendation Book 5 or more weeks prior to CRD. Request premium service for higher reliability and no-roll guarantees.

Indian Subcontinent → North America

  • More port of discharge omissions challenge ISC->USEC bound services as carriers react to ongoing vessel berthing delays in Savannah and Charleston
  • Rates remain for 2nd half of November
  • Space remains a challenge as global congestion results in omissions and altered sailing schedules. LA/LB, Savannah, and most recently Charleston are being hit the worst with berthing delays.
  • Equipment of all types are in deficit. Carriers are replenishing equipment to main import/export ports on priority.
  • Recommendation Use premium services on urgent shipments and shipments with CRD approaching. If routing to USWC, consider rerouting to USEC. Be flexible with inland container depot (ICD) location and equipment type.

North America → Asia

  • Vessel arrivals and available capacity remain fluid for USWC POLs. USEC capacity has been more readily available; Deteriorating schedule integrity in addition to creating void sailings and delays is creating significant challenges with posted earliest return dates and vessel cut-offs at the port.
  • Rates Multiple GRIs announced by multiple carriers for dry and reefer cargoes throughout November expected to be implemented.
  • Equipment Deficits on containers and chassis are still plaguing IPI origins. Availability for standard equipment at ports has not been an issue, but any special equipment is hard to come by.
  • Recommendation Please place bookings 4 to 6 weeks in advance to secure your equipment and vessel space.

North America → Europe

  • There is available capacity on the TAEB trade with carriers looking for cargo from the US East and Gulf Coasts. US West Coast service to Europe is extremely tight due to void sailings caused by systematic delays. There are 3 TAEB services that will be omitting Savannah and calling Charleston or Jacksonville instead, due to the significant congestion issues at the port.
  • Rates to remain steady for November.
  • Equipment Deficits are still plaguing IPI origins. Availability for standard equipment at ports has not been an issue, but any special equipment is hard to come by.
  • Please place bookings 3 to 4 weeks in advance for East Coast/Gulf sailings and 6 weeks for Pacific Coast sailings.

Air Freight Market Update


Asia

  • N.China: The market is still tight and rates have increased slightly since last week. Rates are anticipated to remain at high levels through November if there are no improvements to capacity and terminal rules continue to be strict. Additionally, for FRA cargo, congestion continues to be a major pain point and worries about Germany’s Covid situation are increasing. Several airlines have canceled both inbound and outbound flights. AMS is also becoming more congested and may worsen as peak season is underway. Expect at least 5 to 7 days of dwell time at FRA and AMS terminals.
  • S. China: Capacity remains tight ex-South China as some PAX flights are still cancelled. Rates for both TPEB and FEWB lanes have increased, especially for FEWB. Some carriers have also announced flight cancellations ex-HKG/CAN. Ex-CAN airlines continue to reject large shipments or provide longer transit times of up to 3 weeks.
  • Taiwan: The market continues to be very tight and rates remain high. Some flights were canceled due to mechanical issues. Backlog and dwell times continue to increase. We recommend placing bookings at least 2 weeks out from CRD. Airlines announced slight fuel increases starting on November 16 for both TPEB and FEWB lanes.
  • SE Asia: Rates and space ex-BKK remain similar to the previous week. Most airlines can only accept small shipments. Ex-HAN TPEB charter requests ex-HAN continue to be quite popular in the market so space is very limited. Palletized cargo is especially likely to be rejected by airlines. Additionally, heavy FEWB congestion is leading to longer transit times. Ex-SGN many factories are back to work so space is extremely tight and no rate decreases are anticipated for the month. TPEB and FEWB space is fully booked through week 46.

Europe

  • Demand remains the high WoW ex EU. Market is in peak, and these conditions are expected to continue through to Christmas. Rate levels have increased to all US hubs, and many direct flights are full. Advice WoW is still relevant: If you can move through a secondary hub, and the lead time allows, attractive solutions are still in the market. Capacity should encourage a small amount of stability in the high market, as vaccinated passengers can fly from the US to the EU, which is beneficial for cargo.
  • Still very heavy strain on AMS and FRA ground handling terminals. No notable improvement at FRA for import cargo. Building in extra lead time into FRA or using other German hubs is important.
  • AMS ground handling terminals are feeling the strain, mainly for export cargo. Handlers are recruiting additional personnel, opening additional warehouses where there is capacity. Additional entries and exits to terminals are being added with the aim to free up space for more trucks to pick up or drop off cargo.
  • No changes on Far East Eastbound this week. Capacity still manageable.
  • Advice continues for all trade lanes ex EU: Place bookings at least 7 to 10 days ahead of CRD for most optimal rates and routing solutions.

Americas

  • US export demand is increasing further in November. Larger shipments from major outbound gateways can take 2 to 4 days from booking to uplift into the EU, LATAM, or Asia. Early bookings are suggested
  • US authorities have lifted the ban on travelers from the EU (Effective Nov 8th). European Airlines are slowly introducing more bellyhold capacity.
  • LAX/ORD/JFK ground handlers continue to face backlogs and are using off-airport facilities to manage the flood of inbound cargo, which has a trickle-down effect on the export side. Many have shortened their free time for storage, and have implemented new, earlier close outs for exports to accommodate longer throughput times and screening requirements.
  • Rates from the US to LATAM and some Asia destinations remain at higher levels. Rates into Europe have not experienced significant changes.
  • Fuel surcharges have increased during the last weeks.
  • Slightly higher transit times into top European hubs due to their current labor shortage, and high throughput time.
  • Recommendation Book early considering the dwell time at airports.

Updates from Flexport's Customs & Compliance Team

US to Remove Ethiopia, Guinea, and Mali from AGOA, Unless Reforms Implemented

The Biden Administration announced Ethiopia, Guinea, and Mali will no longer receive AGOA preferential tariff treatment effective January 1, 2022, unless the three countries’ respective governments implement “necessary actions.” US Trade Representative Katherine Tai was reticent on what the necessary actions would entail for each country.

Customs Modernization Act Comments Sought from Trade Community

Senator Bill Cassidy (R-LA) unveiled a draft of the Customs Modernization Act, a crucial part of CBP's efforts to implement its “21st Century Customs Framework.” Senator Cassidy also published a section-by-section summary of the draft’s contents along with a one pager containing a high level overview of the draft bill. It is unclear whether Senator Cassidy will introduce the bill in 2022.


Factory Output News

  • Cambodia Cambodia to develop Sihanoukville into a Special Economic Zone Source.
  • Cambodia American companies are optimistic about investing and expanding their business in Cambodia Source.
  • Myanmar India-based port developer Adani Ports and Special Economic Zone (APSEZ) decides to abandon the plan to build a container terminal in Myanmar by June 2022 Source.
  • Malaysia Malaysia has proposed a new rule to restrict scrap imports for environmental reasons, which would prevent up to 90% from entering the country Source.
  • Sri Lanka Sri Lanka signed $500M finance agreement with the World Bank to strengthen the nation's agriculture supply chains Source.
  • Europe EU and US agree to start discussions on a Global Arrangement on Sustainable Steel and Aluminium and suspend steel and aluminium trade disputes Source.

Freight Market News

Container Dwell Fee Trends Emerge The Loadstar reports the Port of Tacoma is following California ports’ leads imposing a one-time $315 charge for containers that have been at the Husky terminal for more than 15 days. Beginning November 15, customers of the Washington United Terminal will also see fees of $310 for containers dwelling more than 15 days.

Read More: Port Workers Portray the Reality of Bottlenecks

Electricity Rations Hit Container Exports Two of China’s largest port groups indicate a decline in container export volumes that aligns with recent electricity rationing there. The Journal of Commerce notes volumes reflect manufacturing contractions.

Read More: Flexport Survey: Electricity Rationing Impacts to Supply Chains

DOT Allows Flexible Use of Port Grants As part of an initiative to reduce port congestion ahead of the Infrastructure Investment and Jobs Act, the White House directed the US Department of Transportation to allow ports to reallocate grant funds. American Shipper reports funds being used for new projects like pop-up container yards for quicker intermodal transfer.

Read More: Flexport Founder + CEO Ryan Petersen on Twitter


Economic Highlights

Strong October US Jobs Report. Nonfarm payrolls were up 531K while unemployment dropped 0.2pp to 4.6%. The employment-population ratio stayed put at 58.8%, showing how the labor market seems to have settled between the depths of the Covid recession (when it hit 51.3%) and its pre-recession level (61.1%).

The share of teleworkers has declined, from 13.2% of workers in September to 11.6% in October. In May-June 2020 the number was 33.3%.

There were dramatic upward revisions to jobs created in August (+117K) and September (+118K). Together this made for a 42% upward revision for the two months combined.

Euro Zone Unemployment Drops in September to 7.4%, continuing a decline from 8.6% in September 2020. Europe’s unemployment neither spiked as high as that in the US, nor dropped back as far.

Producer prices rose sharply in the Euro Zone, up 2.7% over August and 16.0% over September 2020.

US Imports Up, Exports Down in September. Goods and services imports were up 0.6% over August, while exports were down 3.0%. The split was even sharper for goods alone, with imports up 0.8% and exports down 4.7%. Imports of consumer goods and food were down slightly, while auto imports fell more sharply (7.7% for the month). Imports of capital goods saw a 4.0% increase.

October Chinese Exports Rise by 27.1% yoy, beating expectations. Imports were up only 20.6% yoy, below forecasts.

US Productivity Plunge in Q3. Nonfarm labor productivity fell by 5.0% at an annual rate, the sharpest quarterly drop since 1981. That contributed to an 8.3% increase in unit labor costs.

The effects of the US-EU deal on steel and aluminum tariffs became clearer this week. It will also cut the EU’s consumer goods import tariffs. And the UK, Japan and South Korea all want in.

The Asian RCEP trade deal will come into force from Jan. 1 after the ratification threshold was reached.


Freight Market Update is a complimentary service from Flexport, the modern freight forwarder. If you're not already a subscriber, we invite you to subscribe here.


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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