Market Update

Freight Market Update: October 13, 2020

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of October 13, 2020.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Steady
  • GRI October 15: Not Implemented
  • Carriers extending October rates through the end of the month.
  • Capacity: Recommended advanced booking notice is still minimum of 14 days prior to CRD.
  • Notes: Space situation remains critical, with carriers booking at or above 100% capacity still.

Asia → Europe (Far East Westbound)

  • Rates: Increased
  • GRI October 1: Partially Implemented
  • GRI October 15: Partially Implemented / Some extensions by carriers
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD
  • Notes: Weeks 41-42 have been slower due to Golden Week in China. There is a fast recovery from week 43 onwards with volumes back to normal level again. Due to ongoing equipment shortage, recommend to be flexible with equipment substitution where possible (40’ST and 40’NOR instead of 40’HC). As there continues to be severe congestion in Felixstowe, suggest to divert shipments to Southampton if acceptable.

Europe → North America (Transatlantic Westbound)

  • Rates: Steady
  • GRI October 15: None
  • Capacity: Recommend advanced booking notice 21 days prior to CRD
  • Notes: Strong market outlook with full vessels until the beginning of November as retailers stock up inventory levels in view of anticipated Christmas shopping spree. Premium services available with a number of carriers to secure priority loading and equipment. THE Alliance reinstated the blank sailing of the AL1 service in week 43. 2M extended the TA4 suspension until the end of the year. No further blank sailings have been announced for the remainder of Q4.

India → North America

  • Rates: Indamex: Steady; USWC: Steady; USEC: Steady
  • GRI October 15: None
  • Capacity: Recommend advanced booking notice 14 days prior to CRD
  • Notes: Equipment shortages, particularly 40’HC equipment types, persist across India especially at local ICDs. Space is still very tight due to demand across the Asia/ISC region.

North America → Asia

  • Rates: Steady
  • GRI October 15: 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 and would recommend sufficient lead time for truckers to procure chassis.
  • 40’ container shortages reported at Detroit and Kansas City rail ramps.

North America → Europe

  • Rates: Steady
  • GRI October 15: 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 and would recommend sufficient lead time for truckers to procure chassis.
  • 40’ container shortages reported at Detroit and Kansas City rail ramps.

Air Freight Market Update


Asia

  • China has started to come online this week as the country returns to work post-Golden Week. The well-anticipated iPhone 12 launch is here and has already started impacting the supply chain. Peripherals (vials, syringes and testing kits) to support the vaccine supply chain for Operation Warp Speed are also shipping with volumes expected to pick up in the coming weeks and months. As expected, rates are rising.
  • Rates in the rest of Asia are also climbing. Export volumes from many of the major origins in SE Asia including BKK, HAN, and SGN are seeing massive increases versus same period last year.

Americas

  • Capacity on the TAEB, TPWB, and LATAM trades are for the most part available and not constrained.
  • While the Transatlantic trade is still heavily relying on passenger and passenger freighter capacity, the Transpacific has a very large offering of freighter capacity for all the backhaul into Asia, which depresses yields from the major US hubs back to major Asian hubs, such as ICN/PVG/HKG.
  • The LATAM trade stays fairly stable with a balanced offering of capacity compared to the demand in the market, which may change on the southbound side, while further progressing into the traditional peak season ex Asia connecting to LATAM.

Europe

  • The overall market conditions are beginning to pick up as demand is increasing into the typical peak season. Capacity is reduced about 45% YOY due to the suspension of passenger flights, so expect some major origin points to have backlogs including AMS, FRA, and LHR.
  • The FEWB trade lane from Asia to Europe is coming to life post-Golden Week due to numerous product launches, as well as vaccine peripherals shipping in large quantities.


Updates from Flexport's Customs & Compliance Team


Import Restrictions Considered to Combat Reliance on Critical Minerals from Foreign Adversaries

An executive order posted by the Federal Register on October 5 outlined proposed solutions for dealing with the United State’s dependency on 35 imported “critical minerals,” so-called because they are “necessary inputs for the products [the United States] military, national infrastructure, and economy depend on the most.” The order states that “imposition of tariffs or quotas, other import restrictions against China and other non-market foreign adversaries” are possible.

Department of Labor Adds to List of Goods Produced by Forced or Child Labor

The US Department of Labor’s Bureau of International Labor Affairs (ILAB) has published their 9th edition List of Goods Produced by Child Labor or Forced Labor. To this list, they have added 25 products from 16 countries, including coffee from Brazil, bricks from Cambodia, and gloves and textiles from China.

Customs Determines E-Bike Country of Origin Based on Frame

A September 24 ruling published by Customs & Border Protection (CBP) determined that the country of origin of electric bikes, or e-bikes, is dependent primarily on the origin of the bicycle frame, regardless of where the final assembly place of the e-bike was. In this case, Yamaha’s e-bikes, the frames having been produced in Taiwan with final assembly of the e-bike in China, were determined to have a country of origin of Taiwan, allowing them to avoid paying China Section 301 duties on their imported e-bikes.



Economic Highlights from Flexport Chief Economist Dr. Phil Levy


  • The World Trade Organization brightens its updated April forecast. It now foresees a 9.2% decline in merchandise trade in 2020 and a 7.2% rise in 2021, with substantial risks remaining (particularly to the downside).
    • The predicted 2020 decline in Asian trade (4.5%) was less than that in North America (14.7%) or Europe (11.7%).
    • The WTO narrowed its candidate list for Director General to a final two, from Nigeria and South Korea.
  • The IMF chief shared a warning. In a speech, Kristalina Georgieva said economic recovery from the Covid pandemic was likely to be prolonged and “ . . . there is the risk of severe economic scarring from job losses, bankruptcies, and the disruption of education.”
  • High US unemployment insurance claims continue with a registered 840K in the latest report, a small decrease from the week before. There appears to be significant imprecision in the number, but the weekly numbers remain well above pre-Covid record levels.
  • The Chinese RMB has climbed roughly 4.5% against the dollar in the past 3 months, prompting Chinese policy actions to limit the rise.


Freight Market News


Polar Melt Opens Siberian Route With more Arctic ice melting, ships are increasingly sailing the Northern Sea Route between Alaska and the Baltic Sea via Siberia. The Wall Street Journal reports that Russia expects the route to be mostly ice-free by 2024.

FMC Proposes Later Filing Dates American Shipper reports the Federal Maritime Commission plans to take comments on a rule change that would allow service contracts between ocean carriers and shippers to be filed up to 30 days after the agreement’s effective date. Right now, the Shipping Act requires filing before cargo can move.

Trucking Contracts Shift Short-Term As short-term contracts and spot rates gain popularity across other transport modes, the Journal of Commerce reports that trucking contracts are following suit. Mini-bidding may carry over into next year, potentially limiting contract renewals.


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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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