Market Update

Freight Market Update: October 27, 2020

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of October 27, 2020.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Steady
  • GRI October 15: Waived
  • GRI November 1: Will be implemented
  • Capacity: Recommend advanced booking notice 14 days prior to CRD
  • Notes: November 1 GRI is coming (being implemented on certain lanes) due to sustained strong demand through November. Additionally, port congestion in LA has worsened—delays and chassis shortages are expected to continue.

Asia → Europe (Far East Westbound)

  • Rates: Increase
  • GRI October 15: Partially Implemented / Some extensions by carriers
  • GRI November 1: 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 necessitate equipment substitution (40’ST, 40’NOR and 20’DC instead of 40’HC). In the UK, the serious port congestion in Felixstowe is spreading to other UK ports, e.g. Southampton. Further delays and port omissions are taking place. Carriers are looking to reduce cargo into the UK due to slow turnaround of containers and haulage limitations.

Europe → North America (Transatlantic Westbound)

  • Rates: Steady
  • GRI October 1: Implemented
  • GRI November 1: Unlikely Implemented
  • Capacity: Recommend advanced booking notice 21 days prior to CRD
  • Notes: Strong demand outlook until end of November. Severe equipment shortage in Turkey, recommend placing bookings as early as possible. Capacity development: the 2M alliance will upgrade the TA1 and TA2 services to US East Coast / Gulf with larger ships increasing their pro-forma capacity in November by 11%, while THE Alliance will be operating at 84% with 2 blank sailings scheduled in week 46 and 48 on the AL1 and AL4 service to US East Coast and Gulf destinations.

India → North America

  • Rates: Steady
  • GRI October 15: None
  • GRI November 1: Will be implemented
  • 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. Due to the equipment shortages in the region, carriers have begun to implement equipment repositioning fees and no-show fees. Space is still very tight due to demand across the Asia/ISC region.

North America → Asia

  • Rates: Steady
  • GRI November 1: None
  • GRI November 15: One carrier has announced incremental increases of $50 per 40’ in the scrap segment for 2H November. The agri segment has also seen GRI notices with the highest being $300/40’ from Interior Rail hubs.
  • 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 resulting. Recommend factoring in more lead time for truckers to procure chassis.
  • 40’ container shortages reported at Detroit and Minneapolis rail ramps.

North America → Europe

  • Rates: Steady
  • GRI November 1: None
  • GRI November 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. 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

  • All Asia origins are now in full Peak season and rates have spiked to between $8-$9 per kg from Asia to the US. While capacity is extremely tight, carriers are reserving space for last-minute spot buying. We anticipate that the market will remain at these levels through at least the end of November but likely even well into December given the late expected surge of e-commerce volumes.
  • Full one-way charters from China/North Asia to the US are being sold between $1.3-1.5 million USD with a few limited opportunities left for the November/December time period.

Europe

  • FEWB with strong increases and hardly any capacity. Expected to last for at least 6 weeks with signs of a strong Q1, too.
  • FEEB remains as in past weeks with available capacity and lower rates.
  • TAWB is still in PEAK-scenario. Rates increased to all major airports in the US.
  • Carriers appear to be pulling scheduled PAX-flights again. This will further impact capacity-situation

Americas

  • TAEB remains very balanced between demand and offered capacity with no big spikes in demand, as currently seen on the TPEB. Some PAX carriers are introducing new pFreighters 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. But in lieu of a peak on LATAM SB destinations, rate increases are marginal.

Factory Output News

South Korea’s success in containing the coronavirus highlights importance of digital resilience. [source]

China: Kashgar in Xinjiang Province reports 137 new asymptomatic coronavirus cases, all residents in Kashgar are now receiving tests. City is now under full lockdown. [source]

Italy’s statist instincts resurface under the cover of Covid. Conte government seizes on EU’s willingness to overlook public finances during crisis. [source]

European TV makers fear missing out in UK trade deal. Industry warns EU of risks that post-Brexit import tariffs will wipe out profit margins. [source]


Updates from Flexport's Customs & Compliance Team


Anti-Dumping Investigations into Aluminium Foil from Several Countries

The U.S. Department of Commerce has initiated anti-dumping duty (ADD) investigations on aluminum foil from Armenia, Brazil, Oman, Russia and Turkey, and has also initiated countervailing duty (CVD) investigations on Oman and Turkey. The products under investigation are currently classifiable under (HTSUS) subheadings 7607.11.3000, 7607.11.6090, 7607.11.9030, 7607.11.9060, 7607.11.9090, and 7607.19.6000. Although the HTSUS subheadings are provided for convenience, the written description of the scope of these investigations is dispositive. Although no ADD/CVD duties are in place at the moment, CV duties could be imposed as early as 12/23/2020 and AD duties imposed on or around 03/08/2021.

Dumped Glass Containers from China Do Not Injure U.S. Industry

The United States International Trade Commission (USITC) published a news release on October 20th communicating their finding that U.S. industry was not materially injured or threatened by dumped glass containers from China, and thus no antidumping order will be issued. The glass products under investigation included “glass jars, bottles, flasks and similar containers; with or without their closures; whether clear or colored; and with or without design or functional enhancements (including, but not limited to, handles, embossing, labeling, or etching).”

United Kingdom and Japan Sign Free Trade Agreement

On October 23rd, the United Kingdom and Japan signed the Comprehensive Economic Partnership (CEPA) Agreement, marking the first trade deal the country has signed as an independent trading nation. The agreement resembles the Japan-EU trade agreement, removing tariffs on Japanese cars and auto parts and maintaining lowered tariffs on British food and agricultural products.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • The US composite PMI for October showed the strongest increase in private sector activity since February 2019. Amidst the overall strength, the IHS Markit purchasing manager gauge also revealed decelerations in new business growth, new orders, and foreign client demand.
    • US initial jobless claims registered 787K, a historically high number, but near the pandemic low.
    • Leading indicators slow. The Conference Board’s index rose by 0.7% in September, following increases of 1.4% in August and 2.0% in July.
  • In Europe, PMI came in weak. The IHS Markit composite number showed contraction, hitting a 4-month low; however, that mostly reflected service sector weakness, as European manufacturing PMI numbers showed growth.
  • The split between services and manufacturing has been a prominent feature of the pandemic’s effect. For high-income countries, services constitute 70% of GDP.
  • Services trade fell 30% in Q2, a steeper drop than in merchandise trade, according to The WTO, illustrating the manufacturing-services split occurs in trade as well as GDP. The biggest service trade decline was in tourism, down 81%.

Freight Market News


US Military Will Aid Vaccine Distribution The US Department of Defense announced that its logistics teams will work with the CDC to coordinate the distribution of vaccine-related goods, including needles, syringes, swabs, adhesive bandages, and dry ice. The military will not be involved in moving doses.

China Drives Dry Bulk Ship Demand An increase in commodity imports is pushing up demand for dry bulk carriers as Chinese economic recovery spurs a period of restocking. The Wall Street Journal reports demand for 2020 was flat against 2019, but experts predict demand growth of 3% on average over the next five years.

Carriers Expedite Containers over Exports In the midst of a container shortage crisis, some carriers are choosing to ship empty containers back to Asia as quickly as possible, leaving some agricultural producers with no way to export goods. The Journal of Commerce reports soybean shippers are being hit especially hard.


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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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