Market Update

Freight Market Update: September 29, 2020

Ocean and air freight rates and trends; customs and trade industry news plus COVID-19 impacts for the week of September 29, 2020.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Decrease;
  • GRI October 1: Waived
  • GRI October 15: Expecting further reduction
  • Capacity: 8.4% of total TPEB capacity will be removed in 1st half of Oct; In the 2nd half of Oct, capacity will return closer to 100%.
  • Notes: Q4 is traditionally slack season, following the Golden Week holiday in Asia; Services will start opening up towards the back end of Oct; Expecting another $100 - $200 in rate reductions before 10/14 and likely in week 42
  • PRN - CMA: 40GP/40HQ shortage; HMM / Zim: 40GP shortage, can use 40HQ substitute 40GP
  • Shanghai - ZIM: 40HC EQ shortage; HLCU: 40/ H0HC EQ shortage
  • PRS - CMA: shortage for 40HQ & 45HQ with EIR printing control; supply from outports are extremely limited; COSCO: shortage of 40HQ & 45HQ; ONE: no 40GP supply

Asia → Europe (Far East Westbound)

  • Rates: Increase
  • GRI September 1: Implemented
  • GRI September 15: Partially Implemented
  • GRI October 1: Partially Implemented
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD
  • Notes: Market space is full in the lead up to China’s Golden Week and expected to continue to be strong until end of October. Carriers have announced blank sailings for post–Golden Week so capacity will be tight. Equipment shortages continue. Recommend equipment substitution where possible (40’ST and 40’NOR instead of 40’HC, the size in shortest supply). Severe congestion and operational problems in Felixstowe.

Europe → North America (Transatlantic Westbound)

  • Rates: Increase
  • GRI September 15: Not Implemented
  • GRI October 1: Implemented
  • Capacity: Recommend advanced booking notice 21 days prior to CRD
  • Notes: Vessels fully utilized, high risk of cargo rolls. Recommend booking as early as possible and request premium service for urgent shipments. Space will remain tight throughout October as carriers continue to blank sailings: AL1 and AL4 will be voided in week 41 and 43, leading to a reduction of approx. 5% and 11% of capacity in the respective weeks.

India → North America

  • Rates as of 9/28: Indamex: Steady; USWC: Steady; USEC: Steady
  • GRI September 15: Not Implemented
  • GRI October 1: Not Implemented
  • Capacity: Recommend advanced booking notice 14 days prior to CRD
  • Notes: Equipment shortages persist across India especially at local ICD’s. Space is still very tight due to demand across the Asia / ISC region.

North America -> Asia

  • Rates: Steady
  • GRI September 15: None
  • GRI October 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 and would recommend sufficient lead-time for truckers to procure chassis.

North America → Europe

  • Rates: Steady
  • GRI September 15: None
  • GRI October 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 and would recommend sufficient lead-time for truckers to procure chassis.

Air Freight Market Update


Asia

  • China market saw demand fall this week, which was unexpected heading into the Golden Week holiday. However, looking past the holiday, we expect extremely strong demand, tight capacity and rising rates driven by continued strength with product launches including the shipping launch for the iPhone 12 on October 15th.
  • South China/HKG market saw strong demand this week and rising rates between $5.50 to $6.00 per kg to the US.
  • SE Asia demand continues to be strong and accelerating heading into the peak season. Capacity will be extremely scarce out of many key markets including TPE, BKK, PEN, SGN, HAN for the balance of the year. Anticipate longer than normal transit times and potential offloads at transit hubs.
  • Flexport announced the launch of our second freighter in the region. It will operate between HKG and LAX. Starting in January, it will make a stop in TPE. In addition, we have developed seamless upstream connections from BKK, SGN and HAN.

Americas

  • Several Airlines have announced minor rate reductions going into October for U.S. outbound trades, primarily to Asia. Carriers are seeking backloads from the West Coast and the Midwest
  • European-bound routes remain fairly stable, though some softening of yields are seen from the U.S. East Coast to major E.U. hubs, due to additionally introduced routes by U.S. and European-flag carriers

Europe

  • On the FEWB, we have seen increases in volumes prior to Golden Week. Heading into the holiday week, the situation relaxes a bit. After Golden Week a PEAK-season increase in volumes and rates is expected.
  • On the Trans Atlantic we see minor capacity additions and rates at a slightly decreasing level on selected port-pairs.

Factory Output News


German car industry counts cost of Covid and technological change. Bavaria braces for wave of job losses as strategically important industry scales back [Source: Financial Times]

UK Food industry warns on post-Brexit trade with N Ireland. Government urged to provide greater clarity as members weigh costs of regulatory border [Source: Financial Times]

United States The World Robotics 2020 Industrial Robots report shows a record of ~293,000 industrial robots operating in factories across the United States—an annual increase of 7%. “The stock of industrial robots operating in factories around the world today marks the highest level in history,” says Milton Guerry, President of the International Federation of Robotics.[Source]

Bangladesh 2nd wave of COVID-19 hits. [Source: AA]

India New daily COVID-19 cases fall to lowest level in one month. [Source: Bloomberg]


Updates from Flexport's Customs & Compliance Team


FDA Proposes Additional Traceability for Certain Foods

On September 23rd, the Federal Register published a proposed rule by the Food & Drug Administration (FDA) that would seek to increase record keeping requirements for companies that manufacture, process, pack, or hold certain food products. Comments on the proposed rule must be submitted by January 21, 2021.

Caribbean Basin Trade Partnership Act Renewed in House

On September 22nd, the House unanimously approved legislation to renew the Caribbean Basin Trade Partnership Act (CBTPA) through September 30, 2030. CBTPA includes preferential trade provisions for textile and apparel products from Caribbean countries made with U.S. components. The renewal still requires approval from the Senate.


Economic Highlights from Flexport Chief Economist Dr. Phil Levy


  • Signs of global deceleration appear in a series of September Purchasing Manager Index (PMI) reports by IHS Markit, showing slower growth in September than August and weaker conditions in the services sector than in manufacturing.
    • The Eurozone composite number was 50.1 for September, down from August; 50 is the dividing line between growth and contraction. The composite balanced a services sector contraction and a manufacturing sector with its strongest number in 31 months. Germany showed expansion, while France showed contraction.
    • The UK showed expansion in both manufacturing and services, though both at a lower rate than in August.
    • Preliminary Japanese data showed contraction with services slightly weaker than manufacturing.
    • US PMI showed an expansion in September comparable to that in August. Unlike in others, services looked stronger than manufacturing.
  • Less encouraging US August data shows durable goods orders rose 0.4%, below expectations of 1.5% and well below the increases in June (7.7%) and July (11.7%).
    • The Chicago Fed’s national activity index was positive in August, meaning growth slightly above trend. It was down notably from June and July.
  • Unemployment claims remain high. The seasonally adjusted new unemployment insurance claims figure was 870k, just above that of last week.

Freight Market News


Short Term Contracts from Asia Spike As importers surpass annual service volumes contracted when Covid-19 was first wreaking havoc, short-term contracts are commanding up to 44% more than in September. The Journal of Commerce reports shippers are seeking capacity with a mix of additional carriers and NVOs.

Europe Votes for Carbon Fee European Parliament voted to require that cargo ships pay for emissions created during shipments to and from Europe. Opponents decry the cost, but the Wall Street Journal reports the fees are similar to those paid by factories, power plants, and airlines under the EU Emissions Trading system.

Recovery Aid Talks May Restart While a shutdown of the US government has likely been averted, the odds of a new stimulus package hinge on factors noted by the New York Times, including unifying differences in suggested scale.


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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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