Market Update

Freight Market Update: September 9, 2020

Ocean and air freight rates and trends; customs and trade industry news plus COVID-19 impacts for the week of September 9, 2020.

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Ocean Freight Market Update


Asia → North America (Transpacific Eastbound)

  • Rates: Steady
  • GRI September 1: Implemented
  • GRI September 15: Likely Implemented
  • Capacity: Recommend advanced booking notice 14 days prior to CRD
  • Notes: A mid-month GRI is extremely likely, and is expected to be similar to levels implemented on the September 1 GRI. Significant equipment shortages continue and the capacity situation remains critical as many shippers rush to get cargo out of Asia prior to Golden Week.

Asia → Europe (Far East Westbound)

  • Rates: Increase (Effective Sept. 1 North Europe main ports in the range of USD 1800-1900 per 40’ST with UK add-on and 40’HC add-on on top)
  • GRI September 1: Implemented
  • GRI September 15: Likely Implemented
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD
  • Notes: Market expected to be strong and full throughout September with the lead up to China’s Golden Week in the first week of October. Demand will probably remain high until end of October. Equipment shortages continue especially in China and Vietnam. Best to work with equipment substitution wherever possible (40’ST and 40’NOR instead of 40’HC, which has the most severe shortage). Carriers have announced blank sailings for post-Golden Week so capacity will be tight.

Europe → North America (Transatlantic Westbound)

  • Rates: Increase (Effective Sept. 1, higher bunker surcharges are applicable)
  • GRI September 1: Not Implemented
  • GRI September 15: Unlikely Implemented
  • Capacity: Recommend advanced booking notice 14 days prior to CRD
  • Notes: Terminal operations have resumed at the port of Montreal after a 2 week+ strike. Expect minor delays for the upcoming weeks as carriers clear the backlog of cargo in affected terminals.
  • North Europe to North America: The trade is expected to run at 90-95% of total capacity until the end of September.

India → North America

  • Rates: Steady (USWC: 3300/40’ USEC: 3500/40’ INDAMEX: $2900/40’)
  • GRI September 1: Not Implemented
  • GRI September 15: Likely Implemented
  • Capacity: Recommend advanced booking notice 14 days prior to CRD
  • Notes: Market expected to be strong through end of September. Expecting exports from this region to slow down first few weeks of October. Equipment is still an issue out of the Indian Subcontinent—flexibility of EQ is important to get space released.

North America -> Asia

  • Rates: Steady
  • GRI September 1: No GRI announced
  • GRI September 15: No GRI announced
  • Capacity: Recommend advanced booking notice 21 days prior to CRD

North America → Europe

  • Rates: Steady
  • GRI September 1: No GRI announced
  • GRI September 15: No GRI announced
  • Capacity: Recommend advanced booking notice 21 days prior to CRD

Air Freight Market Update


Asia

  • Demand in China was slower than forecasted last week and into this week as Apple’s product launch was slightly delayed and there was excess capacity in the market.
  • This is a short-term blip before the market is expected to gain strength hitting a mini-peak ahead of the Golden Week holidays in early October and then continuing with strong demand and very tight capacity post-Golden Week.
  • Rates in other key markets of TPE, BKK, SGN, HAN, MNL and KUL remain very strong due to limited capacity and increased demand as many shippers fled China at the height of the tariff wars.

Americas

  • Airfreight market ex North America maintains its status quo without significant change week over week going into Europe or Asia
  • The LATAM market appears to be coming a bit back with some activity and carriers returning capacity into pockets of the market to serve North and Southbound flows

Europe

  • On FEWB we continue to see a volatile market, but with a tendency towards a tighter market prior to Golden Week holidays. After that holiday, the market is preparing for a PEAK-season-scenario.
  • FEEB remains open with stable rates at the lower end.
  • On TAWB and TAEB, the situation has not changed in the past week. However, the market still expects reduced PAX-capacities going forward and sees a trend to increasing rates on the TAWB.

Factory Output News


United States 🇺🇸 full report on manufacturers’ shipments, inventories and orders for the month of July saw new orders for manufactured goods increase 6.4%, marking the third consecutive month over month increase.

Canadian 🇨🇦 auto workers have chosen Ford as a potential strike target as the company weighs future production commitments. (ABC News)

China 🇨🇳 expanded its August manufacturing activity at fastest rate in almost 10 years (Aljazeera)

Thailand 🇹🇭 , the world's largest rubber supplier, is ramping up production of medical gloves to help supply the growing global demand driven by Covid-19. (Bloomberg)

Malaysia’s 🇲🇾 furniture exports should continue to benefit from the US-China trade war along with low raw-material prices and a favorable exchange rate. (New Straits Times)

Germany 🇩🇪 is ruled out of Daimler’s production expansion. Mercedes’ owner will invest in the rapidly growing Chinese market as it prepares deeper cost cuts. (Financial Times)


Updates from Flexport's Customs & Compliance Team


FDA Moving to Phase 2 Artificial-Intelligence Testing The FDA announced they are pushing forward to their phase 2 testing using artificial intelligence to screen imports of seafood. The first phase, completed in 2019, indicated the approach tripled the likelihood of identifying a shipment containing seafood with a public health concern. The second phase will be testing the new AI technology in the field. The AI will use historical data from previous seafood shipments to help FDA staff decide which shipments to examine.

Caribbean Basin Trade Partnership Act Up For Renewal The House Ways and Means Committee is holding an online hearing Thursday, September 10th to make a decision on the renewal of the act. Renewal is expected before the act expires at the end of September.

Reduction to Brazilian Steel Quota In a Federal Register Notice, the USTR announced that the US will lower the steel quota from Brazil. Originally the quota was implemented to avoid placing Section 232 tariffs on Brazilian steel. The quota has now been reduced by approximately 10%.

ITC Issues 2019 Year In Trade Report The ITC issued its yearly report for 2019. It covers a wide range of topics including AD/CVD, IPR infringement, national security, Section 301 duties, trade-agreement changes, new trade agreements and negotiations, trade relations with our biggest partners, and disputes/settlements with the WTO.


Economic Highlights from Flexport Chief Economist Dr. Phil Levy


Weekly initial jobless claims appeared to drop sharply from 1.011m the week before to 881K—but a change to seasonal adjustment procedures made the numbers difficult to compare. Unadjusted claims actually rose over the week.

US trade expanded in July. Imports of goods and services increased by 10.9%, while exports increased by 8.1% over June. Over the year through July, however, 2020 goods imports were down 12.3% from 2019, while goods exports were down 16.5%.

  • Chinese exports were up in August 9.5% in dollar terms over a year earlier, while imports were down 2.1%.

US manufacturing showed August strength in an Institute of Supply Management survey, the fourth straight monthly gain.


Freight Market News


Vaccine Logistics Begin to Take Shape
With over 250 candidates for a Covid-19 vaccine, it’s still too early to tell the exact shape of vaccine logistics, but various corners of industry are preparing to serve more than 200 countries, according to the Journal of Commerce. A viable medical supply chain requires a scale of distribution, including stringent temperature requirements, that will dwarf even the inbound rush of PPE during the height of the pandemic.

Low-Cost Airlines Moving into Cargo After years of minimal interest in shipping, low-cost passenger airlines are removing seats to make space for cargo. The Loadstar reports that the manual loading of these planes is usually not economical—and the sudden additions at airports are causing congestion—but the increased capacity is welcome.

Container Shipments to US Rise Peak season arrives on a wave of current and pent-up demand, reports the Wall Street Journal, with container volumes reflecting e-commerce surges and the upcoming holiday season.


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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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