Freight Market Update: November 16, 2021
Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 16, 2021.
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North America Freight Market Update Live November 18 at 8:30 AM PST / 11:30 AM EST
Get the latest on port congestion. Spend 30 minutes with our experts, plus ample time for Q&A.
Flexport Fireside Chat | Bringing Logistics Tech to Toronto: A Conversation with CEOs November 30 at 8:00 AM PST / 11:00 AM EST
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Ocean Freight Market Update
Asia → North America (TPEB)
- Demand is expected to be strong on TPEB for the remainder of 2021. The outlook reflects shippers placing bookings for cargo that must depart prior to Chinese New Year in early February. High demand and reduced capacity is keeping rates at elevated levels, which according to some estimates, are not expected to return to pre-Covid levels for at least another year. Congestion and vessel bunching, which cause schedule and capacity issues downstream, remain severe.
- Rates A few carriers implemented 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.
- Rates Rates remain at a record high level. However, they have been stable in October and 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 a few lines.
- Space Critical especially to the USWC
- 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 omissions challenge ISC services both at origin and destination. Carriers continue to use omissions as a lever to correct schedules impacted by ongoing vessel berthing delays.
- Rates remain stagnant for the past month
- 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. There are multiple carriers implementing significant GRI’s for India ports requiring transshipments in December as well.
- 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 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
- N.China: Rates have maintained around the same levels as the week prior. Capacity is still constrained however demand is slowing down slightly. We anticipate rates to maintain similar to current levels until the end of the month. For FEWB, FRA hub’s congestion status is not improving and terminal backlog is only increasing.
- S. China: The market situation ex-South China remains the same as the previous week. Capacity is tight 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 tight and space constrained. As the Thanksgiving holiday approaches, demand for ocean to air shipments is increasing. For palletized cargo, uplifts under standard service will likely not depart until the second week of December. Airlines are still open to accepting dense cargo, particularly loose cartons, however volumetric cargo may be rejected. China Airlines announced that they will be removing two freighters from their flight rotation for aircraft maintenance. EVA Air will add one freighter in November and another in December. Both airlines also plan to resume capacity to LHR next month. If demand continues to increase we anticipate airlines to announce further rate increases for December.
- SE Asia: The BKK market remains the same; space continues to be very tight. Some carriers have stopped accepting new bookings in order to clear existing backlogs. Rates to the US Southeast in particular have increased significantly as capacity is very limited. Demand ex-Northern Vietnam is very high and is especially affected by congestion at transit hubs and destination terminals. Rates have increased by about 10-15%. Space ex-Southern Vietnam and connecting hubs are very tight. Most shipments to JFK and LAX are being rejected by carriers and departures have been pushed back until the end of the month. Almost all carriers are rejecting palletized cargo. Additionally, rates have increased by 15-20%.
- Demand continues to be high, and we expect this to continue throughout the peak.
- As travel restrictions are softening between Europe and the US, more capacity is being injected to the market allowing us to offer more diversified offers with deferred routings.
- Airport terminals all over Europe continue to be congested due to an early peak and severe staff shortage. The new custom regulation in Frankfurt airport is further impacting the situation all over Europe as freight forwarders are moving away from this airport and signing up for deferred routings into Germany. To cope with this, terminals are hiring additional temporary staff, implementing new processes and rethinking their infrastructure. We even see traffic controllers coordinating truck movements.
- Advice continues for all trade lanes ex EU: Place bookings as early as possible for most optimal rates and routing solutions
- US export demand will remain at high levels until Thanksgiving. Larger shipments from major outbound gateways can take 2 to 4 days from booking to uplift into the EU, LATAM, or Asia.
- US authorities lifted the ban on travelers from the EU, and 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 high 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
Tariff Exclusions for Covid-Related Products Extended
The US Trade Representative announced an extension for most exclusions related to COVID-19 related products. For the 81 exclusion extensions, the new expiration date is May 31, 2022. The exclusions they are not extending will expire November 30, 2021.
Court of International Trade Announces Oral Arguments for Section 301 Case
The Court of International Trade (CIT) scheduled oral arguments for the Section 301 litigation for February 1, 2022 at 10:00am EST. The date reflects a status conference discussion where the original date proposed was January 13, 2022. It appears that the CIT will broadcast the oral arguments on a dedicated YouTube channel.
Factory Output News
- Taiwan TSMC will join forces with Sony to build semiconductor fabs in Japan and Kaohsiung. Source
- Cambodia Cambodia might lose favorable trade status as the US warns investors operating or planning to operate in Cambodia over human rights, corruption, and organized crime. Source
- Indonesia Despite the global supply chain disruption, business is blooming for Indonesian furniture makers with exports rising 30% in the first half of 2021. Source
- Sri Lanka Sri Lanka’s government to reduce budget deficit target to 8.8% of GDP, to roll out goods and service tax introduced in 2021 budget. Source
- Pakistan Pakistan government prioritizes power and fertiliser sector for gas supply, industrial consumer may suffer gas shortage. Source
Freight Market News
LA/LB Ports Delay Dwell Fees FreightWaves reports the ports of LA and Long Beach delayed consideration of the $100 per day fee for ocean carriers with containers that dwelled for nine or more days. This decision followed a 26% reduction in long-dwelling containers after the plan was announced in October. The fee will be reconsidered November 22.
Air Cargo Takes a Hit from Congestion Air cargo volumes are falling as peak season takes hold. Data shows volumes out of Shanghai fell 16% and volumes out of Europe are down 10%. Delays across the U.S. and Europe are hampered further by the labor shortage for ground handlers and unevenly distributed flight schedules, according to The Loadstar.
US Inflation Pops in October. The Consumer Price Index (CPI) rose by 6.2% over the last 12 months, the fastest rate since 1990. If one excluded the volatile food and energy categories, the increase was 4.6%, the highest since 1991.
Producer Prices Pop Even More. In the year to October, the US Producer Price Index (PPI) was up 8.6% for the broad index, 6.2% less food, energy, and trade services. China’s PPI rose 13.5% over the year to October, the fastest rate since 1995.
US Average Real Earnings Fall. Average nominal hourly earnings rose by 4.9% in the year to October, but when deflated by the CPI increase, that meant a 1.2% real decrease.
Consumers Feel Blue. The University of Michigan consumer sentiment index for early November showed its lowest level for a decade, down 6.6% from the previous month and 13.1% over a year.
Japan GDP Shrinks in Q3 at a 3% rate, a steeper drop than expected and the fifth drop in the last 8 quarters. Real GDP is now at its smallest since late 2014.
China Shows Economic Strength as both industrial production (up 3.5%) and retail sales (up 4.9%) beat estimates.
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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.