Freight Market Update: August 31, 2021
Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of August 31, 2021.
Join us for upcoming webinars:
North America Freight Market Update Live Sept. 2 at 8:30 am PT | 11:30 am ET
Get the latest on port congestion and impacts to shipments at origin and destination.
European Freight Market Update Live Sept 7 at 15:00 BST | 16:00 CEST
A 30-minute update on the Asia-Europe and Transatlantic trade routes. Come with questions for Flexport’s experts to answer.
Ocean Freight Market Update
Asia → North America (TPEB)
- Congestion is expected to worsen due to severe weather, pre-holiday demand, and Covid-19 related disruptions. Capacity remains reduced due to accumulation of delays and resultant blank sailings, despite extra-loaders and charters in the market.
- Rates August 15 GRI implemented
- September 1 GRI expected
- Space Critical
- Capacity/Equipment Critical/Severe Undercapacity
- Recommendation Continue to book well in advance (at least 4 to 6 weeks) prior to CRD for best chance of hitting it. Encourage suppliers to support departures from different origin ports. Consider terminating cargo at destination coastal ports to prevent intermodal delays.
Asia → Europe (FEWB)
- Space and equipment crunches continue. Market demand exceeds supply as rates skyrocket. The situation is worsened by blank sailings and poor equipment availability. Carriers are overcommitted and are limiting booking acceptance or rolling shipments. Schedule reliability is low.
- Rates Rates remain at a record high levels, but stable for August. First half of September is so far reflecting around the same rate level. Rates may increase further due to the impact of the temporary Ningbo terminal closure as well as upcoming Golden Week blank sailings.
- 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)
- Rate levels remain at historical high levels and are expected to climb further in Q4. Congestion at destination ports is expected to worsen and may not ease until the end of the year. Bottleneck issues are particularly critical in the USWC and the intermodal network. Expect delays and port closures in the US Gulf Coast as traffic is impacted by Hurricane Ida.
- Rates Sept 1 GRI likely implemented
- Space Critical
- Capacity/Equipment Capacity remains tight. 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.
India → North America
- Equipment shortage continues to be an issue in the ISC region. Premiums are the only way to help obtain equipment faster; otherwise shippers can expect delays at both wet ports and ICDs.
- Rates will be increasing for 1H September to both the USEC and USWC. Expect rates to continue to increase again in 2H September.
- Space remains extremely constrained to USWC from all ports of loading in the ISC region, especially with congestion in Colombo. Space to the USEC is tight.
- Capacity/Equipment Equipment of all types are in deficit even at larger ocean ports such as Nhava Sheva. Inland Container Depots are seeing the worst of the equipment shortage due to the difficulty of repositioning.
- Recommendation Use premiums on urgent shipments and shipments with CRD approaching. If routing to USWC, consider rerouting to USEC and transload to truck.
North America → Asia
- Space continues to be tight for USWC POLs. Capacity has improved from the USEC to Asia.
- Rates Select carriers have implemented GRI’s for Sept 1.
- 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 ideal sailing.
North America → Europe
- There is available capacity on the TAEB trade with carriers looking for cargo from the US East and Gulf Coasts. US West Coast service to Europe is very tight.
- Rates remain steady going into September.
- 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 4 to 6 weeks for Pacific Coast sailings.
Air Freight Market Update
- Shanghai / PVG: Additional Covid cases were confirmed at PVG airport over the past few days. PVG airport freighter service is still operational but with very low capacity; there is currently no timeline for a return to normal operations. Stricter sanitization procedures may be implemented, and the situation may worsen. TPEB lanes are expected to continue to have extended transit times by 5 to 7 days and maintain a higher rate level. FEWB lanes are expected to extend by 3 to 5 days with rates increasing quickly.
- Hong Kong: The market is tight with limited capacity supply while demand remains strong. Both booking and transit times are expected to increase this week. TPEB rates remain stable but FEWB rates are likely to increase.
- Taiwan: Ocean to air conversions are still prevalent. Additional transit cargo from China and Southeast Asia is also contributing to the tight capacity situation. Shipments bound for the US East and West Coasts are experiencing backlogs at TPE, especially for JFK, ATL, and ORD. Due to sustained high demand and limited capacity in the market, TPEB rates are expected to increase. The FEWB lane remains stable.
- Vietnam: Demand from northern Vietnam remains strong; however airline capacity is still limited due to backlogs at transit hubs. Rates have increased as a result. The situation will likely prolong through the upcoming public holiday (Sept 2 to Sept 5). Demand from southern Vietnam is stable as most of the factories remain closed under the current Covid policy. There are no flight cancellations this week, but the terminal is still short of manpower, so, although transferring cargo from other areas to SGN is now feasible, the terminal has limited operational capabilities.
- Volume remains steady on the Transatlantic, factories will begin their re-openings across the EU as Q4 peak begins to approach. Rates remain stable. No significant increases in capacity, and there is enough capacity to meet demand.
- Disruption continues on the Far East eastbound. Some embargoes on PVG import cargo are still in place. Bookings to PVG are likely to change at short notice, and rates are on an upward trend. Secondary airports to PVG are also facing disruption from lack of ground handling manpower. Flights are also taking longer to turnaround due to increased sanitization requirements.
- Still some European carriers offering interesting solutions from Asia to US via EU hubs, as a substitute for skyrocketing Transpacific demand and rate levels
- US ground handling terminals are still experiencing delays on average of 2 days. Build in some lead time if possible to combat this issue.
- Advice for all trade lanes ex EU: Place bookings at least 7 days ahead of CRD for most optimal rates and routing solutions.
- 100% screening requirement for all US export airfreight is in effect as of July 1, 2021. Ground handlers are still reporting long lines for cargo throughput. Many have implemented new, earlier close outs for exports to accommodate the additional time.
- Export demand from the US remains steady and stable, while US air exports are experiencing some manageable capacity constraints. Large shipments from all major outbound gateways in the US may take 2 to 4 days from booking to uplift into key European and Asian destinations.
- Operations at the PVG airport have been partially suspended due to additional Covid-19 cases, and over 30% of flights have been cancelled. The current situation could potentially generate additional capacity constraints in other Asian hubs (HKG/ICN/TPE). Rates are increasing.
- Capacity to Australia is limited. Several carriers have reduced their weekly flights due to the country’s cap on passenger numbers.
- Capacity to Central Europe (AMS/CDG/FRA) is constrained but manageable.
- Space to India is manageable, even as Nepal, Bangladesh, and Indonesia remain very constrained as aid and relief efforts into the Covid-struck region continue.
- LAX/ORD/JFK ground handlers facing large backlogs are using off-airport facilities to manage the flood of cargo. Ground handlers report 2 to 5 days of backlog to break down import freight. Export cargo cannot be tendered earlier than 2 days before departure as a result.
- Trucking remains scarce for airport transfers, local pickup, and deliveries across the nation, especially around major international in- and outbound hubs.
Updates from Flexport's Customs & Compliance Team
CIT Rules in Favor of Logitech in Recent Litigation
The CIT ruled in favor of Logitech’s classifications of their webcams and ConferenceCams, allowing the company to import their products duty free as opposed to the government’s preferred heading, 8525, where Logitech would’ve owed duty. The CIT determined that heading 8517 more accurately described the goods in question compared to heading 8525.
If this sounds like the kind of move your company wants to explore (minus the litigation), join us for our upcoming webinar:
Logistics Rewired: Preparing for the 2022 Harmonized Schedule Update Sept. 15 at 9:00 AM PT | 12:00 PM ET | 5:00 PM BST | 6:00 PM CET
Factory Output News
Taiwan Taiwan will not ease border restrictions or reduce level 2 until 60% of the population is vaccinated. [source]
Vietnam August industrial production drops 4.2% monthly and 7.4% YoY [Source]
Indonesia Authorities warn of natural disasters as the annual rainy season is expected to start earlier and be more severe this year. [Source]
Indonesia Covid booster shots will be made available from early 2022 [Source]
Malaysia Malaysia reopens travel into the country via the Johor gateway, subject to mandatory quarantine of 7 days before arrival into the country [Source]
Thailand Domestic flights will resume from Sept 1 onwards [Source]
India International commercial flights will be suspended until Sept 30 with the exception of countries with which India has had an air bubble arrangement. The initial suspension was in place since March 23. [Source]
Bangladesh The India-Bangladesh air bubble will resume as of Sept. 3. [Source]
Sri Lanka Airlines will resume services between Colombo and India (Madurai, Tiruchirappalli, Trivandrum, and Cochin) with flights once a week as Sri Lanka reopens borders with India. [Source]
Freight Market News
Hurricane Ida Disrupts Cargo Operations for both rail and ocean freight halted in New Orleans on Monday as a result of Hurricane Ida. AJOT reports the service disruption to rail lines could spread across the US rail network as freight cars have to be re-routed and ships divert from the Mississippi River to avoid the hurricane.
LA/LB Congestion Breaks Another Record FreightWaves reports the number of container ships at Los Angeles/Long Beach is now 4.8x pre-Covid levels with 47 ships at anchor or drifting off the ports of Los Angeles and Long Beach on Sunday—up from the average 16 ships at anchor pre-Covid.
Border Closures Create China-EU Rail Delays China-Europe rail freight could see up to a 30% reduction in capacity in September from delays at Kazakhstan border crossings and congested European gateways according to The Loadstar. The congestion has caused serious capacity shortages and is expected to last for a few weeks.
Economic highlights from Flexport Chief Economist Dr. Phil Levy
Fed notes progress. In his remarks to the Fed’s annual conference, Chairman Jay Powell paid particular attention to the surge in demand for goods, especially durables. In terms of when the Fed would tighten, he noted an earlier intention to ease off asset purchases later this year if economic progress continued. In his view, the test for price stability (inflation) had been met and that there was “clear progress” toward maximum employment. The Fed has said phasing out asset purchases (QE) will precede any rate hikes.
Asia drives trade recovery The recovery in global trade accelerated in June, with global exports up 5.3% compared to 2019 in volume after a 2.6% improvement in May. Emerging markets led the way with Asia ex-China up 18.5% from 4.3%.
US consumer sentiment drops sharply in August, registering the worst economic prospects in over a decade.
Freight Market Update is a free service from Flexport, the modern freight forwarder. If you're not already a subscriber, we invite you to subscribe here.
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.