Freight Market Update: June 5, 2019
Ocean and air freight rates and trends; trucking and customs news for the week of June 5, 2019.
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Ocean Freight Market Updates
Hari Raya Holiday Season May Cause June Delays
The Muslim holiday, known as Eid in some countries, will likely cause shipping delays in Indonesia, Malaysia, Singapore, and other observing countries as those celebrating take time away from work. Your operations team will keep you informed of any delays to your shipments.
Weight Restrictions on Panama Canal Shipments
The Panama Canal restricts the draft (how deep the hull goes into the water) of vessels based on the amount of water available in Gatun Lake, which varies based on rainfall, amount of vessels and other factors. Ships must be lighter to meet the draft requirement, so they need to carry less cargo/ballast/fuel or offload cargo to the Panama Canal Railway.
The Panama Canal Authority has postponed the further reduction to allowable vessel draft for the Neopanamax locks and Panamax locks from May 28, 2019 to June 12, 2019 due to increased rainfall. The long drought has cut capacity through the canal by almost one-fifth and boosted rates for shipments headed to the U.S. East Coast.
Savannah Port Looks to be New Gateway to the Midwest
The Port of Savannah says it offers cheaper freight options into the Midwest than do ports on the West Coast, as it attempts to increase its Midwest market share. And to assist, the Georgia Ports Authority (GPA) has partnered with the St. Louis Regional Freightway to develop train services between Savannah and St. Louis.
Port of Oakland to Advance with New Technology System
The Port of Oakland is implementing a Freight Intelligent Transportation System (FITS) which includes 15 technology projects that will reduce congestion, improve traffic flow, and establish a common communications platform. The projects are scheduled to be completed by late 2021.
Impact of New IMO ECA Regulations
The International Maritime Organization (IMO) has mandated under new Emission Control Area regulations that by 2020, all merchant vessels must reduce their sulfur emissions from 3.5% to 0.5%.
Whether they install scrubbers, build new vessels, or use higher-quality fuel, carriers will need to make significant changes to comply with the new regulations, and those changes will come at a cost to shippers. Freight rates may climb between now and 2020 as a result. 16% of global vessels are expected to be fitted with scrubbers.
For an in-depth look at the regulation and how to prepare, read our blog post: IMO 2020: What Shippers Need to Know Now
Air Freight Market Updates
IATA Downgrades Cargo Forecast to 0%
The International Air Transport Association (IATA) has downgraded its 2019 growth forecast from 2% to 0%, citing the increase in trade tariffs. Trade is expected to weaken as the trade war wages on.
Trucking Market Updates
International Roadcheck Is June 4-6, 2019
The Commercial Vehicle Safety Alliance’s (CVSA) International Roadcheck is taking place June 4-6th, 2019. International Roadcheck is an annual three-day event in which CVSA inspectors examine as many trucks as possible, looking for anything that doesn’t meet their safety standards for motor carriers, vehicles or drivers.
International Roadcheck may lead to delays and/or increased costs, for a few reasons:
- Some FTL carriers and drivers choose not to operate during the week of International Roadcheck, constraining overall capacity.
- Non-compliant drivers and vehicles taken out of service will cause reduced capacity and delays.
- All drivers must wait in lines (which are sometimes long) until they are inspected. The inspection itself takes about an hour.
FedEx Ground to Deliver Seven Days a Week
FedEx Ground has announced that it will expand its delivery service to seven days a week in January of 2020. The company is extending its current peak season policy, to “meet growing demand for parcel shipments.”
FMCSA Asking for Public Comments on Lower Driving Age
The Federal Motor Carrier Safety Administration (FMCSA) is asking for public comment on training, qualification and safety concerns regarding a pilot program that would allow 18-20 year-olds to drive commercial motor vehicles in interstate commerce. The program would create more jobs in the industry and address the nationwide truck driver shortage. The public comment period is open until July 15, 2019.
Customs and Trade Updates
**Removal of India from GSP **
President Trump has officially removed India from the list of countries eligible for the Generalized System of Preferences (GSP) free trade program, effective June 5th. Importers will no longer be able to claim GSP for goods of Indian origin as of 12:01am EDT.
Fifth Product Exclusions List for Section 301 First Tranche
Another list of exclusions has been granted for the first tranche of Section 301 tariffs implemented July 6, 2018. All but one of the 89 listed HTS numbers need to satisfy additional product specifications in order to qualify for the exclusion.
For a roundup of tariff-related news and the latest on the Mexico tariffs, read our Tariff Insider.
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