Market Update

Freight Market Update: October 12, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of October 12, 2021.

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Ocean Freight Market Update


Asia → North America (TPEB)

  • Uncertainty surrounding TPEB floating rates is primarily due to the recent reductions in demand as a result of Chinese Golden Week and electric power restrictions. Whether rates will continue to flatten, reduce, or even increase to peaks again remains unclear. Congestion will persist and is causing carriers to call smaller US ports not generally leveraged on the TPEB trade.
  • Rates Several carriers have extended or reduced rates as we look towards 2H October. Rate levels remain elevated, and the premium market continues to be strong.
  • Space Critical
  • Capacity/Equipment Critical/Severe Undercapacity
  • Recommendation Continue to book well in advance (at least 4 to 6 weeks) from CRD to target ETD for best chance of hitting timelines. Consider terminating cargo at destination coastal ports to prevent intermodal delays.

Asia → Europe (FEWB)

  • Space and equipment crunches continue. Market demand is consistently exceeding supply, and rates have skyrocketed for quite a long period. 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 shiftings, schedule reliability is very low. China just returned from Golden Week holidays. Further review of the impact of power shortages on production is being done.
  • Rates Rates remain at a record high level, but have been stable going into September and a marginal increase in October. Most carriers have extended their premium rates.
  • 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)

  • Terminal congestion along the US East Coast is now impacting vessel schedules with some lines cancelling Savannah calls and replacing them with Charleston or Jacksonville. Congestion at LAX/LGB port remains critical even though the number of vessels now waiting for berth is below 60, a slight improvement from previous weeks.
  • Rates GRI October 1 implemented
  • Space Critical
  • Capacity/Equipment Capacity remains tight for both North Europe and Mediterranean services. Better equipment availability at port, shortages remain at inland depots.
  • Book 5 or more weeks prior to CRD. Request premium service for higher reliability and no-roll guarantees.

India → North America

  • Equipment deficits and port of loading/discharge omissions continue. Carriers are looking to realign vessel schedules in an effort to increase schedule reliability. Congestion at Port of Savannah and a market shift to USEC are the main contributing factors. Multiple upcoming sailings from ISC region to USEC are omitting port of loading: Pakistan and port of discharging: Savannah. CMA has added capacity on ISC to USEC service starting at the end of October.
  • Rates Increased for 2nd half of October
  • Space remains a challenge as global congestion is resulting in omissions and altered sailing schedules
  • Equipment of all types are in deficit. Carriers are working to reposition empties while also placing large orders of new equipment.
  • Recommendation Use premiums 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

  • Space continues to be tight 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 GRI’s announced for dry and reefer cargoes for Oct 15 and Nov 01 expected to be implemented.
  • 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 with carriers looking for cargo from the US East and Gulf Coasts. US West Coast service to Europe is extremely tight.
  • Rates to remain steady for October.
  • 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


Asia

  • N.China: For North China, the market is relatively slack compared to the end of September. Additionally, with the power supply reduced for many northeast and southern Chinese provinces, demand is recovering slower than expected with rates levels already beginning to drop. Recently, the government agreed to increase the price of electricity, so the power supply shortage will hopefully improve this month. This will likely lead to increases in production and subsequent demand. As the holiday season approaches, the air market is anticipated to face high pressure in the coming weeks and months.
  • S. China: The market is slow as factories return from the Golden Week holiday and wade through the power supply situation. On Friday, Hong Kong experienced some disruptions caused by Typhoon Lionrock, which affected many of the weekend pickups. Due to these delays, some scheduled pickups for this week may also be affected. A positive Covid-19 case was found on Oct 7 at the HKG terminal, resulting in a 25% decrease in manpower due to quarantine restrictions. Scheduled flights should operate normally, however special charters and ad-hoc flights may be impacted. Even though the market demand for FEWB lanes has slowed down, the rate is maintained at high levels due to limited options and supply in the market.
  • Taiwan: TPEB space continues to be tight, although cargo volume dropped slightly due to the long holiday from Oct 9 to 11. There is expected to be another peak in the second half of October. FEWB space is also tight, and direct service rates to the EU have increased by around 15-25%.
  • SE Asia: Due to a positive Covid-19 case at the HKG terminal, HKG terminal operations for transshipments will be affected as overall manpower was cut by 25%. Transit times are likely to extend by an average of 2 to 3 days. Space ex-Northern Vietnam continues to be extremely tight as ocean transit times are unable to catch the holiday season schedule. US east coast and AMS demand is very strong in particular and saw significant increases compared to the week before. This market trend is expected to continue until the end of November. The Covid situation in Southern Vietnam has improved with the number of positive cases reduced to 1000 per day. The curfew in Ho Chi Minh has been cancelled for October, and the government has allowed all factories to resume normal operations. Demand is strong and expected to increase as factories run full speed to catch up to holiday deadlines.

Europe

  • Demand steady WoW. Rates slightly up this week, but no significant market shock driving this. Capacity still sufficient to meet demand. Expect to see more PAX capacity on the Trans-Atlantic being phased into airline schedules in the coming weeks. Potentially a sign of a more stable peak season on TAWB when compared with other trade lanes.
  • EU airlines still offer attractive solutions into US hubs via secondary hubs, keeping some stability in the market with regards to capacity.
  • Far East Eastbound back to full operational capacity after Golden Week.
  • Still very heavy strain on EU ground handling terminals at AMS and FRA. Manage expectations with clients accordingly and build extra lead time accordingly.
  • Advice continues for all trade lanes ex EU: Place bookings at least 7 days ahead of CRD for most optimal rates and routing solutions.

Americas

  • US: US Export demand remains steady and stable. Larger shipments from major outbound gateways can take 2 to 4 days from booking to uplift into the EU, LATAM, or Asia.
  • LAX/ORD/JFK ground handlers continue to face large 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 implemented new, earlier close outs for exports to accommodate longer throughput times and screening requirements.
  • Rates haven’t experienced any significant changes compared to the previous week.
  • Recommendation Book early considering the dwell time at airports.

Updates from Flexport's Customs & Compliance Team

USTR Provides More Details for Section 301 Exclusions

The Office of the US Trade Representative provided clarity on the process to begin reinstating Section 301 exclusion extensions of 549 products, seeking comments through December 1, 2021 from the trade on which products the USTR should grant exclusions and for how long. Tariffs will not be refundable from the most recent expiration date, but would begin applying for entries from October 12, 2021.

CBP Starts Testing New MID-Like Identifiers

On October 6, CBP announced they are revamping the MID code used in customs entries to replace it with an alternative identifier. CBP will test three possible replacements and participants in the program would obtain the identifiers and provide them to CBP. CBP said they expect two of the three identifiers to replace the MID.


Factory Output News

China Zhejiang free trade zone keeps chugging on to facilitate the opening-up. Source

Taiwan Driven by rising demand & prices for electronics and raw materials, Taiwan Sept exports increased 29.2% YoY, setting a new monthly record. Source

Vietnam Vietnamese government is offering transportation and companies are upping pay and benefits for workers to return to work Source

Singapore Singapore’s aerospace industry is ramping up and expanding their capacity, estimated to increase its labour pool over the next 2 years Source

Bangladesh Bangladesh export to EU may face challenge by the new framework of GSP Generalised Scheme of Preferences (GSP Plus) Source


Freight Market News

New Regulations for Shipments Coming to Mexico FreightWaves reports beginning January 1, 2022, the Mexican Tax Authority will begin full enforcement of new waybill regulations requiring any entities sending goods through Mexico to modify their electronic invoices. Shippers, carriers, or others could be subject to up to $4,500 in fines for incorrect documentation.

Read More: Your Must-Read Roadmap to Optimize for New HTS Codes

US Port Congestion Slows Retail Imports Covid-19 infections in Asia and shortages of equipment, labor, truck, and rail capacity have contributed to US port congestion and slowed retail imports according to the National Retail Federation.

Read More: New Post-Covid Indicator Shows Q4 Goods Demand Starts Strong

Canada Congestion Threatens Supply Chain The Loadstar reports the situation at the Port of Vancouver has become serious with a surge of holiday imports while chassis are in short supply. At the end of last week, on-time vessel arrivals fell to 16% and at three of the port’s four container facilities percentages also fell for truck trips completed in under 90 minutes.

Read More: Transpacific Shifts: Import Demand Is Changing the World’s Busiest Trade Lane


Economic Highlights

US Maintains China Trade Policy. US Trade Representative Katherine Tai delivered a speech on how the Biden Administration would treat China, following a lengthy review. The upshot was that tariffs would stay in place, discussions with China would follow, and the US would engage with allies to achieve its goals.

In a subsequent conversation with Chinese Vice Premier Liu He, Liu asked Tai to consider lifting the tariffs.

US Exports, Imports Climb in August. Exports were up 0.7% over July, while imports rose 1.1%. Looking at year-to-August figures, 2021 exports are up 23.9% over 2020 and 3.3% over 2019. Imports for the same period are up 23.1% over 2020 and 9.6% over 2019.

WTO Ups Trade Prediction. It increased its forecast for global 2021 merchandise trade volume growth to 10.8% and 4.7% in 2022.

Rising Oil, Interest Rates. The price of West Texas Intermediate Crude rose above $80/barrel, its highest level since late 2014. Meanwhile the US 10 year Treasury rate has risen sharply, to 1.61% from a recent low of 1.17% at the beginning of August.

EU Retail Trade Up in August. Overall retail sales rose 0.3%, while sales of non-food products were up 1.8%, each reversing a decline in July.

UK and EU Prepare to Hash Out NI Protocol The UK and the EU seemed headed toward further Brexit-related disagreement over the treatment of Northern Ireland. British Prime Minister Boris Johnson demanded the EU “fix it or ditch it.”

US Car Sales Slump US sales of cars and light trucks fell by 24.9% in the year to September and were their lowest since April 2020. The last time before the pandemic that sales were that low was in January 2012.


Freight Market Update is a complimentary 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.

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