Market Update

Freight Market Update: February 23, 2021

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: Extended
  • GRI Feb 15: None.
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: No change in rate levels being extended through the end of February. Carriers continue to reiterate that premium remains the best way to maximize ability to secure space and equipment.

Asia → Europe (Far East Westbound)

  • Rates: Extended
  • GRI Feb 15: Mostly extended until end of February and some carriers even until end of March
  • Capacity: Recommend advance booking notice at least 21 days prior to CRD.
  • Notes: Rates remain at high but stable levels expected to persist until the end of February. Weeks 7 and 8 were impacted by CNY but we see a reasonable recovery from week 9 onwards. No significant changes to equipment shortages. So far, there are 8 CNY blank sailings announced (four by Ocean Alliance, three by 2M and one by The Alliance). Some carriers are accepting limited UK cargo while most of the restrictions remain in place.

Europe → North America (Transatlantic Westbound)

  • Rates: Increasing
  • GRI February 15: Implemented
  • GRI March 1: Likely implemented (North Europe and Med)
  • Capacity: Recommend advanced booking notice at least 5 weeks prior to CRD.
  • Notes: We recommend requesting premium service for most urgent cargo. The strong market is expected to continue through May as carriers report full vessel utilization up to 6 weeks ahead of ETD with high volume anticipated in Q2. Expect further rate increases starting in March.
  • Supply remains extremely tight across Europe. There are shortages of Reefer containers and 40’/HC dry, in particular in Germany, Italy, Spain and Portugal, plus severe equipment deficit in Turkey.
  • Port congestion: North European Ports are clearing the backlog caused by the bad weather of previous weeks. Felixstowe and Southampton are still congested due to high import volumes.
  • Capacity development: upcoming blank sailings on the AL1, AL5 and AL6 service between week 9 and week 14. Expect void sailings to continue through March/April as carriers try to recover schedule reliability.

India → North America

  • Rates: Increasing
  • GRI February 15: Implemented
  • GRI March 1: Pending, likely
  • Capacity: Space is extremely full and rolling to USWC. Space is tight to USEC. Transhipment at SIN/CMB has 1-3 week delays.
  • Equipment: Shortages reported in Mundra and Delhi regions. Equipment shortages continue to be an issue—please make bookings in advance so forwarders can plan for container availability at your local ICD/wet port. Consider moving 20GP instead of 40GP/HC. Recommend utilizing premium services to secure equipment faster.

North America → Asia

  • Rates: Increasing
  • GRI March 1—Multiple rate increases announced, concentrated on US West Coast ports. A few carriers have also announced significant GRI’s just for reefer containers.
  • GRI March 15—A few carriers announced increases for Asia and a substantial GRI to Australia/New Zealand.
  • Capacity: Recommend advanced booking notice 7-10 days prior to CRD at Port.
  • Capacity: Recommend advanced booking notice 10-14 days prior to CRD at Rail Ramp.
  • Chassis availability is tight at most major ports and rail ramps. Recommend factoring in more lead time for truckers to procure chassis.
  • Port of LA situation remains very fluid. Vessel schedule integrity is completely off, causing vessel bunching and smaller windows for container delivery.

North America → Europe

  • Rates: Steady
  • Port congestion along the US East Coast and in North Europe impacts vessel-schedule integrity for all services, causing capacity to be lost week to week as ships try to make up time. We urge booking sooner to help ensure coverage for bookings.
  • Capacity: Recommend advanced booking notice 10–14 days prior to CRD at port.
  • Capacity: Recommend advanced booking notice 10–14 days prior to CRD at rail ramp.
  • Chassis availability is tight at most major ports and rail ramps. Anticipate more lead time for truckers to procure chassis.

Air Freight Market Update


Asia

  • With CNY over, factory production is returning to normal levels but airfreight demand exit China is still weaker than anticipated and rates have declined this week as many additional charters hit the market. However, March 1st is likely to see a rapid return of volume and higher rates.
  • Markets in North Asia, Taiwan and SE Asia have remained strong through CNY with rates averaging between $7-8.50 per kg on the TPEB and slightly lower on the FEWB.
  • Flexport begins new dedicated-charter flying next week with 1 additional frequency from HKG to LAX and the inauguration of 2x per week charters from TPE to LAX.

Europe

  • Rates remain at elevated levels as capacity ex Europe to Asia and North-/South America is constrained. Carriers reporting high load factors from all major outbound hubs in Europe, mainly driven by high demand from the automotive & manufacturing and pharma industry verticals.
  • Capacity constraints have led to more increases of underlying air-freight rates to North and South America.
  • Main airports in E.U. are fully operational, but report back smaller backlogs from import moves, which have a slight negative domino effect on the outbound side causing some throughput delays.

Americas

  • Exports from the U.S. saw a big uptick in activity and capacity to Europe and Asia from all major U.S. hubs is constrained. Carriers report back very high laid-factors and see capacity booked out as far as the second week of March.
  • LATAM SB continues to see strong demand with rolling backlogs reported to destinations such as Chile, Brazil, Argentina. Capacity to Central America remains heavily constrained.

Factory Output News

China Tesla quality issues threaten its dominance in Chinese EV market. [source]

Vietnam 15 new community cases were recorded in Hai Duong raising the province’s tally to 611. All of them were quarantined before found positive for covid 19. [source]

Indonesia 5 People were killed in a severe flood that hits Jakarta. Indonesia’s meteorological agency warned of more heavy downpour next week. [source]

Sri Lanka The International Finance Corporation (IFC) of the World Bank Group has proposed US$ 50 million long-term financing facility to Brandix Lanka Limited to sustain its operations and preserve jobs in the country in response to COVID impacting Sri Lanka’s apparel sector [source]

Updates from Flexport's Customs & Compliance Team

CIT Rules Section 232 Tariffs to be Deducted from Foregin Export Prices in AD/CVD Calculations

The Court of International Trade (CIT) published a ruling on February 17th that determined Section 232 tariffs should be deducted from the foreign export price of goods when calculating Anti-Dumping & Countervailing (AD/CVD) rates. Anti-Dumping & Countervailing duties are trade measures meant to protect domestic producers and industry by offsetting the value of goods imported by foreign producers below “normal value”. The U.S. Department of Commerce will generally compare the exporter’s home market price to the price of its sales in the U.S., adjusted for several economic factors, to determine if dumping has occurred. Any deductions from the exporter’s home market price, all other factors remaining equal, would increase the gap between the two prices assessed and have the potential to increase AD/CVD duty rates.


Economic highlights from Flexport Chief Economist Dr. Phil Levy

  • Producer price index jumps by a seasonally adjusted 1.3% in the year to January, the largest increase since the index began in December 2009. Unadjusted measures rose even more quickly.
  • Treasury bond yields climb as the rate on the benchmark 10-year Treasury bond hit 1.34% on Friday, the highest level since late February 2020. The rate was as low as 0.52% in August and started February at 1.09%.
  • Retail sales surge in January by 5.3%, significantly exceeding expectations. Retail sales were 7.4% above January 2020. The biggest monthly change was in electronics and appliance stores, up 14.7%, while the biggest annual change is in “nonstore retailers,” up 28.7%.
  • WTO shows strong trade numbers. The “Goods Trade Barometer” looks at merchandise trade trends. All components are at or above trend, though with some signs of slowing.
  • First-time US jobless claims were 861K, above the four-week average.

Freight Market News


At Sea Container Loss Continues The 13,100-TEU Maersk Eindhoven lost 260 containers overboard during an engine stop due to heavy seas that prevented the ship from maneuvering. The Maritime Executive reports investigations are ongoing as the number of overboard containers rises industry-wide.

Container Factories Sell Out Again Container manufacturers are exercising market discipline in the face of high demand, reveals American Shipper. Factories are sold out until July.

777 Suspensions Miss Freighters After two planes dropped engine debris while in flight, Boeing recommended a suspension of all its planes containing engines from a single company. The Loadstar reports none of the grounded planes are freighters and any reduced capacity is unlikely to impact cargo volumes on a broad scale.


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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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