Freight Market Update: March 30, 2021
Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of March, 30 2021.
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Ocean Freight Market Update
Asia → North America (Transpacific Eastbound)
- Rates: Slight increases.
- GRI Mar 15: None.
- GRI Apr 1: Slight increases.
- Capacity: Recommended advance booking notice at least 21 days prior to CRD.
- Notes: The impact of the Suez Canal situation is being closely monitored in terms of its effect on both capacity to the USEC over the next few weeks and carrier rate levels for April. So far, carriers have indicated slight increases in rate levels to the USEC owing to the Suez situation and fuel adjustment fees.
Asia → Europe (Far East Westbound)
- Rates: Rate increase expected due to Suez Canal situation.
- GRI Apr 1: Some carriers have indicated a rate increase.
- Capacity: Recommend advance booking notice at least 21 days prior to CRD.
- Biggest news has been centered on the Ever Given in the Suez Canal. While the ship is now free, we expect 2-3 months of vessel delays and fewer containers returning to Asia. Also likely are increased blank sailings in weeks 15/16, though there are no official announcements yet. Overall, it’s clear that space and equipment will be very challenging in the next few weeks.
Europe → North America (Transatlantic Westbound)
- Rates: Increasing
- GRI March 15: Implemented
- GRI April 1: Likely Implemented
- Capacity: Recommend advanced booking notice at least 5 weeks prior to CRD.
- Notes: We recommend booking urgent cargo on Premium. Market expected to remain dynamic through at least the end of Q2 as capacity remains very low.
- Supply is extremely tight across Europe. Suez canal blockage puts further pressure on EQ availability, in particular in Turkey, Germany, Italy, Spain and Portugal.
- Port congestion will keep driving low schedule reliability. Expect cargo delivery and booking windows to remain in place to alleviate terminal congestion at origin.
- Port updates: Port of Montreal remains open while negotiations continue with union members. By law, the union representing the longshoremen is required to provide 72hrs notice before any formal job action is taken.
- Capacity development: 4 new blank sailings announced for April, removing ~10% of trade capacity in a 4-week period ex Europe to North America.
India → North America
- Rates: Increased
- GRI April 1: Increase across multiple carriers mainly to USEC due to delays with Suez Canal.
- Capacity: Space is extremely tight due to overbooked vessels, low vessel transit time reliability, and congestion at many major terminals. Transhipment delays continue to persist due to congestion and high volumes on TPEB trade. Suggested booking 15-20 days prior to CRD.
- Equipment: Inventory shortages at Mundra, New Delhi, and Bangalore in particular. Starting to see some relief due to government intervention.
- Notes: We continue to recommend booking urgent cargo on a Premium no-roll service. Expect downstream equipment and vessel capacity issues due to the Suez Canal incident.
North America → Asia
- Rates: Increasing
- GRI April 1: Multiple carriers intend to implement a GRI for the start of next month.
- 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. Recommend factoring in more lead time for truckers to procure chassis.
- Severe vessel congestion at both US coasts continues to move vessel cut-off dates and earliest return dates in the network. The backlog of incoming vessels exiting the Suez Canal may make matters worse in the coming weeks.
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 make up time. We urge booking sooner to help ensure coverage. 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
- The airfreight market on all export trade lanes in Asia remains strong as we finish Q1. Rates are at their Q1 peak and are expected to maintain these levels for at least the first 2 weeks of April. Capacity is very tight on most trade lanes with TPE and BKK fully booked until April 5th.
- FEWB trade lane should continue to see strength as ocean-to-air conversions start to materialize due to impact of Ever Given crisis.
- European Export demand continues to show a lot of strength to the Americas and Asia in general, though space to the West Coast is the most constrained. ORD, JFK and ATL had a slight influx of new capacity from PAX and freighter carriers, which provided some relief on backlogs and high yielding per kg rates. But there is almost no space before the Easter holidays and booking trends show that also after the long holiday weekend, demand should remain high.
- Export market remains tight due to a lack of belly capacity. It takes several days to get bookings to key European destinations but capacity is open in the TransPacific Westbound sector.
- Many US carriers have delayed the start of transatlantic passenger services as many European countries reimpose lockdowns and close borders to tourists following a surge in Covid cases. It’s unclear how long these delays will persist,
- ORD continues to see large backlogs in the breakdown of import freight as ground handlers are overwhelmed by large numbers of freighter flights from both Asia and Europe.
Factory Output News
China EV maker Nio halts its production for 5 working days due to the shortage in semiconductor chips. [source]
Vietnam GDP for Q1 2021 grew 4.48% Year on Year with export growing 19.2% year on Year in March 2021. [source]
United States The IHS Markit Flash U.S. Manufacturing PMI increased from 58.6 in February to 59.0 in March, driven by growth in new orders which expanded at the quickest pace since June 2014. [source]
United States New orders for durable goods fell 1.1% in February. Transportation led the decrease of new orders, falling 1.6 percent for the month after five consecutive monthly increases. [source]
Updates from Flexport's Customs & Compliance Team
Commerce Delaying Implementation of AIM System
On March 29th, the U.S. Department of Commerce announced it is delaying the launch of the majority of its new Aluminum Import Monitoring & Analysis (AIM) System until June 28, 2021. Originally slated for a March 29th release, Commerce is delaying compliance with license requirements for all aluminum imports until June. Commerce will, however, release the public AIM monitor on the AIM system website on March 29, 2021.
USTR Announces Next Steps for Section 301 DST Investigations
On March 26th, U.S. Trade Representative (USTR) Katherine Tai announced that the U.S. will maintain tariffs on goods from Austria, Britain, India, Italy, Spain and Turkey in retaliation for their digital services taxes (DSTs). "USTR is proceeding with the public notice and comment process on possible trade actions to preserve procedural options before the conclusion of the statutory one-year time period for completing the investigations.” The office of the USTR also announced it will terminate investigations into Brazil, the Czech Republic, the European Union, and Indonesia as they did not implement DSTs at the onset of the investigation.
Economic highlights from Flexport Chief Economist Dr. Phil Levy
- US income and spending fell in February. Disposable personal income fell by 8.0% and personal consumption expenditures fell by 1.0%, both largely in line with forecasts. In each case, the drops only partially offset large increases in January. The income drop was more than accounted for by the completion of government payments in January.
- Within personal consumption, goods consumption was down 3.0%, while services consumption was up 0.1%. It is too soon to discern any trend, but a key question is whether the shift from services to goods that has helped drive the global logistics squeeze will recede with health concerns.
- A key inflation measure accompanying these numbers remained tame. The price deflator for personal consumption expenditures excluding food and energy (known as Core PCE) was up 1.4% in February over the year earlier. It has been in the 1.3-1.5% range since last July.
- US monthly trade dips. Advance Census numbers show seasonally-adjusted February imports down 1.4% from January, but up 10.1% from February 2020. Exports were down 3.8% on the month and 5.4% on the year. Wholesale and retail inventories were relatively flat.
- EU consumer confidence hit its highest reading in a year in February.
Freight Market News
Ever Given Stuck and Freed in the Suez Canal The 20,124-TEU Ever Given container ship suffered severe weather in the Suez Canal and became lodged diagonally for six days. Dredger and tugboat crews were able to free the ship with the arrival of a king tide, but cargo delays are likely to occur for weeks. Flexport is providing frequent updates and industry reactions on Flexport’s blog.
Warehouse Space Is Filling up Fast As a wave of consumer demand continues, warehouse capacity is getting tight in both the US and UK. Rampant demand, plus rising construction costs to create additional space, could lead to a rent-cost increase of up to 10% this year, reports The Loadstar.
US Port Grants Focus on Climate Change The US Department of Transportation has issued a new round of grants to upgrade or expand port infrastructure, in part to address climate change, reports the Journal of Commerce.
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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.