Market Update

Freight Market Update: November 30, 2021

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 16, 2021.

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The State of Trade | The Year Ahead in Supply Chains: Forewarned is Forearmed December 1 at 9:00 AM PST / 12:00 PM EST

Join Flexport to discuss how logistics teams can ensure resiliency against ongoing disruption in 2022.

North American Freight Market Update Live: December 2 at 8:30 AM PST / 11:30 AM EST

European Freight Market Update Live: December 7 at 16:00 CET / 15:00 GMT

Get the latest on port congestion. Spend 30 minutes with our experts, including time for Q&A.

Ocean Freight Market Update


Asia → North America (TPEB)

  • Demand remains strong with a tightening capacity outlook on TPEB. Approximately 15% of capacity in December may be considered effectively unavailable due to congestion-related delays, sliding schedules, and vessel recovery measures from the carriers. Less space and continuing demand are keeping pressure on the market and bolstering high rate levels. Congestion at LA/LB and Savannah ports remains severe while recent weather events pose challenges in Vancouver.
  • Rates A few carriers implemented GRIs for 1H December. Rate levels remain elevated with strong premium demand outlook.
  • Space Critical
  • Capacity/Equipment Critical/Severe Undercapacity

Asia → Europe (FEWB)

  • Space and equipment crunches continue as market demand consistently exceeds supply with rates very high for a long period. The 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 shifts, schedule reliability is very low.
  • Rates Rates remain at a record high level, although they have been relatively stable through October and November. Some slight increases are expected for December in the lead up to the Chinese New Year period and due to blank sailing schedules.
  • 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)

  • USWC remains heavily congested at both LA and LB.
  • Congestion at USEC ports is spilling to Houston on top of the known situation in Savannah. Most lines are now omitting Savannah and replacing it with Charleston.
  • Rates December rates are set to remain strong for both USEC and USWC. PSS increases for USWC ports have been announced by a few lines.
  • Space Critical especially to the USWC
  • Capacity/Equipment Capacity remains tight for both North Europe and Mediterranean services. 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.

Indian Subcontinent → North America

  • Capacity to the West Coast remains a challenge as ocean carriers continue to omit ports like Nhava Sheva in an effort to right schedules disrupted by global delays. Smaller markets like Bangladesh are also becoming more of a challenge due to the country's reliance on using feeder vessels and transhipment ports to get to the final destination.
  • Rates for the first half of December remain unchanged from November levels as carriers push back their previously filed General Rate Increases (GRIs)
  • Space remains a challenge as global congestion results in omissions and altered sailing schedules. LA/LB, Savannah, and most recently Charleston are being hit the worst with berthing delays.
  • Equipment is still a challenge, but improvement can be seen at some of the larger ports such as Nhava Sheva and Mundra.
  • Recommendation Use premium services 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

  • Vessel arrivals and available capacity remain fluid 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: For December, there are multiple GRIs likely to be implemented for India destinations requiring transshipment as well as GRIs for destination Australia.
  • 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 from the US East and Gulf Coasts. US West Coast service to Europe is extremely tight due to void sailings caused by systematic delays. Multiple TAEB service strings will be omitting Savannah and calling Charleston or Jacksonville instead, due to the significant congestion issues at the port of Savannah.
  • Rates to remain steady for December.
  • 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: Demand is once again increasing, and rate levels have climbed from the week prior. With the emergence of the South African Omicron variant of Covid, the global supply chain is expected to become even more distorted. Covid-related cargo to the EU is increasing rapidly and is expected to be the main driver for the FEWB trade lane. The tight market situation is anticipated to continue until Lunar New Year.
  • S. China: The market situation ex-South China remains the same as the previous week. Capacity is tight as some PAX flights are still cancelled. Rates for both TPEB and FEWB lanes have increased, especially for FEWB. Some carriers have also announced flight cancellations ex-HKG/CAN. Ex-CAN airlines continue to reject large shipments or provide longer transit times of up to 3 weeks.
  • Taiwan: The market continues to be very tight and space constrained. Last week, China Airlines cancelled several flights to LAX/JFK due to aircraft mechanical issues. These cancellations will add additional dwell time at origin, particularly for JFK (estimated 4 to 7 additional days). Capacity to the US East Coast is almost fully booked through mid-December. Due to continued high demand, rate increases are anticipated for US east coast and SFO lanes and will likely be effective starting from December 6 until mid-month, but official announcements are pending. For the FEWB trade lane, the market continues to be tight and capacity full but there are no significant changes in the rate level. Both EVA Air and China airlines will resume direct flights to LHR in December.
  • SE Asia: Ex-BKK airlines can only accept small shipments as capacity is very constrained. We recommend placing bookings at least 10 days prior to CRD. Space is extremely tight ex-Southern Vietnam for all TPEB lanes. Export demand is still increasing and warehouse terminals are overloaded with cargo. In order to best secure space, bookings should be submitted at least 1 to 2 weeks in advance. Carriers have yet to announce flight cancellation during the Christmas and New Year holidays. Space is especially tight for FEWB lanes. Cathay Pacific had a recent outbreak of Covid among its pilots and the resulting quarantine measures have greatly impacted their European services and led to some rate increases. For ex-Northern Vietnam, space is tight and demand is increasing. Carriers typically announce some flight cancellations around this time but official announcements are pending. Rates for FEWB lanes have increased.

Europe

  • Demand is still very high this week and expected to remain at this level until the end of the year. There are more ocean to air conversions on the market ex-EU to the US, as shippers look for the quickness of air solutions to ensure stock levels are replenished before Christmas.
  • Capacity has been reintroduced on the Transatlantic trade lane; however demand still outweighs capacity, resulting in rates being squeezed higher, week over week. Much of the space for Week 48 is full; therefore, be prepared for a longer transit time and manage expectations accordingly.
  • Splitting cargo into smaller batches across more uplifts is a viable solution in a very congested market with limited capacity.
  • Congestion at AMS airport terminals has improved, but terminal congestion across other Europe hubs continues to be a bottleneck. It is expected to last until the end of the year, and negatively impact all freight forwarders’ transit times. To cope with this, terminals are hiring additional temporary staff, implementing new processes and rethinking their infrastructure.
  • Advice continues for all trade lanes ex-EU: Place bookings as early as possible for most optimal rates and routing solutions.

Americas

  • US export demand will remain at high levels until the last weeks of December. Larger shipments from major outbound gateways can take 2 to 4 days from booking to uplift into the EU, LATAM, or Asia.
  • US authorities lifted the ban on travelers from the EU, and European Airlines are slowly introducing more bellyhold capacity. Additional capacity has also been deployed into LATAM.
  • LAX/ORD/JFK ground handlers continue to face 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 shortened their free time for storage, and have implemented new, earlier close-outs for exports to accommodate longer throughput times and screening requirements.
  • Rates to Latam, Europe and Asia have seen seasonal increases, and will remain at these levels until the last weeks of December.
  • Slightly higher transit times into top European hubs due to the current influx of cargo arriving to their terminals.
  • Recommendation Book early considering the current dwell time at airports.

Updates from Flexport's Customs & Compliance Team

USTR Signals Openness to Add India to GSP Eligible Countries

Last week, the US Trade Representative (USTR) and the Indian Trade Minister released a joint statement pledging cooperation on a wide range of trade topics. Of particular interest was a mention of India’s desire to restore its previous GSP benefits and the US’s openness to India’s GSP restoration. The two trade officials were silent on a concrete pathway to such a resolution.

DST Tariffs on Indian Goods Terminated

On November 24, the USTR announced that the US will terminate its plan to impose 25% tariffs on 26 HTS headings on goods with country of origin India, following a settlement between the governments of India and the United States. India will continue to levy its Digital Service Tax, but will do so under the auspices of an international tax regime.


Factory Output News

  • Taiwan Taiwan semiconductor production is expected to grow by 25% by this year as demand continues to outpace supply. Source
  • Vietnam Vietnam factories continue to struggle with labor shortage to support year-end production. Source
  • Cambodia China-Cambodia Free Trade Agreement will take effect in January 2022. Source
  • Indonesia Indonesia plans to stop exporting tin in an effort to boost resources refining industry. Source
  • Singapore At least 50% of the logistics sector will experience displacement due to Industry 4.0 in the coming 3 to 5 years. Source
  • Sri Lanka Sri Lanka will impose higher taxes to cover expenses after a steep cut in value added tax in 2019. In the 2022 budget, a “super gain tax” will target large companies that earn more than 2B rupees in profit. The super gain tax is to charge an additional 25% from the large companies. Source
  • Bangladesh The Petrapole land border between India and Bangladesh will remain open 24/7 to reduce the detention period for trucks. Source

Freight Market News

Port Congestion in Canada Rises As of late Monday, there were 51 vessels waiting at berth at the Port of Vancouver—down from 54 on Sunday. The congestion follows the shutdown of Canada’s Vancouver-Kamloops rail line over the weekend as heavy rain hampered reopening efforts, according to FreightWaves.

Read More: The Start of a Plan to Clear LA/LB Port Congestion

2022 Chinese New Year Disruption Expected The Loadstar reports Covid restrictions and quarantine rules for ship crews in South China are expected to lower feeder capacity for the Pearl River Delta ahead of Chinese New Year. The disruption could create ripple effects such as an earlier surge in cargo to and from smaller ports.

Read More: How to Forge a Golden Age of Supply Chain


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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