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Market Update

Freight Market Update: February 1, 2022

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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Freight Market Updates Live: Get the latest information on the ocean and air freight markets by region. Spend 30 minutes with our experts, including time for Q&A.

North America Freight Market Update Live: Thurs, February 10 @ 8:30 am PST | 11:30 am EST

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

Ocean Freight Market Update


Asia → North America (TPEB)

  • Destination delays and sliding departures at origin are continuing to bring on-time performance and schedule reliability to historical lows. Congestion and trucking capacity shortages remain severe. Shippers with urgent cargo, or those working to replenish depleted inventories, are still willing to pay premium rates for space. Covid-related labor shortages and uncertainties surrounding when production will resume at origin remain at play. Demand is expected to remain strong in the coming months on TPEB.
  • Rates Rate levels remain elevated, and the premium market is strong.
  • Space Critical
  • Capacity/Equipment Critical/Severe Undercapacity
  • Recommendation Book at least 2-4 weeks prior to CRD. Consider premium options and carrier IPIs through the PSW gateway. Be flexible in regard to equipment and routings.

Asia → Europe (FEWB)

  • Space and equipment crunches continue into the Lunar New Year period as market demand consistently exceeds supply. Space and equipment remain tight due to frequent blank sailings and port omissions. The situation is exacerbated by the trucking shortage at origin. Carriers are overcommitted and are limiting booking acceptance or rolling shipments. With continuous vessel delays and shifts, schedule reliability is very low and delays for pre-LNY sailings will have a significant impact into the post-LNY period. This week, many factories in China are already starting to close down for the holidays.
  • Rates Rates have increased slightly during January in the lead up to the pre-LNY peak season. Majority of carriers extended rates until mid-February.
  • Space difficult space situation
  • Capacity/Equipment Severe equipment shortage across all Asia origins.
  • Recommendation Book at least 3 to 4 weeks prior to CRD. Consider premium options, which may be limited. Be flexible in regard to equipment.

Europe → North America (TAWB)

  • Schedule reliability No improvement so far with schedule reliability still hovering around 33-35% compared to around 60-65% 2 years ago.
  • Congestion at USEC ports is stable with no major issues announced. LA/LGB situation is still critical while yard congestion gets slightly better.
  • Rates Ocean levels continue to remain high with further increases expected as from February.
  • 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

  • Demand for space is increasing as we begin ISC’s traditional peak season. This time period is the last quarter of India’s financial calendar where we see demand rise as manufacturers look for a strong close to their books to end the year.
  • Rates remain at current levels. Multiple carriers expected to implement GRI for 2H Feb.
  • Space to the USWC is and will remain a challenge into 2022. Port omissions on services to the USWC continue to cut capacity out of the ISC. Recommendation is to move on premium services or look for alternative routing to USEC and transload to final destination.
  • Space to the USEC will be difficult from mid to end of February as bunched vessels off the coast of USEC is resulting in longer turn-around time back to origin. This leaves a gap of sailings for the most consistent services typically relied upon for ISC-USEC
  • Equipment remains a challenge at smaller Indian ports in the South and South-East as well as inland container depots (ICDs). Carriers are encouraging shippers’ use of their own origin carriage services to mitigate equipment shortages. Equipment is normalized at key ports such as Nhava Sheva and Mundra. Recommendation remains to load via wet port instead of using ICDs to avoid delays and accessorial fees.

North America → Asia

  • Vessel arrivals and available capacity remain fluid for USWC POLs. Rail availability over the USWC is limited as carriers are strictly adhering to allocations. USEC situation sees Savannah operations improving but increasing delays around Charleston and New York. Erratic vessel schedules continue to create void sailings and delays in schedules creating significant challenges with posted earliest return dates and vessel cut-offs at the port.
  • Rates There have been a few GRI advisories posted for mid-February specific to transshipment ports as well as Oceania destinations.
  • Equipment Deficits on containers and chassis continue to plague 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 although there have been some instances where conditions were tight due to operational issues caused by phasing in new vessels. US West Coast service to Europe is extremely tight due to void sailings and skipped ports caused by systematic delays.
  • Rates There is one small GRI announced for February for the US East Coast.
  • 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


Europe

  • Demand is manageable this week so far, some capacity squeezes towards the end of last week due to the situation at FRA airport, which has pushed rates up slightly. Lufthansa banned transit cargo (i.e. loose cargo transhipping from AMS at FRA into the US) due to increased Covid cases in their terminals. They lifted this embargo on Jan 31, so expect the capacity squeeze to be short lived.
  • AMS airport also faced some delays and flight cancellations due to very heavy wind conditions from Storm Corrie (Monday). Ground handling agents warned of the delays to be expected for the start of this week. Again, the impact should be limited and cleared as soon as the storm has passed.
  • Some carriers are still offering deferred routings into major US hubs via secondary airports where they have regular passenger capacity. If the lead time can take it, this deferred option can be very suitable, and offer rates below the standard market level
  • Advice remains in place ex-EU: continue to place bookings early for optimal rates and solutions.

Americas

  • Demand to Asia will decrease during CNY while Europe and Latam will remain stable.
  • Capacity is manageable and airlines are back on schedule after cancellations due the weekend Nor'easter.
  • LAX/ORD/JFK terminals have slightly reduced the inbound backlog cargo, which has a positive effect on the export side.
  • Larger shipments from major outbound gateways can take 2 to 3 days from booking to uplift.
  • Most terminals provide reduced free time for storage, and have earlier close-outs for exports to accommodate throughput times and screening requirements.
  • Rates to Latam, Europe and Asia have not experienced significant changes, but fuel is slightly higher.
  • Congestion at the European hubs keeps on improving which is slightly reducing the average dwell time at destination.

Trucking & Intermodal


Europe

  • Truck, barge and rail capacity are still under pressure due to high demand. Barge and rail capacity slowly increasing, however due to weather and congestion reasons pick-up delays to be expected at the Ocean Ports
  • Rates. High fuel prices force carriers to further increase their fuel surcharge fees
  • Space. Sufficient space on barge and rail.
  • Recommendation. Early bookings and flexible unloading/delivery times at receiving warehouses remain key to obtain truck, barge and rail slots

Customs and Compliance News

House Introduces COMPETES Act

Members of the House of Representatives introduced their chamber’s version of the Senate’s USICA bill, seeking to address a wide swath of trade issues. Among them, the bill reauthorizes a more stringent GSP and MTB, ends the wide application of de minimis on merchandise from China, speeds up AD/CV approvals when ITC has approved similar cases, omits a requirement for the U.S. Trade Representative (USTR) to reopen exclusion process for Section 301 tariffs, and requires that nonresident importers have U.S. assets and customs bonds. President Biden is aiming to have a compromise bill between the House and Senate versions on his desk by February or March at the latest. However, Senators have indicated compromise talks could last through late spring.

USTR Updates Some Section 301 Exclusions Due to HS 2022 Update

The Office of the USTR will update a Section 301 tariff product exclusion to align the exclusions with HS 2022 changes effective January 27, 2022. The exclusion in question is located in “U.S. notes 20(sss)(i)(1), 20(sss)(iii)(14), and 20(iii)(15) to subchapter III of chapter 99” and is relevant to HTS codes in Chapters 38 and 84, respectively.


Factory Output News

  • Vietnam Fitch Ratings expect Vietnam growth to increase to 7.9% in 2022 and 6.5% in 2023 as domestic demand rebounds and export remains strong Source
  • Cambodia and the United Arab Emirates are in discussions of a bilateral FTA Source
  • Malaysia AirAsia has signed a partnership agreement with French logistic firm Geodis to provide regular dedicated scheduled cargo flights Source
  • Singapore signed a MOU with Colombia to promote export of goods and services Source
  • Indonesia plans to penetrate Australia’s automotive industry within the first quarter of 2022 Source
  • India Electronic exports increased by 49% in April-Dec 2021 compared to the same period in 2020 Source

Freight Market News

Omicron Drives Rail Volume Decline Supply Chain Dive reports that the rise in Omicron cases have led to staffing challenges within rail service. In addition to disrupted service, cumulative volume across railroads declined approximately 4.5% in the first three weeks of 2022, as compared to 2021. Still, demand for rail is expected to remain high as shippers try to avoid high trucking prices.


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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