Market Update: January 3, 2018
Ocean and air freight rates and trends for the week of January 3, 2018.
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Ocean Freight Market Updates
The January 1 GRI will hold
The January 1 GRI was implemented at $300/FEU for the USWC, $400/FEU for the USEC, and about $200/FEU for Asia-Europe. Further rate increases are expected as the month continues.
As Chinese New Year approaches, rates are up and space is tight
Chinese New Year will begin on February 16. Factories in China will be closed and/or operating at diminished capacity for at least 4 weeks around that time.
Because of increased demand, rates will stay up and space will be more difficult to secure -- both trends that will continue through the start of Chinese New Year. End-of-year blank sailings have led to cargo overflows, further tightening space this week.
Prepare for Chinese New Year
These strategies can help keep your supply chain moving in advance of Chinese New Year (CNY):
- If possible, share a forecast with your Flexport team.
- Book your shipments at least three weeks prior to CNY.
- Follow up with suppliers on the Cargo Ready Date -- these can shift frequently since factories are running on maximum capacity.
- If you’re shipping multiple containers, split them among several bills of lading (to reduce impact if your shipment is rolled).
- Consider a service with a longer transit time, which is less likely to be overbooked.
- If your cargo is traveling inland, consider an alternate port of discharge -- this will allow for more options when choosing a sailing.
Check out more ways to prepare here!
**Europe - US: Weather delays and equipment shortages **
For Europe - U.S. services, especially from the UK, winter weather is likely to cause delays. We’re also seeing equipment shortages in many inland locations due to high demand.
Air Freight Market Updates
2018 is starting strong with high rates and space constraints
Final numbers are still being tallied, but it’s looking like 2017 was a record year for air freight. There’s plenty of momentum for air heading into 2018, thanks to steady demand for e-commerce products, service cancellations, and Chinese New Year.
What does this mean for you? We can expect rates to stay high, and space will remain difficult to secure in the coming weeks. Chinese New Year will maintain pressure on both rates and space, as importers rush to get their products out of China before February 16.
Get ready for Chinese New Year
- Share a forecast with your Flexport team, so that we can help you secure space. Air capacity is already constrained, and ocean-to-air conversions will exacerbate the issue as we approach Chinese New Year.
Other Freight Market Updates
Weather-related closures at the Ports of New York / New Jersey, Savannah, Charleston, and Norfolk
The ports of New York / New Jersey, Savannah, Charleston, and Norfolk announced closures on Wednesday, January 3 and Thursday, January 4, due to winter weather conditions. If your cargo is routing through either of these ports, you’ll probably see delays. These closures will impact operations for up to a week.
Expect weather-related delays generally
Big storms and extreme cold are forecast to hit the Midwest, East Coast, and Southern United States later this week. Thousands of flights have been canceled at EWR, BOS, LGA, ORD, and ATL.
Furthermore, this type of weather is always hard on trucking operations, as it causes mechanical, service, and capacity issues in impacted regions.
If you have cargo routing through any of these areas, keep an eye out for delays or rescheduled pickups.
The Merchandise Processing Fee (MPF) has increased
As of January 1, 2018, U.S. Customs has increased the MPF. The new minimum and maximum are:
- Minimum: $25.67 (up from $25.00)
- Maximum: $497.99 (up from $485.00)
The percentage used to calculate the MPF will remain the same, at 0.3464%.