--- title: "Freight Market Update: June 15, 2021 " description: "Weekly update: ocean carriers post record profits as Transpacific rates climb and supply stays tight against demand." language: en canonical: https://www.flex.thisisbrew.com/logistics-updates/freight-market-update-june-15-2021/ lifecycle: live --- # Freight Market Update: June 15, 2021 ## Upcoming Webinar: June 23 at 9:00 am PT ## State of Trade: The Secret Key to US Trade Negotiations Will we get new trade deals, or more of the same? Much will come down to President Biden gaining new negotiating authority from Congress. We’ll take a close look at this secret key to strengthening trade rules and critical supply chains, both avowed goals of the White House. [Watch now.](https://www.youtube.com/watch?v=lZZZwSgpPbo) ## Ocean Freight Market Update ## Asia → North America (Transpacific Eastbound) - **Ocean carriers post record earnings** as the result of record-high rates that continue to climb steadily from Asia to North America. Meanwhile, shippers still face a market where the lack of supply, relative to demand, leaves them paying premium rates even while booking to estimated departure times and schedule reliability stay low. Despite carrier efforts to keep equipment returning in a timely fashion to Asia for export and vessels adhering to sailing schedules and rotations, severe port and intermodal congestion continue to constrain available capacity. - **Rates** June 1 GRI implemented, June 15 GRI mitigated, July 1st expected - **Space** Critical - **Capacity/Equipment** Critical / severe under capacity - **Recommendation** Book at least 4-6 weeks in advance of CRD. - Read more - [Yantian port reports a new COVID-19 case related to the freighter operator case](https://www.hellenicshippingnews.com/yantian-port-reports-a-new-covid-19-case-related-to-the-freighter-operator-case/) - [Threat to sailing schedules from new congestion problem at Yantian port](https://theloadstar.com/threat-to-sailing-schedules-from-new-congestion-problem-at-yantian-port/) - [Congress to address port congestion, US export challenges](https://www.joc.com/maritime-news/container-lines/congress-address-port-congestion-us-export-challenges_20210614.html-0) ## Asia → Europe (Far East Westbound) - **Space and equipment crunch continues**. Market demand is exceeding supply and rates are skyrocketing. There are more blank sailings coming up in June/July and no improvement in equipment status. Carriers have a sizable backlog and are not able to accommodate their booking intake. Yantian port restrictions and congestion are causing further disruption as well with omissions and diversions to alternative ports - **Rates** Significant increase on June 15th and rates will go up further moving into July - **Space** Extremely tight space situation - **Capacity/Equipment** Severe equipment shortage across all Asia origins - **Recommendation** Book at least 4-5 week prior CRD. Consider the limited premium options. Adopt flexibility on equipment substitution. ## Europe → North America (TAWB) - **Growing congestion in North Europe ports restricts export cargo deliveries**. Terminal operator PSA Antwerp announced a seven-day delivery window before the confirmed arrival date of the nominated vessel. - **Rates** New PSS / GRI have been announced for July, backed by strong vessel utilization and high-volume forecasts. - **Space** Critical, there is high demand on all services. - **Capacity/Equipment** Equipment and space are guaranteed only with Premium rates. Capacity is impacted by blank sailings and port omissions made by carriers to get their schedules back in order. Expect equipment availability to worsen in the coming months as the ripple effect of the Yantian–service disruption unfolds. - **Recommendation** Book 5 or more weeks prior to CRD. Request Premium service for cargo that needs higher reliability. ## India → North America - **Blank sailings and congestion in China make a bad situation worse from ISC -> USWC**. Over recent weeks blank sailings have crippled capacity to the USWC. Carriers have and will continue to prioritize TPEB shipments to clear backlog and congestion following Yantian and other China port closures. These issues coupled with an expected surge in export volume due to relaxing of Covid restrictions will make it hard to secure space throughout this summer. - **Rates** 2nd half of June GRI Implemented - **Space** Tight to USWC and Canada - **Capacity/Equipment** Equipment shortages easing. South India still a challenge. Feeder space to transhipment ports like Colombo is tight. - **Recommendation** Use premiums on urgent shipments and shipments with quickly approaching CRDs. ## North America → Asia - **Vessel delays and void sailings continue to shrink capacity**. The US West Coast is still most affected by this lost capacity. Decisions by some ocean carriers to omit or scale back their Port of Oakland calls will further hamper export capabilities. Carriers prioritizing moving their empties back, compounds the situation. - **Rates** Anticipating quarterly BAF levels will increase for July 1. GRI advisories are mostly limited to reefer shipments at this time. - **Space** Tight from the US East and West Coast. A new service launching in the US Gulf will increase its capacity a good deal. The port of Yantian closure may impact feeder networks for Southeast Asia destinations. - **Capacity/Equipment** Capacity tight from the US East and West Coast. Equipment and Chassis tight at most ports and all ramps. - **Recommendation** Book 4+ weeks out. ## North America → Europe - **US and Europe port congestion diminish available capacity**. Ocean carriers implement numerous port omissions to make up vessel schedules, causing a new set of backlogs. - **Rates** Steady, but with a July 1 BAF change, rate levels should see an uptick. - **Space** Very tight from the US West Coast. The US East Coast is being managed more tightly by a few ocean carriers due to lost space from vessel delays. - **Capacity/Equipment** Containers at US EC ports are available but certain rail ramps are tight. Chassis very tight at both ports and rail ramps. - **Recommendation** Recommend 4+ weeks lead time on bookings from the US East Coast and 5 to 6+ weeks if possible for the US West Coast. ## Air Freight Market Update ## Asia - **The Asia export market remains a bit subdued** from the highs seen earlier in month but indications point to demand picking up this week as we near the end of Q2. - **Capacity** should remain tight over the next two months prior to the start of the traditional peak season as carriers use summer to perform heavy maintenance checks on their freighter aircraft. This capacity reduction along with robust consumption, especially in the US, should keep rates elevated during July and August. - **Passenger flights** are not likely to return to Asia in 2021 with the earliest date for any meaningful increase in April of 2022 (Summer IATA schedule season). ## Europe - **Export demand remains strong across all trade lanes**, elevating rates to higher levels than we usually see this time of year. - **Capacity** is expected to improve slightly on the TAWB, with some airlines restarting PAX flights into major US hubs. - For other trade lanes, capacity is manageable, with early booking still advised to secure space at best rate levels. - **Airport hubs in the EU** are operating as normal and not reporting backlogs for import/export. ## Americas - **Export capacity remains well utilized due to continued lack of belly capacity**. For large consignments it can take 2-3 days from booking to uplift into key European destinations, mainly from the West Coast. Capacity from WC gateways is the most constrained to Europe, while the Midwest and EC are very manageable. Capacity from the WC to Asia is filling up well, not driven by perishables as in recent weeks. - **Space to India**, Nepal and Bangladesh remains very constrained as aid and relief efforts reach the COVID-struck region—currently space is booked out until late June. - **LAX and ORD** ground handlers facing backlogs are using off-airport facilities to manage the flood of cargo. Ground handlers still report 2-5 days of backlog for breaking down arriving freight. - **Trucking** remains scarce for airport transfers and local pickup and deliveries, especially on the USWC. ## Updates from Flexport's Customs & Compliance Team **China Competition Bill passes the Senate, but has dubious future in the House** On June 8, the US Senate passed the [US Innovation and Competition Act](https://www.npr.org/2021/06/08/1004600001/the-senate-passes-a-bill-to-encourage-tech-competition-especially-with-china), a bill with a massive scope on technology and trade policies. Particularly, this bill authorizes a new MTB, a resumption of Section 301 tariff exclusion process, and renews GSP for more than five years. However, the bill faces slim prospects of passing in the House of Representatives, as the House has a couple bills addressing similar policy aims. **CIT says that importers must file protests to obtains refunds under Section 301 Exclusions** By dismissing a case whereby plaintiffs sought refunds via Section 301 Exclusions, the Court of International Trade (CIT) on June 11 effectively [said](https://www.cit.uscourts.gov/sites/cit/files/21-73.pdf) that importers must file a protest in a timely manner before filing a lawsuit in the CIT. Thus, the plaintiffs could not seek tariff relief since the statutory [protest filing deadline](https://www.law.cornell.edu/cfr/text/19/174.12) passed for pertinent entries. **The US and the EU resolve longstanding dispute over aircraft subsidies** On June 15, the US and the EU announced they had agreed on a resolution to the decade’s long Airbus-Boeing dispute, thereby relieving importers of the threat of back and forth retaliatory tariffs across the Atlantic. Both the [White House](https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/15/fact-sheet-u-s-eu-understanding-on-a-cooperative-framework-for-large-civil-aircraft/) and the [European Commission](https://ec.europa.eu/commission/presscorner/detail/en/ip_21_3001) hailed the deal as preserving competition in the aircraft industry while giving the US-EU trading relationship some extra stability. ## Factory Output News **China** The FAK rate from Asia to North Europe is hitting nearly $20,000 per 40ft. And the spot rate increased 1000% from last year. This huge spike brought enormous challenges to retailers, driving some small businesses out of business. \[[Source](https://theloadstar.com/asia-europe-spot-rates-head-for-20000-per-feu-as-new-china-covid-crisis-bites/)\] **China** The knock-on effect of Yantian port closure may take many months to resolve and lead to shortages in supply in during winter holidays. \[[Source](https://www.bbc.com/news/business-57446437)\] **Vietnam** Jointly made Pfizer-BioNTech vaccine approved for domestic emergency use in Vietnam. \[[Source](https://www.channelnewsasia.com/news/asia/covid-19-vietnam-approves-pfizer-biontech-vaccine-emergency-use-15001520)\] **Cambodia** Country launches industrial gold manufacturing.\[[Source](https://www.khmertimeskh.com/50872890/video-cambodia-to-launch-historic-industrial-gold-manufacturing/)\] **Thailand** Export sector—and economy—threatened by a series of Covid outbreaks at 130+ factories. \[[Source](https://www.channelnewsasia.com/news/business/covid-19-thailand-factories-outbreak-threaten-export-sector-15010824)\] **Philippines** Imports increased by 141% in April from the previous year and exports increased 72%, the highest growth in more than a decade. \[[Source](https://www.reuters.com/world/asia-pacific/philippines-april-exports-imports-rise-fastest-pace-over-decade-2021-06-09/)\] **India** Coal India, India’s largest domestic coal producer, is aiming for one billion tonnes of coal production by 2024. \[[Source](https://www.moneycontrol.com/news/business/coal-indias-114-mining-projects-under-different-stages-of-implementation-7028031.html)\] **Bangladesh** Schools and colleges will remain closed till June 30th in view of the surge in Covid-19 cases. This was an extension from June 13th. \[[Source](https://indianexpress.com/article/world/covid-19-schools-colleges-to-remain-closed-till-june-30-in-bangladesh/)\] **Pakistan** NCOC has placed restrictions on travellers from 26 countries including India, Bangladesh, Iran, Iraq, Indonesia in fear of a fourth wave of Covid-19. \[[Source](https://www.gulftoday.ae/news/2021/06/13/pakistan-puts-travel-ban-on--people-from-26-countries)\] **UK** Coronavirus restrictions rules will remain in place in England for another 4 weeks after the planned June 21st unlocking\[[Source](https://www.bbc.com/news/uk-57464097)\] ## Freight Market News **Yantian Delays Threaten Supply Chains** A partial closure at the port of Yantian, due to a Covid outbreak, could create long-term global congestion and delays. The [Loadstar](https://theloadstar.com/ripples-from-yantian-port-delays-building-to-unprecedented-supply-chain-disruption/) reports the turmoil could result in product shortages and an increase in the scarcity of shipping containers. **Read More**: [Yantian Port Congestion Scrambles Shipments After Covid Outbreak](https://www.flexport.com/blog/yantian-port-congestion-scrambles-shipments-after-covid-outbreak/) **Read More**: [Beating the Bullwhip Effect: Can Supply Chain Imbalances Be Fixed?](https://www.flexport.com/blog/beating-the-bullwhip-effect-can-supply-chain-imbalances-be-fixed/) **Ships Order Surge; So Do Steel Prices** [The Wall Street Journal](https://www.wsj.com/articles/ship-orders-surge-as-carriers-rush-to-add-capacity-11623179052) reports that 208 container ships worth $16.3 billion were added to the global order book in the past five years. Some shipbuilders are attempting to renegotiate, though, because the price of steel has shot up. A cargo ship needs 25,000 to 30,000 tons of steel. **Congress Investigates Congestion** US Congress has questions for US maritime regulators, container line representatives, and port officials about how to mitigate container shortages and shipping delays. [The Journal of Commerce](https://www.joc.com/maritime-news/container-lines/congress-address-port-congestion-us-export-challenges_20210614.html-0) reports the hearing will also address if Shipping Act violations occur when carriers refuse agricultural exports due to congestion. ## Economic highlights from Flexport Chief Economist Dr. Phil Levy **Further Evidence of Inflation** [US consumer prices](https://www.bls.gov/cpi/) rose 5.0% over the last 12 months. Chinese [producer prices](https://www.reuters.com/world/china/chinas-may-factory-gate-prices-rise-fastest-pace-over-12-years-2021-06-09/) rose 9.0%. Please note that the information in our publications is compiled from a variety of sources based on the information we have to date. 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