--- title: "Freight Market Update: March 18, 2020 " description: "Tanker rates skyrocket as Saudi and Russian oil output surges, amid COVID-19 disruption to ocean and air freight." language: en canonical: https://www.flex.thisisbrew.com/logistics-updates/freight-market-update-march-18-2020/ lifecycle: live --- # Freight Market Update: March 18, 2020 *How will businesses recover from COVID-19? When will factories start running again? And how can you ensure your cargo is moving when they do? Read the *[Coronavirus Update](https://www.flexport.com/blog/coronavirus-update-how-to-jump-start-your-supply-chain/)* for detailed information from our experts in ocean, air, and trucking across the US and Asia.* ## Ocean Freight Market Update ## Ocean Market Update March 18, 2020 ## Air Freight Market Update ## Air Market Update March 18, 2020 ## Freight Market News **Tanker Freight Rates Skyrocket** As Russia and Saudi Arabia announce oil production boosts, daily rates for VLCCs have jumped from $33,000 in early March to between $200K and $300K this week. The [WSJ](https://www.wsj.com/articles/tanker-freight-rates-surge-as-crude-price-war-takes-hold-11584020686) reports Saudi Arabia will raise output from 12m to 13m barrels a day, creating tight VLCC capacity through April, despite economic troubles in China, the world’s largest oil importer. **Shippers Want Unfair Demurrage Fee Ruling** A group of 67 trade associations addressed the US Federal Maritime Commission Chairman in a letter calling detention and demurrage fees punitive in the wake of Coronavirus logistics snarls beyond shipper control. According to [American Shipper](https://www.freightwaves.com/news/american-shippers-want-fmc-container-availability-rule-published), the group requests publication of a rule defining unfair assessments. **Truck Routes Close As Hours of Service Expands** US regulators are allowing truck drivers hauling specific Coronavirus-relief cargo to drive beyond usual 11-hour limits. The allowance does little to balance delivery obstacles, including business closure, driver detention, and curfews across the country, writes the [JOC](https://www.joc.com/trucking-logistics/truckload-freight/covid-19-restricting-us-trucking-route-map_20200316.html). Impacted verticals include auto, grocery and categories experiencing import increases as China re-opens. Meanwhile, this week, **Flexport Chief Economist Dr. Phil Levy** noted the following economic highlights: - **The Federal Reserve** made an [emergency rate cut](https://www.washingtonpost.com/business/2020/03/15/federal-reserve-slashes-interest-rates-zero-part-wide-ranging-emergency-intervention/) to zero and promised direct bond buying of at least $700bn (quantitative easing) on Sunday, days before a regularly scheduled meeting. Chair Jay Powell said the highly unusual move was made because the Fed anticipated the Coronavirus pandemic would have a significant effect on the [economy](https://www.washingtonpost.com/business/2020/03/14/recession-economy-coronavirus-jobs/), including negative growth in Q2. - While the move was intended to demonstrate the Fed’s resolve to support credit markets, the extreme response suggested a level of alarm that could [spook](https://www.cnbc.com/2020/03/15/the-sp-500-futures-hit-limit-down-at-5-percent.html) investors. - While it is possible to cut target interest rates below zero, doing so creates [serious strains](https://www.ft.com/content/8a94b7bc-62d2-11ea-b3f3-fe4680ea68b5) in the banking sector. - Separately, last week the Fed planned to devote [$1.5 trillion](https://www.vox.com/policy-and-politics/2020/3/13/21178457/1-5-trillion-stimulus-loan-fed-federal-reserve) to address [strains](https://www.bloomberg.com/news/articles/2020-03-09/why-it-matters-that-the-fra-ois-spread-is-widening-quicktake) in short-term financial markets. - **China’s economy shows a sharp drop** as economic numbers come in [significantly worse](https://www.scmp.com/economy/china-economy/article/3075314/coronavirus-caused-dramatic-collapse-chinas-economy-warning) than expected. For January and February combined, industrial production was down 13.5%, retail sales were down 20.5%, and fixed asset investment was down 24.5%, all compared to a year earlier. - **European leaders pledge aid** worth [hundreds of billions](https://www.nytimes.com/2020/03/13/business/europe-germany-coronavirus.html) of euros to counteract the economic effects of Coronavirus - **US March consumer sentiment drops** as The University of Michigan index [fell](https://www.marketwatch.com/story/consumer-sentiment-tumbles-in-early-march-as-coronavirus-threat-explodes-into-view-2020-03-13) to its lowest level in 5 months. The data covered the first 11 days of March. ## Customs and Trade Updates **USTR Grants Exclusions to More Medical Supplies** The USTR granted 19 [additional exclusions](https://ustr.gov/sites/default/files/enforcement/301Investigations/%24300_Billion_Exclusions_Granted_March_2020.pdf) from Section 301 list 4 to medical supplies that were part of the COVID19 response. Unlike for previously exempted medical supplies, this list has specifically prepared headings for the 19 products that are excluded. They apply retroactively to the implementation date of September 1st, 2019 and will remain until September 1st, 2020. **USTR Grants Exclusions to List 3** The USTR [granted exclusions](https://www.federalregister.gov/documents/2020/03/16/2020-05310/notice-of-product-exclusions-chinas-acts-policies-and-practices-related-to-technology-transfer) for 5 full tariff numbers that were subject to the Section 301 List 3. These apply retroactively to the September 24th, 2018 implementation date and remain in effect until August 7th, 2020. **USMCA Passes Canadian Parliament Vote** The Canadian Parliament [unanimously approved](https://www.parl.ca/legisinfo/BillDetails.aspx?Language=E&billId=10615191) the US-Mexico-Canada Agreement on Friday March 13th. Now that all three countries have ratified the deal, each country must continue to uniform the regulations to fulfill the commitments that were agreed to. Labor reform and origin requirements are among the main hurdles to issuing USMCA as the replacement for NAFTA. **For a roundup of tariff-related news**, visit [Tariff Insider](https://www.tariffinsider.com/). --- *This is a markdown version of [https://www.flex.thisisbrew.com/logistics-updates/freight-market-update-march-18-2020/](https://www.flex.thisisbrew.com/logistics-updates/freight-market-update-march-18-2020/) for AI/LLM consumption.*