Ocean
Trans-Pacific carriers may curb free time in annual contracts. Ocean carriers are indicating that they will reduce contracted free time for 2021-2022 contracts, which if successful, will force shippers to accept higher per diem charges. Additionally, this move could make shippers take more difficult steps to adjust warehouse operations so that containers could be unloaded more quickly, and this move could also impact drayage by “resulting in fewer opportunities for two-way moves by drayage drivers.” This move comes as the last year saw widespread equipment shortages.
Chinese New Year is this week. Many workers in China are already off for the holiday, and depending on what demand is like after the holiday, ocean rates may increase. Typically, rates may only increase for a couple of weeks to a month after the holiday. When the events of the holiday settle down, it’ll be more clear what impacts there are on the industry during this unique year.
Maersk projects that the dynamics driving freight rates to be higher should start “easing” in the second quarter of this year. While it is quite difficult to predict patterns for 2021 based on the unprecedented year for the logistics industry, Maersk expects rates to normalize based on the rates it has seen so far.
Customs
Section 232 tariffs on steel were upheld by the Court of International Trade (CIT). The CIT upheld former President Trump’s imposition of Section 232 tariffs on imports of steel products. This decision could make it more difficult for President Biden to reduce or remove the tariffs after his administration reviews the matter. This decision might also serve as a precedent to uphold the Section 301 tariffs on China, but it won’t be clear until that decision happens.
Our team is seeing continued surveillance from CBP of personal protective equipment (PPE) imports for counterfeit. Recently, CBP seized counterfeit PPE that the state of Washington received and was used by health workers in the state. Given the seriousness of this situation, CBP is monitoring more imports of PPE to ensure that they’re not counterfeit products.
Biden announces sanctions against the military regime in Myanmar. The President announced these sanctions in response to the coup Myanmar experienced earlier this month. The sanctions prohibit Myanmar from accessing $1 billion in assets from the U.S. that would benefit the country’s military leaders.
Ports
Terminal operators at the ports of Los Angeles and Long Beach project that congestion will clear by late spring. It is estimated that the port will continue experiencing record container volumes until the spring, but the backlogs of vessels in the harbor should dissipate sometime between April and June. The congestion will likely decrease as more workers at the port continue to receive the COVID-19 vaccines.
Air
Air freight rates are increasing, again, despite the recent decline. Air rates are going back up again, even though there the rates slightly decreased a few weeks ago. Because shippers now have to book on premium services for new bookings and standard services are being rejected entirely, importers are looking to switch from ocean freight to air freight. Therefore, the demand for air freight is increasing, which is increasing the air rates, again. Because of this demand, delays are expected in the coming weeks. If you’re considering air freight, don’t hesitate to reach out to one of our experts.
FEMA is launching an investigation to prioritize PPE on air freights. The National Customs Brokers and Freighters Association of America (NCBFAA) Leadership and Airfreight Sub-Committee Chair had a call with FEMA this week to discuss delays at airports in recovering PPE cargo. FEMA is reviewing data related to delays in PPE cargo so that the agency can prioritize distributing PPE on air freights to effectively respond to the COVID-19 pandemic.
Trucking
Winter weather will continue to affect trucking. As the winter season continues and an ice storm is anticipated to hit nearly a dozen states in the next few days, trucks may not start due to frigid cold weather or may get stuck in the snow, which will drive up trucking costs. Due to this weather, delays should also be expected.
Trucking capacity to remain tight as jobs decline. The trucking industry lost more jobs in January and as imports continue to surge at U.S. ports and U.S. business activity expands, these job losses signal a tight trucking market for the months ahead. If trucking capacity is tightened due to a lack of drivers, spot rates could begin to move upward.
Other
It’s Black History Month. This month, we’re celebrating Black revolutionaries who transformed the supply chain and transportation industry. Our Black History Month blog highlights prominent Black figures who technologically and culturally made the industry move forward, faster. Take look.
