Air cargo markets have started to stabilize and take strides toward normal capacity in recent weeks, but many warn that it may be temporary. Global volumes are still about 25% lower than this time last year, but dramatically improved from just a couple months ago. Prices are still significantly higher than usual, and many are waiting to see what happens to rates as COVID-19 case counts surge in the U.S., which may trigger a renewed demand for medical supplies and PPE.
With air cargo’s unpredictability in mind, now’s a great time to rethink your routes. The last few months have given airports that prioritize cargo a chance to shine in terms of speed and reduced congestion. However, limitations on the airlines that can fly between the U.S. and China have left importers fettered in their choice of airports. Now is a good time to decide whether it’s speed or cost that matters more to your business—as always, Navegate international freight experts are here to help.
Trans-pacific container lines have successfully boosted rates with a general rate increase (GRI) and spot rates to the U.S. west coast are up nearly 70% compared to this time last year. Shipping alliances have fought off the effects of a near 10% drop in U.S. imports using GRIs and capacity cuts, but Q3 blanked sailings are much closer to normal levels and rates continue to rise. This provides defense for the alliances as they face accusations of price-gouging in order to profiteer off the pandemic. Other participants in the ocean supply chain are also taking measures to ensure financial stability during the pandemic, as shippers are facing stricter credit terms from carriers and forwarders. Many shippers are adjusting by demanding lowered or eliminated container fees to save money and ensure their ability to meet their new credit agreements.
Some Section 301 Tariff exclusions have been extended through the end of the year. Check to see if your imports are on the list.
The typical mid-summer surge combined with some states relaxing lockdown measures has led to a boom in trucking volumes and a major capacity crunch. Last week, volumes were up 45% year-over-year. In southern states – especially those bordering Mexico – capacity is incredibly constrained in van and flatbed markets. If you’ve struggled to find consistent space on trucks in the past few weeks, Navegate’s domestic logistics experts can help.
The spring saw many U.S. shippers negotiating big price decreases in exchange for a consistent work in an unsteady market. As volume returns, these shippers are at risk of their truckers abandoning low-priced contracts for a more lucrative spot market.
The Port of Oakland has been hit hard by declines in volume related to the pandemic, and the fiscal year 2021 budget approved for the port this week is 15% smaller than 2020. Oakland is one of many smaller American ports heavily impacted by the economic shutdowns the pandemic has necessitated.
Despite the ongoing trade tensions between the U.S. and China, the share of American imports from Asia that were sourced from China jumped to an 8-month high in May as factories resumed production after pandemic lockdowns ended. Although importers are trying to reduce their reliance on China as a source of manufacturing, other options in the region are constrained by workforce size and transportation infrastructure.