Freight Market Updates

Times are uncertain and things change quickly. Stay up-to-date on Navegate’s latest news and resources for managing the impact on your supply chain.

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Shipping Alliances: How Do They Impact My Supply Chain?

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What are they? If you’re one of the many companies using ocean carriers to fuel your supply chain, there’s a good chance you’ve dealt with a member of a shipping...
Inbound Logistics 2020 top 30 Global Trade Management Systems issue on table with coffee

Navegate Named a Top 30 Global Trade Management System for 2020

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Global trade management (GTM) systems connect sourcing and logistics to make global trade transparent, efficient, and cost effective. From resource planning and transportation management to analytics, Inbound Logistics has chosen...
Small Package Shipping - Domestic Transportation Management

Webinar: Leveraging Supply Chain Technology to Keep Business Growing

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Leveraging Supply Chain Technology to Keep Business Growing​ Pre-Recorded Webinar   The right tools can enable businesses to grow and scale faster, father, and more cost-effectively. As communities everywhere pave their way forward through...

Navegate Named a Top 100 Logistics IT Provider for 2020

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Every year, Inbound Logistics editors recognize 100 logistics IT companies that support and enable logistics excellence. These companies exemplify the path forward in logistics and supply chain. Drawn from a...

Explosion Levels Port of Beirut, Many Section 301 Exclusions Expire Tomorrow, and a COVID-19 State of Emergency Closes Australian Airports

By | COVID-19 Latest Updates | No Comments

The port city of Beirut is in rubble after an explosion at a port warehouse facility Tuesday evening. As the search for the missing continues and investigators seek a cause, we ask that you keep our Beirut colleagues and the people of Lebanon in your thoughts. 

As a result of the tremendous damage, most logistics providers in the region have announced closures and major container lines are shifting operations further north, to the Port of Tripoli.   

Customs 

Extensions have yet to be granted for the 14 different Section 301 exclusions that are set to expire tomorrow. If you have imports that are impacted by this—see the exclusion notice here—reach out to Navegate Customs expert for help. 

U.S. Customs and Border Protection (CBP) is working to shift the expectations of customs brokers and their relationships with importers. Amongst higher security requirements and shifts in port requirements for brokers, CBP is also pushing to require brokers to report any potentially fraudulent activity from importers. With a final decision expected in September, comments on the motion closed on Tuesday, and many trade attorneys are speaking out about the proposed rules. 

Ocean 

Trans-Pacific volumes remain volatile as spot rates climb to more than $3,000 per FEU for Asia – U.S. West Coast routes. A surge in traffic, combined with anticipation of new General Rate Increases (GRI), is making it difficult for rates to stabilize. Many predict that the low capacity levels will remain through at least the end of August, if not well into September. 

More and more shippers are turning to expedited LCL shipments. The expedited routes—promising 12-day port-to-port transits—have soared in popularity as importers fight to get product from China’s dominant ports to Los Angeles and Long Beach. These expedited LCL moves offer cheaper, less congested alternatives to air. If you’re curious if this is a good option for your business, reach out to a Navegate air and ocean expert. 

Air 

Australian airline Qantas is among several service providers that have slowed or shut down their operations at Melbourne airport in the wake of the state of Victoria‘s COVID-19-induced state of emergency. While airport workers are exempt from stay-at-home orders, concerns of positive cases amongst the workforce have pushed many businesses to reduce operational capacity in favor of safety. Some fear that, if the lockdown measures persist, commerce could slow significantly through Victorian air and ocean ports.  

Trucking 

Storms hitting the east coast caused ports to close temporarily, and the re-opening has brought major congestion to the roads in the area as truckers try to deliver their already-delayed cargo. Additionally, as school season begins, lanes in Pennsylvania have been flooded with demand for paper products. 

Chassis shortages persist at Los Angeles and Long Beach for full container loads, and the pain may not be contained to Southern California. As an attempt to relieve the dire need in Los Angeles and Long Beach, chassis may be brought in from other cities causing milder shortages across the country. 

Ports 

Longshore workers at the port of Montreal are in the midst of a second 96-hour strike over working conditions that began on Monday, and the port is feeling the impact. Container lines have started to divert shipments to other regional ports, and at least one terminal has stopped accepting refrigerated exports. 

New Orleans will be able to accept ships larger than the current 10,000 TEU limit in 2024 thanks to the U.S. Army Corps of Engineers (USACE). USACE plans to complete a dredging project that will deepen a 256-mile stretch of the Mississippi river by 5 feet, and it has plans for Mobile and Houston projects after it completes New Orleans. 

In light of equipment shortages and high volumes, all Union Pacific Railroad (UP) customers will be charged a $500 surcharge for excess cargo shipped out of California. Last week, UP announced that this fee would only apply to low-volume customers, but this week they expanded eligibility for the fee to all shippers in excess of the surge allotment. 

Section 301 Exclusions Extended, FMC is Monitoring Blank Sailings, and Mask Mandates Reaching Truck Stops

By | COVID-19 Latest Updates | No Comments

Customs 

The U.S. Trade Representative announced extensions on Section 301 exemptions for 14 item classificationsThe goods, now set to have their exclusion expire on December 31, 2020, are mainly medical supplies and items critical to slowing the spread of COVID-19. Despite this good news, exclusions for many more items are set to expire July 31, 2020. If you’re looking for a partner to help you prepare for this or future exclusion deadlines, schedule a call with a Navegate customs expert. 

Ocean 

Rates in various sectors of ocean shipping are plateauing despite the end of July generally being a peak season. In the Europe-North America lane, prices are 7% lower year-over-year as shippers try to avoid overstocking themselves should the continent re-enter lockdown protocols. While history suggests a general rate increase (GRI) is likely to be implemented soon to lift the price plateauthere has been no formal announcement. Dry bulk prices were climbing to unprecedented highs for much of the year, but they’ve recently taken a nosediveAfter months of high demand and heavy congestion, the rate has been cut in half as capacity has returned to the market while urgent demand has subsided.  

Members of the FMC are taking a closer look at the surge of blank sailings in spring and early summer of 2020While a formal investigation is still being considered, they’re monitoring actions by major carriers to determine whether the blank sailings are genuinely necessary to adjust to the changes in demand or if they’re mostly motivated by carriers trying to maintain profit levels. 

Air 

Air cargo prices continue to slowly decline toward more level rates. While we’re seeing a significant decrease from the rates we saw in the spring, IATA predicts that belly cargo, or the cargo space on passenger planes won’t return to pre-pandemic levels until at least 2024. 

Trucking 

Mask mandates have reached domestic truck drivers, as major truck stops require them to wear masks during their visits to help slow the spread of COVID-19. Drivers face near-normal business, though, as major ports remain constrained while overall capacity holds steady. 

Ports 

Severe weather is contributing to already-rough waters at ports around the world. Officials have reported that congestion at Chinese ports is approaching record highs as torrential rains complicate operations under high demand and increased safety protocols. The next bout of severe weather is headed for the Caribbean and may lead to port closures or delays there. 

Montreal’s second port strike of the month is set to end Friday night. Longshore workers began their 96-hour strike on Monday, ceasing all container handling at the port to increase pressure on contract negotiations. 

Spikes in volume out of Los Angeles have led rail carriers to hit shippers with surcharges. Union Pacific has implemented a $500 surcharge on excess freight in reaction to heavy demand out of Los Angeles terminals, and other intermodal operators are imposing similar restrictions. 

List 3 Exclusions Set to Expire, CBP Dropping Interest Rates, and Carriers in Pricing Turmoil

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Ocean

Consistency appears to be returning to the Asia-Europe lane of ocean freight. Carriers have reinstated 10% of announced blanked sailings while adding just 2 additional blanked sailings to the tally for last week. While rates remain at extreme highs, they have likely peaked. General rate increases (GRIs) are lasting for less than a full week as competition increases among carriers, and with the stabilization of sailing schedulessupply chain consistency may be returning to the ocean marketThat being saidcarriers in the Ocean Alliance (CMA CGM, Cosco, OOCL, Evergreen) may continue to blank sailings, as the alliance has opted against pre-emptive blanked sailings in favor of providing short notice.  

While thmarket is generally stabilizing, shippers that have direct contracts with steamship lines are having issues getting space booked at their service rate. With rates at record highs, shippers are calling for the Federal Maritime Commission to intervene as steamship lines reject bookings made at agreed-upon service rates in lieu of bookings made at market prices.

Customs 

All exclusions for Section 301, List 3 tariffs are set to expire on August 7th. Because List 3 is the largest of the Section 301 tariffs, many are nervous about their potential for renewal. If your business benefits from these exclusions, now may be a good time to consider what needs to be done to utilize your exclusions and get your freight inland before the 7th. If you want to explore your options, reach out to a Navegate Airfreight expert. 

U.S. Customs and Border Protection (CBP) cut interest rates paid for overdue accounts and refunds of customs duties. This means that those who are working out underpayments or overpayments with CBP may see big shifts in how much money they receive. From July 1 to September 30, 2020, overpayments will see a 2% drop while interest paid for underpayments will drop to 3%. 

Air 

For the first time in months, volatile airfreight rates finally appear to be plateauing. How long this lasts, however, remains to be seen as capacity out of China and Hong Kong begins to tighten. Renewed demand for PPE and large-scale new product launches for popular tech like iPhones and PlayStation are beginning to dominate capacity on all-cargo planes.  

Trucking 

Much like air, trucking rates seem to be remaining stable. The common hotspots like Los Angeles, Houston, and Charleston remain slow-moving, and New Jersey has joined in on the capacity struggle. Those looking to save time and money might consider setting their sights on Chicago, which has managed to remain relatively congestion-free. 

Other 

As the extent of human rights violations against Chinese Uighur people comes to light, American supply chains may find themselves entangled. So far, eleven Chinese companies have been placed on a U.S. government blacklist due to suspicions that the Chinese government is using the forced labor of imprisoned minority groups to support manufacturing and supply chains for brands like Apple, Google, and Ralph Lauren. Some question whether that is the true extent of these violations, as essential goods like sanitizer and PPE are also suspected to have ties to labor camps as well.  

While the obvious solution would be to regulate the suppliers and weed out ones using forced labor, the unprecedented demand for these goods means that the infrastructure to do this is lacking. Importers are sourcing goods that they have never needed before, and the quality and ethics of their suppliers are not readily available for evaluation. 

Trump Announces Tariffs on $1.3B of French Imports, More than 200,000 Seafarers Remain Stranded, and CMA CGM Cuts Tampa Route

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Customs

Trade relations between the U.S. and France have soured this week with the Trump administration announcing 25% tariffs on $1.3B of French goods. The U.S. Trade Representative recommended tariffs after determining that a new French digital services tax discriminated against American companies. Set to go into effect on January 6, 2021, the tariffs will target makeup, soap, handbags, and other popular French imports. 

President Trump has also indicated he is “not interested” in negotiating a Phase Two trade deal with China. He suggested that the decision not to move forward is in part because China should be “held accountable” for the role he believes the country played in the COVID-19 pandemic. Adding to the turmoil, the USMCA has been in effect for just over two weeks now, and Navegate experts have heard of significant confusion from trade lawyers due to unaddressed inconsistencies between this deal and NAFTA. If your team needs help making sense of it all, reach out to the Navegate team.

Ocean 

As port congestion increases, spot rates are expected to go up for tankers. On-the-water crude oil volumes remain high as vessels fight their way through congestion and floating storage that has yet to be unloaded.

Carriers are preparing to make permanent capacity cuts if demand remains at current lows. While they’ve used blanked sailings to mitigate lower demand, permanent cuts could keep costs up and increase predictability in sailing schedules.  

The International Maritime Organization (IMO) is still pleading with nations around the world to help more than 200,000 seafarers who are stuck on their vessels. Because of travel restrictions meant to slow the spread of COVID-19, the seafarers have been stranded on their ships, working months beyond their contracts while their relief teams are stuck in their home countries. So far, the U.S. and 12 other countries have recognized them as essential personnel, enabling them to travel, but the IMO is asking many more to follow suit. 

Trucking 

Domestic trucking capacity continues to tighten this week as an overall uptick in demand is colliding with increased pressure to expedite test kits, medical supplies, and masks as a result of surges in COVID-19 cases and preparations to reopen schools. 

Ports 

As U.S. supply chains shift production out of Chinaports in the U.S. Southeast and along the Gulf Coast are expecting a boost. As a combined result of U.S.-China trade pressures and the start of USMCA, some American companies are expected to shorten supply lines and work toward reshoring parts of their production. 

CMA CGM Group announced that it will no longer operate a direct route between Asia and Port Tampa Bay. Shippers aren’t likely to feel much of an impact, however, as fellow OCEAN alliance member Cosco Shipping will pick up the route instead. 

The Port of Long Beach posted an 11.1% year-over-year decline for the month of June, citing blanked sailings and decreased demand due to the COVID-19 pandemic. 

Ocean Freight Rate Increases, Section 301 Exclusions Extended, and a Boom in Trucking Volumes

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Air  

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. 

Ocean 

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. 

Customs 

Some Section 301 Tariff exclusions have been extended through the end of the year. Check to see if your imports are on the list.

Trucking 

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. 

Ports 

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. 

Other 

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. 

USMCA is Here, Blank Sailings are Stacking Up, and COVID-19 Leaves Sailors Stranded at Sea

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Customs 

NAFTA has officially been replaced by the USMCA as the North American trade deal. Despite months of negotiations and promises of a brand-new deal from the White House, Senator Chuck Grassley has stated that 95% of the new agreement is “the same as NAFTA.” American auto companies will be significantly impacted with the USMCA mandating more domestic component manufacturing and higher wage requirements for workers, and American dairy companies stand to gain with Canada agreeing to import more dairy products from the U.S.

Political tensions between China and India have boiled over to the freight market as Indian customs officials are holding all shipments from China for potential inspection. Major delays and congestion have ensued, and in response DHL Express has temporarily suspended India-bound bookings from China. 

The U.S. Trade Representative (USTR) is requesting comments on Section 301 exclusions. Comments on the Section 301 List 4 exclusions, which are otherwise set to expire on September 1st, will be accepted until July 30th 

The USTR is proposing new and increased tariffs on $3.1 billion of European goods. Annex III of the trade action is open for comments until July 26thYou can comment on these, and other exclusion lists in their comments portal. 

Ocean 

Trans-Atlantic blank sailings are stacking upand experts predict that 10%-25% of capacity will be withdrawn from the Europe/Mediterranean to North American East Coast lanes through August 10. 

Two outbreaks of coronavirus on cargo ships last week highlighted a dire situation at sea. An estimated 200,000 crew members are stranded at sea as governments continue to bar crews from re-entering their home countries, and unions and shipping groups are growing increasingly concerned for the mental health of the crews and the health of international trade. 

Trucking 

Freight markets showed signs of life in May, as markets rebounded across the country. While U.S. trucking markets have been on a steady incline, eyes are turning toward states like Arizona, California, and Texas as they reinitiate lockdowns.  

Flatbed capacity remains extremely constrained, especially as summer construction resumes across the country. Major port areas around southern California, Texas, Georgia, and Tennessee are under constrained capacity, causing delays. 

Air 

Delta will resume operations at its O’Hare cargo facility today, after announcing a mysterious indefinite closure on Monday. After recent spikes in COVID-19 cases across the U.S., Delta has also announced that they may begin to cut flights for the rest of the summer. 

Ports 

Longshore workers are set to strike starting this afternoon at two Montreal terminals in an apparent attempt to prove the Canadian Industrial Relations Board wrong. In May, the board ruled that the longshore workers were non-essential. 

Other 

The U.S. House of Representatives passed legislation last night to penalize banks doing business with Chinese officials in response to new security laws that China has imposed on Hong Kong. So far, no other trade measures have been imposed. 

Tariffs Back in Turmoil, Reinstating Ocean Capacity, and Preparing for a Flood of Returns

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Customs

Tariffs are back in turmoil this week, as the Trump administration weighs a series of new measures. On Tuesday night, the United States Trade Representative (USTR) filed paperwork to allow companies to comment on tariffs on roughly $7.5 billion of imports from the European Union and U.K. The administration is planning to add goods to the list—adding an additional $3.1 billion worth of European goods—and is also considering increasing existing tariffs to as high as 100%.

Even though the revised North American trade deal, USMCA, goes into effect in just under a week, the Trump administration is preparing to reinstate tariffs on aluminum imports from Canada. Many U.S. trade officials have vocalized concern over this move, fearing retaliation from Canada and a rocky start to the implementation of the new trade deal.

After months of pushing for the use of American-made medical equipment in the fight against COVID-19, the Trump administration is also considering extending its tariffs on Chinese imports to include critical medical supplies. While no official moves have been made yet, massive increases in PPE and medical supplies moving through West Coast ports suggest that importers may be trying to get ahead of any new tariffs.

Don’t forget—the USMCA goes into effect on July 1st. Make sure your business is prepared by reading up on the agreement and its protocols

Ocean 

After months of blanked sailings and capacity cuts, carriers are beginning to reinstate capacity on Trans-Pacific routes. There are still huge numbers of canceled sailings for throughout the third quarter of the year, but after China-West Coast rates saw an 84% year-on-year increase this week, carriers seem to be moving out of survival mode and refocusing on market competition. Projections on carrier profits are being reevaluated as low capacity has enabled carriers to turn back to competing for market share. While the ocean freight industry is guaranteed to suffer a massive loss for the year, these may be signs that carriers are feeling optimistic about the rest of 2020.

Air 

Despite the recent uncertainty regarding the flow of air cargo between the U.S. and China, rates have fallen significantly due to a decreased urgent demand for PPE. However, partially due to significant blanked sailings by ocean carriers, air cargo rates are expected to remain at unusually high levels for the summer. 

Ports 

Rampant blank sailings by ocean carriers have caused issues with equipment return and sporadic gate closures at Los Angeles-Long Beach, and protests for racial and social justice at 29 ports also disrupted the flow of goods with the largest impact being in Seattle-Tacoma. 

Trucking 

Federal grants have been given to both Ohio and Indiana in order to facilitate the development of smart logistics and trucking technologies on the I-70 highway shared by the states. 

Met with significant resistance from owner-operators and many in the trucking industry, the House of Representatives voted to raise mandatory insurance coverage for truck owners from $750,000 to $2,000,000. 

Other News

In the U.S., where restrictions in many states are being eased or eliminatedsurvey data suggests retailers should prepare for heightened demand and a “flood of returns.”

Shutdowns designed to stop the spread of COVID-19 are easing and tightening with little consistency across the globe, and the latest uncertainty has highlighted the need to build resilient and digitally enabled supply chains. If you’re curious about supply chain tech and how it can be an asset to your business, reach out to a Navegate tech expert.

 

Trans-Pacific Spot Rates Skyrocket, India Goes Back Under Lockdown, and USMCA is Coming Soon

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Ocean 

As U.S. stores begin to reopen, Trans-Pacific spot rates are skyrocketing. Last week, spot pricing from Shanghai to the U.S. West Coast jumped 29.2 percent from the previous week. 

The FMC has ruled to give contract filing relief to carriers. Container lines will no longer be required to file ‘essential terms’ of contracts with cargo owners. The change comes after determinations that few rely on essential terms publications and that such a change won’t impact market competition. Removing the requirement is estimated to save 41,048 man hours to process the data, generating nearly $2 million in savings per year. 

Air 

New data from The International Air Transport Association shows a 50% decrease in airline revenue for 2020. “Financially, 2020 will go down as the worst year in the history of aviation,” said their CEO, but they acknowledged that freight rates and increased airfreight traffic have kept the industry afloat. 

The U.S. Department of Transportation has further loosened restrictions on Chinese airline flights. They will now allow four round-trip flights per week from Chinese airlines, doubling the previous allowance. 

Ports 

As India sees a new surge in Covid-19 cases, several districts have been placed under complete lockdown—in most places restricting commercial activity to essential goods only. 

Ports are feeling the pressure as vessel and call sizes increase. Huge growth in call sizes strain port capacity and prolong stay times. 

Maersk has added four international ports to its program that allows cargo owners to expedite or slow down cargo shipmentsThe Maersk Accelerate product has been extended to the ports of Durban, South Africa; Barcelona, Spain; Felixstowe, England; and Lázaro Cárdenas in Mexico. 

Trucking 

As businesses across the U.S. begin to reopen, domestic truck spot rates are expected to level out, slowly moving towards normal. Predictions show spot rates flattening in early July. 

Truck traffic continues to increase across the country, and prices are going up with it. The West Coast in particular faces extremely tight capacity, as personal protective equipment continues to flood in, along with an increase in typical consumer goods.  

Other News

The USMCA goes into effect on July 1st. Make sure your business is prepared by reading up on the agreement and its protocols. 

Airfreight Backups, More Blanked Sailings, and the FMCSA Dials Back HOS Exemptions

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Customs

A new list of exclusions for Section 301 List 4 tariffs has been granted, applied retroactively back to September 1, 2019 and in effect until the same date of this year. See if your imports are on the list.  

Air

As tensions over air travel quiet down between the U.S. and China, Kallita and FedEx have been granted authorization to operate between Hong Kong and Singapore. As little airfreight moves out of China, most cargo owners must now rely on the two carriers.  

Currently, the only carriers servicing China-U.S. trade lanes are those based in China, which only use a small number of cargo handlers. As the majority of freight on trans-pacific lanes are now entering the U.S. through limited terminals, we’re seeing significant backlogs at major airfreight hubs. In some places, it’s even as long as two weeks before freight is checked in. 

If you’re suffering from these delays and need a little relief, reach out to a Navegate Airfreight expert to explore your options for gaining control. 

Ocean

Container lines are continuing to blank sailings at some of the highest rates we’ve seen—last week, reaching nearly 4 million TEUsCarriers have used the cancellation of sailings to keep rates high throughout the pandemic, but it has cause major delays for cargo owners. The best thing to do? Give your forwarder as much notice as possible for shipments—some carriers are even requiring a three-week notice. The more your forwarder or carrier can plan in advance, the more likely you are to get your shipment on time. 

The Laura Maersk is out of commission after a turbocharger breakdown caused a small fire in the engine room of the ship. One crew member is being treated for non-life-threatening injuries, and no significant damage has been reported on board. The ship’s cargo, which was en route from Algeciras, Spain, will be carried onward by a sister ship. Maersk officials tell cargo owners to expect about a week’s delay. 

Trucking

The Federal Motor Carrier Safety Administration (FMCSA) has started to dial back its emergency rule exemptions as U.S. domestic markets begin to reawaken. Back in March, the FMCSA exempted drivers from Hours of Service (HOS) rules if they were carrying essential goods like medical supplies, personal protection equipment, food, or fuel. That exemption will expire on June 14th, and in its place, HOS rules will only be exempted for drivers carrying livestock and livestock feed; medical supplies and equipment related to COVID-19; and supplies and equipment necessary for safety, sanitization, and reducing the spread of COVID-19. By the look of the current freight market, these HOS changes aren’t likely to make noticeable impacts on most supply chains. 

Overall, the U.S. domestic trucking market appears to be on the rebound. Traffic is up, trucking unemployment is down, and while rates still fluctuate heavily, they appear to be moving in the right direction. As things pick back up, there are still plenty of backups in hotspots like Los Angeles and Houston. 

Tensions with China Escalate, More Blanked Sailings, and a Promising Outlook for Trucking

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Air 

Demand for urgent medical supplies and personal protection equipment has started to taper off, sending airfreight rates on a steady decline from May’s record highs. The increased capacity from the use of passenger planes for carrying cargo has also helped bring these prices down, and analysts remain optimistic that a continued surge in ecommerce will help prop up rates. 

Tensions between the U.S. and China remain high. Earlier this week, the Trump Administration threatened to block Chinese passenger airlines from flying into or out of the U.S. in response to China continuing to bar international airlines from operating in the country. This morning, however, Chinese officials appear to be moving to quell the dispute, announcing that foreign airlines will be allowed to operate one flight per week in Chinese cities. 

Ocean 

Despite optimism that June would be the start of the rebound for ocean freight, THE Alliance announced this week that its carriers would continue to blank sailings in large numbers through at least September. The carriers—Hapag-Lloyd, HMM, Ocean Network Express and Yang Ming—have announced 75 blanked sailings so far for the third quarter. This is likely just an effort to remain conservative, however, as they can always bring in new sailings if demand requires it. 

Charges have been made in response to the May 24 incident that sent 50 containers tumbling from an APL ship near Australia. The Australian Maritime Safety Authority’s inspection of the ship found “inadequate lashing for cargo and heavily corroded securing points for containers on the deck,” and have deemed the ship unfit to depart from the Port of Brisbane where it currently sits. The charges filed cite significant, preventable damage to the marine environment. 

Ports 

In light of the adaptations the world has been making in an effort to slow the spread of COVID-19, a group of 10 maritime organizations, led by the International Association of Ports and Harbors, is pressing ports to go digital. Paper bills of lading, person-to-person contact, and cybersecurity have all become serious threats to health and safety at ports during the coronavirus pandemic, and have come to highlight the need to modernize port operations. 

Trucking 

After months of steep drops in long haul trucking throughout the U.S., May ended with promising signs. Volume indexes hit some of their lowest points in April, but overall, things are starting to move again.  Since long haul freight is typically replenishment from distribution centers moving to stores, it also signals an anticipated return of overall consumer demand. 

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