september 2020 report: what’s inside · ait worldwide logistics / global market update /...

AIT Worldwide Logistics / Global Market Update / September 2020

SEPTEMBER 2020 REPORT: WHAT’S INSIDE

AIT’s monthly Global Transportation

Market Report is here to help you make

informed decisions about the future of

your organization.

Read on for a quick rundown of current

trends and headlines from across

modes—and around the world.

Ocean Trends and Headlines

Air Trends and Headlines

North America ▪ Air Freight

▪ Expedited LTL

▪ Final Mile

U.S. Customs Brokerage

AIT Contact Information

COVID-19 Vaccine Transportation


Personal protective equipment, e-Commerce drive strong North American demand from APAC

OCEAN PRICING, CAPACITY TRENDS – SEPTEMBER 2020

.

Very low rates to APAC and

Europe expected to last through

Q3.

Rates to APAC and North

America stable month over month,

with no major increases

anticipated. No major space

constraints.

North American demand continues to

be strong, driven by PPE and

e-Commerce. While capacity is

improving, container rolls are

commonplace. Expect Peak Season

Surcharges (PSS) and guaranteed

space rate offerings. Space to Europe

continues to be tight. Blank sailings

throughout Q3 to balance supply and

demand. Carriers implementing PSS.


Idle fleet figure shrinking, still high for season

▪ The number of inactive containers ships dropped to 313, or 6.6% of total global fleet capacity, as of July 20

▪ At nearly 1.55M TEU, this figure remains high for this time of year

▪ Manipulated capacity reductions is expected into the peak season for rates to remain elevated.

Containership deliveries still expected in two to three years, capacity to be affected

▪ Three alliances expect delivery of a backlog of 86 ships (more than 10,000 TEU capacity) in the next 48 to 72 months

▪ Many earmarked for Far East trades to Europe

▪ Will place pressure on rate levels; expect aggressive blank sailings to compensate for capacity influx

▪ Speculation for alliances to capture market share during this period would translate to very competitive rates for shippers

CMA CGM simplifies container trade simplification, absorbs transpacific commercial

▪ When the CMA CGM changes take effect Oct. 1, the company will manage five expert brands in dedicated markets:

▪ APL (U.S. government cargo)

▪ ANL (leader in Oceania)

▪ CNC (intra-Asia, short sea specialist)

▪ Mercosul Line (Brazilian cabotage)

▪ CMA CGM will manage the TPEB trade for all services except “Eagle Express”

OCEAN TRENDS AND HEADLINES

https://www.logisticsmgmt.com/article/cma_cgm_to_become_the_groups_exclusive_commercial_carrier_on_the_transpacif


AIR PRICING, CAPACITY TRENDS – SEPTEMBER 2020

COVID-19 continues to impact capacity as peak season rate hikes approach

Rates to APAC have softened to pre-

pandemic levels but are not expected

to plunge.

A drop in rates to Europe due to

capacity increases is expected to

continue through Q3

Capacity and rates to APAC at pre-

pandemic levels.

Capacity to North America gradually

loosening due to increased carrier

options. However, rates are steady

and expected to remain so through

Q3.

Few passenger flights to North America

means tighter capacity, rising rates for

peak season. China to North America

charter capacity exhausted through

2020, currently at US$800,000-

$850,000. High shipment volumes of

personal protective gear to North

America are expected to persist through

2020. Prices to Europe are softening

and we expect current rates to extend

into September.


Industry-leading regions show signs of recovery as capacity, rates remain tight

▪ North America, Asia and Europe showing signs of improvement month over month

▪ Load factors, airlift in other regions continue to deteriorate

▪ Belly capacity slips again despite an increase in the number of international flights

▪ Charter opportunity continues to meet high freight demand out of China with space and

rates expected to remain tight through 2020

TOP AIR TRENDS AND HEADLINES


COVID-19 VACCINE DISTRIBUTION

Building an effective procurement, transportation strategy

COVID-19

▪ AIT anticipates solvable supply chain

challenges if/when a vaccine (or multiple

vaccines) is/are launched in Q4 2020 or

beyond

▪ Strategic procurement of capacity will be

critical, and distribution is expected take

the form of a gradual, global ramp up

rather than an immediate, mass release


COVID-19 VACCINE DISTRIBUTION

Critical Factors

▪ Vaccine production timing, location(s)

▪ Distribution duration (single vs. multiple dose requirement)

▪ Reefer and Envirotainer availability

▪ A potential vaccine produced outside the United States would create an air capacity

crunch, rate spike

– If launched in Q4, capacity will be extremely tight due to peak season, holiday

demands and electronics launches

– 25% rate increase projected for air freight from Asia to United States, a trade lane

already operating under limited capacity

– Despite the challenges, the air freight market should have sufficient capacity to

respond to an influx of volume from a vaccine launch

▪ Among other factors like ground handling and temperature-controlled facilities, a lack of

available capacity in the validated reefer trailer market may complicate efficient U.S.

ground distribution


Manufacturing output increases, retail fulfillment goes regional

▪ With industrial manufacturing increasing output month over month, more freight

capacity is required -- pointing to gradual economic recovery from COVID-19’s impact

▪ Rates expected to remain at current levels for short term

▪ Flight frequency increase however, passenger confidence remains low

▪ Integrated cargo lines -- peak season surcharges rolling out as volume increases

NORTH AMERICA: U.S. AIR FREIGHT


NORTH AMERICA: EXPEDITED LTL

Carriers add West Coast surcharges

▪ As an increase in ocean imports hits the U.S. West Coast, carriers are meeting tight

capacity with surcharges

▪ AIT is adding direct load capacity where demand is enabled by volume

▪ In other regions, rates are stable with extended capacity, allowing for spot quote

opportunities, especially to the west coast

▪ Traditional peak season increases still in question

▪ FEMA’s sourcing of transportation providers for Hurricane Laura relief efforts in the

midsouth will tighten truck load capacity


NORTH AMERICA: FINAL MILE

COVID-19 continues to impact in-home, white glove services

▪ Vast majority of states reopening markets following COVID-19 shelter-in-place

guidelines

▪ Reinstatement of in-home and white glove services fluctuates as virus resurges in

some regions

▪ AIT dedicated to operating with CDC best practices and preventative measures

▪ Projected peak season, Q4 influencers:

▪ Retail bankruptcies

▪ COVID-19 case upticks

▪ Inventory replenishment from international imports


Section 301 duties not required on Hong Kong products

▪ Following a July executive order mandating all products from Hong Kong be labeled as “Made

in China,” U.S. Customs and Border Protection clarified that Section 301 duties are not

required for products made in Hong Kong

Chinese import tariffs continue, 2019 exemptions expiring

▪ The U.S. Trade Representative continues to periodically release updates and exemptions to

Chinese tariffs, with product list updates being the most common

▪ Submit protest filings on the USTR website

PPE exemptions expired Sept. 1

▪ Tariff codes for masks and thermometers changed, increasing duty levels (Vietnam origins

remain exempt)

FDA hand sanitizer regulations are changing

▪ Please ensure compliance prior to importing

▪ AIT continues to monitor FDA approvals and regulations related to PPE imports during

COVID-19 and will communicate any changes

▪ For any questions regarding products impacted or updated list, please reach out to your AIT

representative

U.S. CUSTOMS BROKERAGE AND IMPORTS

https://us12.campaign-archive.com/?u=a89db14ed70836fe4ae031c5f&id=e25a7d3e02

https://ustr.gov/

https://www.jdsupra.com/legalnews/got-more-hand-sanitizer-part-2-more-66434/


TURN INSIGHTS INTO ACTION WITH AIT

Partner with a global network of experts on logistics plans tailored to you

Now that you know what’s on the horizon for the coming month, it’s time to strategize.

But you don’t have to do it alone.

Let us put our 40+ years of experience across every industry, mode and region to work for your

organization.

Domestic Product

Dale Grosso

[email protected]

Customs Brokerage

Emily Faulkner

[email protected]

International Air and Ocean

Kent Thompson

[email protected]

mailto:[email protected]



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