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Ocean Freight Market Update

Air Freight Market Update

Freight Market News

Shipping Groups Call for Port Digitalization The International Association of Ports and Harbors issued a call to action signed by 9 other shipping groups that seeks to streamline digital processes and data exchanges between ports with the goal of building a more resilient environment in the wake of COVID-19 congestion and delay. Hellenic Shipping News outlines 9 priorities to promulgate harmonious digital standards that are compliant with existing regulations and include ports of all sizes.

Emergency Air Freight Demand Subsides As nations slowly re-open after COVID-19 shutdowns, the JOC reports intense air freight demand has started to dip from mid-May highs when the rush for PPE and medical supplies was more urgent. Flattening infection rates have allowed North America and Europe to build stocks of supplies, reducing the need for emergency transport.

Meanwhile, this week, Flexport Chief Economist Dr. Phil Levy noted the following economic highlights:

• April US trade plunges. In the preliminary, seasonally-adjusted goods trade data, imports fell 14.3% from March while exports fell 25.2%.
  • Mexico mirrors the drop as Mexican imports for April fell 21.9% in seasonally-adjusted terms, while exports dropped 37.7%. Mexican automotive production fell 98.8% from April a year earlier, while auto exports were down 90.2% over the previous year. JP Morgan predicts an 8.4% contraction for Mexican GDP across 2020.
• US personal income increased by 10.5% in April, compared with an average decrease of 0.4% across the first three months of the year. The boost came predominantly from economic recovery payments under the CARES Act.
  • Spending is down, despite the jump in income. Personal consumption expenditures fell by 13.6% in April, following on a 6.9% fall in March. The difference (increased savings) likely reflects a concern about future prospects that inhibits spending.
• US consumer confidence stabilizes with two measures of US consumer sentiment leveling off in May. The University of Michigan index rose from 71.8 in April to 72.3—compared to 100.0 in May 2019. The Conference Board measure rose from 85.7 in April to 86.6.
  • European sentiment is weak as well, as the European Commission survey got a strongly negative response on willingness to make a major purchase.
• Japanese factory activity shrank in May at the fastest rate since March 2009.
  

Customs and Trade Updates

End to Hong Kong's Special Status
In a press conference last week, President Trump announced that Hong Kong will have its special status as a separate customs territory revoked. While details were lacking, the implications of such a shift would be vast, potentially changing most everything in the US-HK relationship including export controls, customs, immigration, and section 301 duties. A more detailed executive order is expected later this week. These actions will likely escalate the current trade war between the US and China.

Section 301 List 3 Extension Comments Requested
The USTR issued a notice that it will accept comments on three additional sets of the Section 301 List 3 tariffs that are set to expire on August 7, 2020. Comments can be sent between June 8 and July 7 and should show why the exclusion of that product should be extended for another year. Extensions will be reviewed individually on their own merit.

Section 301 List 1 Exclusions Extended
The USTR released a list granting an extension to 16 exclusions that were previously granted to Section 301 List 1. These exclusions were set to expire on June 4th, but are now extended for six months until December 31, 2020. The remaining 72 exclusions will expire on June 4, as they were not granted an extension.

For a roundup of tariff-related news, visit Tariff Insider.

Please note that the information in our publications is compiled from a variety of sources based on the information we have to date. This information is provided to our community for informational purposes only, and we do not accept any liability or responsibility for reliance on the information contained herein.