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Market Update: COVID- 19 For August 4, 2020

Market Update: COVID- 19 for August 4, 2020

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Canada’s State of Trade 2020: As Canada’s Minister of Small Business, Export Promotion, and International Trade. Over the last few months, countries around the world have come together to fight the global pandemic, working to ensure the health and safety of our people while mitigating the economic impact of the pandemic. During this difficult time, we have seen entrepreneurs, workers, and all Canadians come together to support one another. Our businesses have shown incredible flexibility and creativity to adapt and find innovative solutions to the challenges they faced. This report highlights how Canadian innovation and resilience has allowed our businesses to continue to compete in the global marketplace and our government’s commitment to supporting trade through turbulent times. As COVID-19 swept the world, many countries responded by closing their doors to trade in an effort to protect their people. But COVID-19 should not–cannot–be used as an excuse to stop trading or to turn inward. Trade remains crucial to the prosperity of Canadians, accounting for nearly two thirds of our national economy and supporting 3.3 million Canadian jobs before COVID-19. We are recognized globally as a strong, stable, and reliable trading nation and one of the best places in the world to invest and start a business.

But global supply chains are under pressure now more than ever. That is why, through our Export Diversification Strategy, our government recommitted to finding new ways to serve and better support Canadian business owners and entrepreneurs to succeed in the global marketplace.

Free trade agreements, such as the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and Canada–United States–Mexico Agreement (CUSMA), also known as the new NAFTA, expand and diversify market opportunities. This gives our Canadian businesses access to 1.5 billion customers around the world and creates more opportunities and jobs for Canadians. Our approach to strengthening Canada’s trade relationships includes discussions with Mercosur, the Pacific Alliance, and potentially, the Association of Southeast Asian Nations. As we work toward our economic recovery, we will continue to work with our international partners and take a leadership role to keep supply chains open, strengthen and diversify trade relationships, and support rules-based trade for the 21st century. We need to strengthen multilateral institutions, such as the World Trade Organization, which are vital to supporting rules-based trade and giving our businesses the stability, they need to grow globally. The global economic recovery depends on inclusive and sustainable cooperation and collaboration on trade. This means ensuring that traditionally under-represented groups, including women entrepreneurs, small business owners, and Indigenous-led businesses, can access the benefits of trade. Diversity of thought and talent leads to greater innovation, building businesses that are more resilient and able to weather turbulent economic times. That is why our government will continue to create opportunities that benefit Canadians and Canadian businesses from coast to coast to coast.

Air Freight

Market talk: Looks like air freight will be oh, so quiet in August It’s only anecdotal, but forwarders are reporting the likelihood of a quiet August in air freight. Rates next month look set to fall, with prices currently being quoted by airlines at normal August rates, although some pockets of high prices remain. Australia, for example, remains some three times higher than normal, said one forwarder, but China to Europe rates have fallen back. The transpacific remains relatively buoyant,  but has, broadly speaking, followed the example of Europe by a few weeks, according to one analyst. “It’s bloody quiet out there. Especially on air freight,” said one European forwarder. “Even rates are stable this week. Wherever you look, the cargo really is getting sparse.” One carrier reported it was “chasing every kilo” at the moment, with volumes down. However, cargo profits are well up for the year so far, despite volume declines, as yields have been much higher. United, for example, saw a 128% increase in yields in the second quarter and, despite having no freighters and barely any passengers with the consequent belly capacity, grew cargo revenue 36% year on year as it operated its passenger-freighters. But that will not make up for the losses recorded for having the majority of its aircraft on the ground. Pure cargo airlines, of course, have seen high profits, and there is some anticipation of strong third and fourth quarters, with tech product launches arriving.

Sea Freight

Ports remain closed after Hurricane Isaias makes landfall: The eye of Hurricane Isaias made landfall late Monday evening, August 3, near Ocean Isle Beach, North Carolina. Isaias returned rather quickly from tropical storm status back to hurricane strength in the hours before coming ashore. Eyewall arrival in Wilmington, NC. The nearby Oak Island weather station measured a sustained wind of 76 mph, making Isaias a Category 1 hurricane. Isaias has weakened a bit, and is back to a tropical storm. Yesterday morning, the U.S. Coast Guard (USCG) issued port condition ZULU, temporarily closing the ports of Charleston, South Carolina and Wilmington, North Carolina. They issued restrictions at other Southeastern ports. Anticipating the storm tracking through the mid-Atlantic today, the USCG announced last night that it was temporarily shutting down operations at the ports of Delaware Bay and Baltimore.

Expedited trans-Pacific LCL filling a growing niche. Major ocean freight consolidators in the U.S. market see no shortage in demand for expedited less-thancontainer load (LCL) service requests from freight forwarders during the ongoing global pandemic. These services promise roughly 12-day port-to-port transits between China’s dominant seaports and Los Angeles and Long Beach in Southern California, compared to mostly standard, monthlong ocean transits for eastbound, trans-Pacific container traffic. Although expedited LCL services are three to four times more expensive per cubic meter of freight than traditional LCL, they offer airfreight shippers that are currently pinched for capacity and seeing higher-than-normal air transport rates due to the coronavirus pandemic a rate that is two-thirds of three-fourths cheaper, if extra days can be allowed in the transit. “We have seen a significant uptick in volume on these services in recent months,” Niels Nielsen, executive vice president in the U.S. for Hoboken, New Jersey-based Shipco Transport, told American Shipper. “Yes, there’s a premium for utilizing such carriers, but with reduced transit times and faster availability at the U.S. terminal — and especially when compared to airfreight alternatives — that premium can be justified.” Starting in early March, trans-Pacific Ocean carriers calling U.S. West Coast ports began canceling sailings to offset the dramatic drop in import containers caused by a sudden steep decline in consumer spending and manufacturing resulting from the COVID-19 pandemic.

Business as usual this weekend: Activities at the Termont and MGTP container terminals (Cast, Maisonneuve, Racine and Viau terminals) in the Port of Montreal will resume as normal over the weekend. Operations will recommence on Saturday, August 1 at 7: 00 a.m. at the four Termont and MGTP terminals listed above. Also, the truck gates will be open from 7:00 a.m. to 3:00 p.m. on Saturday, August 1 and Sunday, August 2. This means that all Port of Montreal terminals will be operating during the weekend.

Strike notice for Viau and Maisonneuve terminals only: Monday, August 3 to Friday, August 7: A new strike notice was sent by the Longshoremen Union to the Maritime Employers Association. This stoppage will affect longshoring and mooring activities at the Termont container terminals, namely the Maisonneuve and Viau terminals. It will be effective on Monday, August 3 at 7:00 a.m. through to Friday, August 7 at 6:59 a.m. Not affected by this situation are the MGTP container terminals (Cast and Racine terminals) as well as all other Port of Montreal terminals. The Montreal Port Authority is concerned about this situation, as Port activities are essential to keep the economy running smoothly and, in some cases, to ensure public health and safety. A prolonged stoppage or slowdown in port operations is unwelcome, not only for the logistics and supply chain but also for the businesses and citizens who benefit from the movement of goods. We are therefore closely monitoring the situation and look forward to workers’ employer, the Maritime Employees Association, and the Union to reach an agreement promptly.

Market Sources

https://www.international.gc.ca/gac-amc/publications/economist-economiste/state-of-trade-commerce-international-2020.aspx?lang=eng

This announcement applies to all World Wide Customs Brokers services, including our Air Freight, Sea Freight, Ground Freight and Logistics. We are continuously monitoring the situation and will provide further updates as the information becomes available.

If you have any questions, please contact your local World Wide Customs representative.

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