The BOC Blast 354 – Transatlantic Air Freight Rates Soar as US Imposes Europe Travel Ban

Transatlantic Air Freight Rates Soar as US Imposes Europe Travel Ban March 12, 2020

Transatlantic air freight rates are expected to soar, possibly overnight, following the US travel ban on mainland Europe, excluding – for now – the UK and Ireland.

Up to 80% of air freight capacity on the transatlantic could be cut as airlines ground passenger flights, with bellies normally taking the lion’s share of the capacity on the route.

“IAG, Air Canada, Virgin and Aer Lingus are all going to be very busy,” said one senior air freight analyst. “There is a tremendous amount of trade between the two continents, and the vast majority is in bellies. If that capacity plunges, you can only imagine the reduction in trade on the Atlantic. There is going to be tremendous pressure on capacity.”

One European forwarder told The Loadstar: “This is going to be another case of ‘pay to play’. Where prices are going to go is anyone’s guess.” Current dynamic load factors on the transatlantic are 78% westbound, and 60% eastbound, according to Clive Data Services. Even with a modest assumption of 60% of the capacity removed, demand is easily going to outstrip supply.

“There are so few airlines with freighters left,” said the analyst. “The US majors have none, it’s really only Lufthansa and AF-KLM, and they have cut their freighter fleets. This is a big gift for IAG.”

Forwarders said that any BSAs on non-cut capacity would be unlikely to be honored by the airlines, and in any event, most contracts would only last until the end of the month.

“The US market tends to work on spot rates anyway.”

Airlines throughout Europe are said to be in meetings to determine how to manage their capacity, with more information expected this afternoon. Some are already talking about using passenger aircraft just to move freight on the transatlantic – and are looking to command a high price for it.

Trucking is also expected to be key, with mainland European carriers looking to fly goods into Canada and Mexico on passenger aircraft and trucked over the borders into the US. In Europe, forwarders are looking to truck freight into the UK for Virgin and IAG flights into the US.

“Cargo is going to be redirected and trucked,” said one forwarder. “The multinational forwarders will already be diverting it to the UK.”

However, belly capacity from the UK has already been cut. BA announced on 2 March it was cutting back transatlantic flights as passenger demand fell. Norwegian cancelled 22 long-haul flights between Europe and the US from 28 March to 5 May.

The BOC Blast 353 – Coronavirus US exporters warned about pending shortages of empty containers

US exporters warned of pending shortages of empty containers

Bill Mongelluzzo, Senior Editor | Feb 18, 2020 5:30PM EST,, March 2, 2020

Carriers are warning US exporters that with Chinese factories crippled for a third consecutive week and carrier announcements of more than 80 blank sailings in February and March, the shortage of empty containers beginning to surface in the US interior will intensify in the coming weeks.

Additionally, export spot rates to Asia are beginning to increase as space on vessels leaving US ports tightens. “The imminent thing is the escalating number of blank sailings. That is going to have an impact on the influx of equipment to the US,” said Uffe Ostergaard, president of Hapag-Lloyd Americas.

A sudden downturn in imports can result in a shortage of containers that are available to carry US exports. With fewer laden inbound containers unloading in population centers such as Chicago, Minneapolis, or Columbus, Ohio, there will be insufficient empty containers in those regions to meet the demand from exporters for products such as scrap materials or agricultural commodities.

Blank sailings could spawn container shortages

Carriers are beginning to notify customers that the growing number of blank sailings in the trans-Pacific due to factory shutdowns in Asia for the week of Lunar New Year in late January, followed by extended shutdowns due to the coronavirus (COVID-19) in China, would disrupt the flow of import containers into the US.

“The carriers are notifying us about a shortage,” said Hayden Swofford, independent administrator of the Pacific Northwest Asia Shippers Association, which represents forest products exporters. The container shortages normally develop first in the interior, but eventually work their way back to the West Coast, he said.

Exporters of soybeans and specialty agricultural products in the upper Midwest have begun to experience problems getting all of the empty containers they need, said Bruce Abbe, transportation strategy adviser to the Specialty Soya and Grains Alliance.

“It’s blank sailings compounding other blank sailings,” Abbe said. Canceled sailings and staff shortages at shipping lines and warehouses across Asia, especially in China, are limiting the volume of Asian exports to the United States, he said. Spot shortages of containers are surfacing near hubs such as Chicago and Minneapolis. “There’s a lot of uncertainty now. Everybody will be looking to do work-arounds the best we can,” Abbe said.

From past experiences after the Lunar New Year, exporters around Chicago, Minneapolis, Detroit, and Cincinnati and Columbus in the Ohio Valley, will probably encounter shortages of empty containers, which could be more extensive this year because of the extended factory closures due to the coronavirus, Krause said.

A shortage of empty containers is also emerging in the agricultural-rich Central Valley of California, said Peter Friedmann, executive director of the Agriculture Transportation Coalition.

So far, export shipments in the trans-Pacific have not been rolled due to a lack of vessel space. Export shipments this season have been consistent, but Krause said Seko is alerting its customers that exports could spike in March, which is normally a peak month in the westbound trans-Pacific.

Export spot rates in westbound trans-Pacific increasing

Carriers are also notifying customers of general rate increases (GRIs) in the westbound Pacific, which indicates they anticipate bookings will pick up.

Some carriers told this week they not only anticipate that export rates will go up, but also that they will begin limiting shippers to the volume agreed upon in their minimum quantity commitment (MQC), with the exporters having to sign new contracts if they intend to exceed their MQC.

The US East Coast has yet to feel the drop in imports because of longer transit times from Asia. “As of this moment in terms of discharging and loading, it’s not a factor, but it will become a factor as we get into March,” said Sam Ruda, the seaport director at the Port Authority of New York and New Jersey.

“I am not seeing any structural equipment imbalances,” he added. “That may start looking a little different in the next few weeks as we see what the volumes look like, so we’re keeping a very close eye on it.”

The BOC Blast 352 – Section 301 Large Civil Aircraft (LCA) Trade Remedy – Modification March 5 2020 and March 18 2020

Section 301 Large Civil Aircraft (LCA) Trade Remedy – Modification March 5, 2020 and March 18, 2020

CBP Modification, Section 301 duties for EU/EU Member States

The U.S. has been in dispute with the European Union (EU) and certain EU member states concerning the subsidies provided on large civil aircrafts that are inconsistent under SCM Agreement and GATT 1994 obligations.  CBP has posted the modification to the additional Section 301 duties for EU and EU member states, on February 21,2020 please see 85 FR 10204.  Please see the below chart from Cargo System Messaging Service (CSMS)

CBP CSMS # 41840662

CSMS #41840662 – Section 301 Large Civil Aircraft (LCA) Trade Remedy –
Modification March 5, 2020 and March 18, 2020

The purpose of this memorandum is to provide notice of the United States Trade Representative’s (USTR) modification determination to impose additional duties on products of the European Union (EU) or certain member states.  The effective date is dependent on the section of Annex 1 and may be either on or after 12:01 a.m. eastern daylight time March 5, 2020 or on or after 12:01 a.m. eastern daylight time March 18, 2020.  The complete list of affected products, countries of origin, Chapter 99 HTSUS numbers, and the associated effective dates and tariff rates is attached to the end of this memo.


Effective October 18, 2019, the USTR imposed additional duties on certain products of the EU and certain EU member States in this Section 301 investigation to enforce U.S. WTO rights in the Large Civil Aircraft (LCA) dispute published in the Federal Register 84 FR 54245. On December 12, 2019, the USTR announced a review of the Section 301 action and requested public comments.

On February 21, 2020, based on this review, the USTR published a Modification to the LCA dispute in 85 FR 10204 to revise the action being taken by increasing the rate of additional duties on certain LCA, and by modifying the list of other products of certain current and former EU member States subject to additional 25 percent duties.

As specified in the annexes to FR notice 85 FR 10204 , the USTR has determined to increase the duties on certain LCA from 10 percent to 15 percent.  The countries that are affected by the duty increase for LCA are France or Germany.

The USTR has also changed the composition of the list of products subject to additional duties of 25 percent. As of this time, the USTR has decided not to increase the rate of additional duties above the additional 25 percent currently being applied to non-aircraft products. The countries that are affected by the change to the list of products are Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden or the United Kingdom.  The LCA Section 301 duties only apply to products of the countries set forth in the Annex to FR notice 85 FR 10204.

The USTR has also determined that going forward, the action may be revised as appropriate immediately upon any EU imposition of additional duties on U.S. products in connection with the LCA dispute or with the EU’s WTO challenge to the alleged subsidization of U.S. large civil aircraft.


The modifications set out in the Annex 1, subparagraphs A and B are applicable with respect to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on March 5, 2020.  The modifications in additional import duties for products set out in Annex 1, subparagraph C, apply to merchandise entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time March 18, 2020.  A complete list of products subject to the remedy and assessed duties are set out in FR notice 85 FR 10204.


Any product listed in the Annex 1, except any product that is eligible for admission under ‘domestic status’ as defined in 19 CFR 146.43, which is subject to the additional duty imposed by this determination, and is admitted into a U.S. foreign trade zone on or after 12:01 a.m. eastern daylight time on March 5, 2020 or March 18, 2020 (only) may be admitted as ‘privileged foreign status’ as defined in 19 CFR 146.41. Such products will be subject upon entry for consumption to any ad valorem rates of duty or quantitative limitations related to the classification under the applicable HTSUS subheading.

Reminder: When importers, brokers, and/or filers are submitting an entry summary in which a heading or subheading in Chapter 99 is claimed on imported merchandise, refer them to CSMS 39587858 (Entry Summary Order of Reporting for Multiple HTS when 98 or 99 HTS are Required).

Please ensure the FR notice 85 FR 10204 is passed to all Center Directors, Assistant Center Directors, Port Directors, Assistant Port Directors (Trade), Import Specialists, CBP Officers, and Entry Specialists.  If field personnel have any questions regarding the Section 301 remedy described in the United States Trade Representative (USTR) Notices of Action, please contact

Related Messages: CSMS 40430843, 40281968

The BOC Blast 351 – UPDATE Coronavirus – COVID-19 Origin Operations

UPDATE: Coronavirus/COVID-19 Origin Operation

Over the past week or so, the China government has reportedly lowered COVID-19 emergency response levels in some provinces, allowing workforce back into production. Return-to-work restrictions/requirements from the Chinese local authorities and some office building management teams remain in place.

A larger portion of our colleagues in China have returned to the offices, and the team is strictly following precautionary measures. While some teammates are working from home, we are operationally ready to manage business as normal:

Shanghai, Ningbo, Taiwan and Hong Kong: 100% of the teams are working in the office. 

Qingdao: 90% of the team is working in the office, with 10% working from home.

Shenzhen: 60% of the team is working in the office, with 40% working from home.

Xiamen, Fuzhou and Tianjin: 50% of the team is working in the office, with 50% working from home.

Dalian: 40% of the team is working in the office, with 60% working from home.

We continue to work with the relevant authorities to bring the full team safely back into our offices.

Other Market Developments

Drayage in China:  Cross-border trucking between China and Hong Kong continues to run, but it is highly recommended that bookings are made at least 2 days in advance to ensure driver availability. 

Availability of inland trucking in mainland China remains limited, advanced bookings of at least 2-3 days are required to secure trucking services.

International Air and Ocean Freight:  Production and export volumes from China have increased as the workforce returns, and demand for airfreight space, particularly to the rest of Asia, is picking up. There are also indications that ocean freight shippers are looking to switch modes in a bid to ‘catch up’ on schedules, further accelerating the demand for airfreight.

We are not expecting a quick reinstatement of cancelled airfreight capacity on both freighter and passenger flights outbound China, which we estimate to be well above 30% of last year’s global capacity (50% to the US, 50% to Asia, 35% to Europe), particularly passenger flights, as many countries maintain advisories against travel to China. At this point, we anticipate that airlines will initiate a resumption of capacity no earlier than the third week of March.

Airfreight rates soared on the China-Asia routes as capacity pulled out of this market is most significant, and demand for space has become ‘red-hot’. Air charters are in high demand, but supply is soft as the availability of aircraft and crew remain challenged.

The fallout from COVID-19 is strongly felt in the container shipping market. According to Alphaliner, Q1 2020 volumes at ports in China and Hong Kong are estimated to have reduced by more than 6 million TEUs due to the extended Lunar New Year holiday and COVID-19 containment measures.

Currently, container equipment is sufficient in China, but the availability of Non-Operating Reefers (NOR) is diminishing.

We will continue to update you as we receive more information. If you have questions, please contact your BOC Representative.

The BOC Blast 350 – Coronavirus – COVID-19 Operational Update

Coronavirus / COVID-19 Operational Update

  • Work Arrangements – Our teams are working as much as possible, guided by advice from local authorities to protect the well-being of our staff while maintaining maximum coverage and minimal operational disruption as possible
  • In China, our team is operating either from our offices or their homes, and we have implemented tiered working hours.
  • In Hong Kong, a portion of our staff is working from home while the rest is working from the office.
  • Market Developments
  • Factories in China are gradually resuming operations at a varying pace, a slow ramp-up in production and exports are still to be expected.
  • Drayage in China: Various provinces and cities have imposed restrictions on the entry of non-residents and vehicles registered outside their localities. This has given rise to a shortage and/or rate increase of inland trucking in the mainland China as truck drivers have not been able to return from their hometowns to their work regions post-holiday. Advanced bookings of at least 2 days is required to secure trucking services.
  • Air Freight: A large number of passenger and freighter flights to and from China have been cancelled, severely impacting capacity. Though freighter flights have gradually been reinstated from last week, with demand far outstripping supply, airfreight rates will likely be much higher than normal.
  • Ocean Freight: All Chinese ports except Wuhan are currently operational. However, many container yards have yet to re-open, potentially causing equipment shortages.
  • Global Port Developments

We will continue to monitor the situation closely and provide updates as we have them. Please contact your BOC Representative, if you have any questions.

The BOC Blast 349 – Coronavirus Delays – Update

Coronavirus delaying normal post-CNY trans-Pac flow to March

Bill Mongelluzzo, Senior Editor | Feb 10, 2020 2:57PM EST

Logistics experts predicted Monday that delays in resuming China’s factory production and inland transportation supply chains due to the deadly coronavirus will push the return of normal post-Lunar New Year Trans-Pacific cargo flows to late February or early March.

Furthermore, carriers over the weekend announced an additional 21 blanked sailings, which means that beneficial cargo owners (BCOs) now face at least 82 blankings through February and into March, with additional canceled sailings possible.

Although China’s government initially extended the Lunar New Year factory shutdowns until Feb. 3 for much of China and Feb. 10 for the Wuhan-Hubei province region in a bid to stem the spread of the virus, sources indicated those deadlines have slipped.

“From what I’ve been told, most of the factories may only resume normal working around Feb. 17,” Paul Tsui Hon-yan, managing director of Hong Kong-based logistics company Janel Group, told

Additionally, before factories resume production, they must submit a plan to authorities detailing precautions they have implemented to prevent the virus from spreading. “That means the actual date of resumption of operation could be delayed by a further two or three days,” he said.

The closely intertwined warehouse, trucking, and factory logistics chain is struggling with a shortage of workers, which is delaying the resumption of operations, let alone full production, said Jon Monroe, who represents non-vessel-operating common carriers (NVOs) in the United States and China.

“They can’t get enough truck drivers,” he said. “There are skeleton crews at the factories. Warehouses are closed.”

In past years, many workers in the coastal areas who went to their homes throughout China for the Lunar New Year factory shutdowns returned a few days late. This year, the situation is compounded by a hesitancy among workers to travel on crowded trains amid unceasing reports about the virus and its spread, Monroe said.

Carriers announce 82 blank sailings

Once merchandise begins rolling off the production lines, BCOs will face an unprecedented number of blank sailings from Asia to North America. In this week’s Sunday Spotlight, Alan Murphy, CEO of Sea-Intelligence Maritime Consulting, said carriers have announced 82 canceled sailings into March thus far.

“With increasing announcements in the past 24 hours of factories extending closure periods further, it seems likely that the number of blank sailings might also escalate in the coming week,” Murphy wrote.

Trans-Pacific services from Asia to the West Coast will be the hardest hit by the blankings. “There will be a staggering 62 blank sailings on the Asia-North America West Coast trade lane, 19 of which have been in relation to the coronavirus outbreak,” he said. Carriers have announced 20 blank sailings to the East Coast, 18 of which are due to the Lunar New Year factory shutdowns, and two to the virus, he said.

Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates, estimated that containerized imports at US ports in January declined 3.8 percent from January 2019, and will fall 12.9 percent in February and 9.5 percent in March year over year. Global Port Tracker projected that year-over-year increases in imports will resume in April, but the first half of 2020 will still be down 0.4 percent from the first six months of 2019.

In attempting to deliver transportation solutions and work-arounds due to vessel delays, blank sailings, and port issues within Asia, Swire Shipping said in an advisory that 14-day quarantine periods for vessels that call China must be taken into consideration when projecting vessel arrivals in receiving countries. “These restrictions may lead to delays caused by changed rotations or longer transit times,” Swire said.  

Logistics experts emphasized that conditions in China, the rest of Asia, and in the trans-Pacific shipping arena remain fluid, especially for any services touching China, so BCOs should maintain close contact with their transportation consultants for regular updates.

JOC correspondent Keith Wallis contributed to this report.

The BOC Blast 348 – Coronavirus Logistic Challenges

Coronavirus Logistic Challenges

Dear Customer,

For a word to define the current situation, I would use fluid. Typically after CNY, there are some planned canceled sailings due to a lack of volume since the factories close for the normal holiday period. Now with the extended closures due to the Coronavirus, the carriers, both ocean and air, suddenly are canceling additional services that were not originally scheduled to be aborted. Below you can see the JOC article which details some new unplanned blank ocean sailings announced. In regards to air capacity and services, 1/3 of all air freight cargo moves in passenger planes. With almost all passenger services to and from China for the next several weeks suspended, we believe there will be a lack of air capacity and rising air prices until at least the end of March. As some of the factories begin to open on Monday, we have also identified that inland pick up at the Chinese factory is going to be a major issue. Many of the truck drivers who come from outside of the port areas, will not have returned to work due to Coronavirus human mobility restrictions. The human mobility restrictions are overseen by the central China government but the local Chinese municipalities have been granted additional authority to restrict human travel within their own region. We will keep you informed as we get the details but I would plan for potential delays due to sudden changes in service for weeks to come. Transparency and updated information will be the key role we will play and help you pass all the information on to your customers. We will get through this terrible affliction together.

If you have any questions or would like to discuss this further please feel free to contact your local BOC Representative.

Maersk blanks trans-Pacific sailings, citing coronavirus


Maersk on Wednesday said it was cancelling six Asian service sailings to North and South America due to the extended Lunar New Year holiday triggered by the coronavirus outbreak, and warned that although Chinese port container operations continue, refrigerated plug scarcity is slowing reefer shipments. More carriers operating on the trans-Pacific are expected to follow Maersk’s lead.

The message to customers from Maersk comes after Alphaliner warned that China’s response to the coronavirus and carrier reaction to the extended Chinese New Year holidays will cut the country’s first quarter container volume by more than 6 million TEU. Such a drop will shave 0.7 percent off global volume for the full year.

In its customer notice, Maersk said the backlog of barge operations from Wuhan, the origin of the coronavirus, was easing, and it was working with reefer shippers to mitigate port plug-in power capabilities. Maersk announced the cancellation of the following sailings:

  • Feb. 2 from Kaohsiung on the TP9 to the US West Coast
  • Feb. 9 from Yantian on the TP2 connecting to US West Coast
  • Feb. 17 from Ningbo on the TP18 toward the US East Coast
  • Feb. 7, Feb. 14, and Feb. 21 sailings from Ningbo on the AC3 to the South American West Coast

Alphaliner noted 2M, of which Maersk is a member with Mediterranean Shipping Co., will cancel an additional two China-North Europe sailings in February, and the Ocean Alliance is believed to be blanking three sailings in February on the China-US West Coast trade.

“The full impact of the Chinese coronavirus outbreak on container volumes will not be fully measurable until ports announce their throughput numbers for the first quarter,” Alphaliner noted in its weekly newsletter.

Beijing has extended the Chinese New Year holidays by a week. Factories are supposed to reopen on Feb. 10, but as the number of deaths and infections rises, that date might be extended further. There are also severe travel restrictions in force across most of the country and limited cross-provincial movement, so even if the holiday ends this weekend, the factories’ migrant workforce will find it difficult to get to work.

Beijing has extended the Chinese New Year holidays by a week. Factories are supposed to reopen on Feb. 10, but as the number of deaths and infections rises, that date might be extended further. There are also severe travel restrictions in force across most of the country and limited cross-provincial movement, so even if the holiday ends this weekend, the factories’ migrant workforce will find it difficult to get to work.