• 14 min

Current Position | Weekly Briefing July 22nd - 28th

The Expeditors Podcast

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Chris Parker: You're listening to Current Position, a weekly briefing from Expeditors, mapping the shifts across trade compliance, regulatory changes, and global supply chains, plus some open market insights from Adam Kord. I'm Chris Parker, and here's the latest from July 22nd to July 28th. 

New Section 301 forced labor tariffs of 10% to 12.5% went into effect last week, on July 24th, covering imports from 60 economies. Two lawsuits filed at the US Court of International Trade argue the duties are an unlawful continuation of previously struck down tariff programs, affecting goods that make up roughly 99.4% of US imports. The Department of Justice and Department of Homeland Security's Trade Fraud Task Force reported more than $1 billion in recoveries, penalties, and charged losses in under a year. DOJ has now created a dedicated global trade and commerce enforcement section and issued a joint guide flagging misclassification, valuation errors, and forced labor violations as top targets. 

First up, here's what's going on in global customs and trade. Trade groups are urging CBP to slow down before implementing President Trump's June 3rd Customs Enforcement overhaul, with business organizations and the US Chamber of Commerce pushing for a transparent rulemaking process with public comment. They point to CTPAT as proof that a risk-based approach can target bad actors without burdening compliant importers. 

Far East to US ocean rates have surged 234% since the Iran crisis began February 28th, hitting $8846 per FEU on the East Coast. Rates are now softening gradually, though Xeneta expects declines to keep falling far slower than the spike that drove them up. 

The Department of Transportation's Maritime Administration and the Port of Long Beach signed an agreement this week to develop small modular reactor technology for commercial vessels. A successful program could mark the first US nuclear-powered merchant ship since 1959. 

The Fiscal Year 2027 National Defense Authorization Act, awaiting a Senate vote, could send roughly $26 billion to domestic shipyards for submarines, destroyers, and carrier construction. General Dynamics, HII, and Hanwha Philly shipyard are among the builders in line, keeping funding roughly level with last year 

And now on to the global air market. Global air freight rates fell for a fifth straight week through July 27th, but remained 16.8% higher than a year ago.  Rates out of the US actually firmed on several lanes, including to China and Germany, even as the broader market softens.

The shift from temporary Section 122 tariffs to new Section 301 forced labor tariffs is expected to leave most importers paying similar duty levels. C.H. Robinson's Mike Short says the focus now shifts to classification accuracy and landed cost management rather than sourcing overhauls. Industry analysts say the focus now shifts to classification accuracy and landed cost management rather than sourcing overhauls. 

Hong Kong to Europe air cargo tonnage fell 24% year over year in the week of July 13th to 19th, the fifth straight weekly decline since the EU scrapped its 150 euro de minimis exemption on July 1st. China-Europe volumes dropped 10% too, while Trans-Pacific lanes to the US state comparatively resilient. 

And finally, onto ground transportation. A Supreme Court ruling opening brokers to liability in highway accidents, plus a recent nine-figure jury verdict against a major freight brokerage, are pushing brokers to formalize carrier vetting. Industry groups are now petitioning FMCSA for a clear carrier selection standard.

ACT Research’s supply-demand balance index eased to 60.9 in June as freight volumes softened and carriers added capacity. Meanwhile, spot truck load rates fell 2.5% week over week to $3.38 per mile, even as diesel prices jumped 27 cents. 

And finally, the $4.5 billion Canadian-funded Gordie Howe International Bridge opened to traffic on Monday, giving truckers a lower-cost alternative to the privately owned Ambassador Bridge. Detroit is the top U.S. port for truck traffic on the Canadian border, and the bridge opens even as trade tensions between the two countries remain elevated. 

Up next, senior vice president of Global Ocean at Expeditors, Adam Kord.

Chris Parker: Adam Kord, senior vice president of Global Ocean here at Expeditors. What has been on your mind for the last week or so?

Adam Kord: There's always a lot on my mind, Chris, but as of late, you know, I'm happy that we're moving out of this manic ocean market that was most of June into early July.

Chris Parker: Mhm. What was going on then?

Adam Kord: Yeah. Looking at pretty much all exports coming out of Asia, the markets were extremely turbulent. There was a lot of congestion. Schedules were off course, which caused rates to go way up. To put it very, very simply, demand was exceeding the available capacity that was available in Asia, pretty much to all areas of the world, which really drove up rates.

Chris Parker: Yeah, yeah. Can you talk a little bit more into the the reasons, the factors that were contributing to this capacity?

Adam Kord: Yeah, sure. You know, when the when the conflict in the Strait of Hormuz started off, many people were worried that this was really going to throw off the balance of supply and demand.

Chris Parker: Mhm.

Adam Kord: But, um, really only about 2% of global capacity goes through the strait. And it really didn't alter those movements, just not enough activity to really move that pendulum of supply and demand. However, the global supply chain is pretty fragile. And when you look at how vessels move, vessels move in loops, and those ships that are departing from Asia are going to the US, they're going to Europe, they're going to Latin America, and they move in full loops, and then they ultimately come back.

Chris Parker: Mhm.

Adam Kord: One of the reasons that the market was altered is fuel got extremely, extremely expensive. It's very transparent across all industries.

Chris Parker: Right.

Adam Kord: Cargo going back to Asia are typically there's a lot of empty boxes. There's a lot of cheap commodities. The carriers really slowed down those vessels. Just for those of us who drive a car on gas or petrol, when you drive slower, it's more fuel efficient. They slow those vessels down, which cause those vessels to arrive back to Asia late. There was also some bad weather, typhoons, fog which caused congestion, and it all just compounded. Here in the US, for those of us who are paying attention to tariffs, which is pretty much everyone, there was a looming date of July 24th where the tariffs could change again, and they did.

So you had demand spike up a little bit with people frontloading. And this combination caused whirlpools to form in Asia. There wasn't enough capacity on those vessels that were arriving, caused rates to go way up. But right now we're seeing just over the past couple of weeks, those whirlpools have have been removed. You're starting to see capacity rise demand's cooling. That congestion in Asia has dissipated and the markets are somewhat, knock on wood, coming out of Asia have returned to starting to return to normal. We're starting to see rates drop, schedule integrity return a little bit, and some of those headaches are going away.

Chris Parker: Now, historically speaking you saying the global market can be fragile. I imagine like a whiplash effects have happened before historically.

Adam Kord: Right.

Chris Parker: Have we not seen that this time around, or should we be expecting something like that? Or does it make sense to think about that right now? 

Adam Kord: I think that's a great point. One thing we're seeing is capacity moves faster than at any period of my 28 year career at Expeditors. One example that I'll bring up is right now from large trade. If you look at India into the US, it's a market that was really soft the first part of the year. Right now, that market has become red hot with demand far exceeding available capacity. And you might ask me or ask anyone, well, why? 

Well, ONE, great partner of ours, they have a service in that market called the WIN Service that services between India and US East Coast. They were blank sailing, and I'll come back to blank sailings in a minute. But they've suspended that service. And when you remove all that service from a market, it leaves a void in the rest of the competition in the market between MSC, Hapag, CMA. There's just not enough there, right? It's caused those rates to go way up, and that's something that can move in a hurry.

Chris Parker: Now, going back to blank sailing. What is that exactly?

Adam Kord: I always talk about because the typical customer or even expert employee that I engage with, they always want to know where rates are going, right? And when I talk about rates, it really comes back to are rates predictable based on where supply and demand is at. Carriers can't control one. They can't control demand. Carriers can't control whether or not you or I decide to buy more widgets from Asia, or more widgets from Latin America, or widgets from the US. But one thing is the carriers can control is their capacity.

Chris Parker: Mhm.

Adam Kord: Something else the carriers really can't control is they can't control rates. They set the rates. But there's antitrust agreements throughout the world by the Chinese Ministry of Transportation, in my own backyard here with the Federal Maritime Commission, to say that carriers can't collude in terms of pricing, but the carriers can control their capacity to move their capacity that can throw off that pendulum. It's really expensive for them to remove capacity. If I'm a carrier, just like ONE did with the WIN, if they take and they pull all those vessels, they're removing five, ten, fifteen, twenty vessels from a market that's very expensive. They have to find a place to put them. Whereas in blank sailing, blank sailing is something that the carriers can quickly do relatively cheap because they don't have to displace assets. So vessels move in loops. So just as an example, if I'm a carrier and I'm servicing Asia to the US East Coast, and I decide that in order to serve vessels going back and forth between Shanghai to Newark and Norfolk, I'm going to use five vessels and they're going to operate in a loop. What a blank sailing is of those five vessels in one loop. I'll have one of those vessels not pick up any cargo, so it remains active. But what it's going to do is it's going to do that loop and not pick up any cargo. By doing that, I've removed 20% of capacity from that loop.

Chris Parker: Without wrecking your schedule

Adam Kord: Without wrecking my schedule or whatever. It just keeps going. So that's a way that the carriers can quickly add and remove capacity. And just to put it into perspective, this is something the carriers didn't do a lot in the past, but I think all the way back to 2015, when there were twenty global carriers, carriers didn't blank sail because they were worried, hey, if I blank, the next carrier is just going to swoop in and take all my bookings.

Chris Parker: Yeah, for sure.

Adam Kord: However, right now, we've seen so much consolidation in the industry.

Chris Parker: Mhm.

Adam Kord: Now there's fewer carriers. There's really eight global carriers.

Chris Parker: Wow.

Adam Kord: So they can blank, and there's no one there to swoop in and take up. And just using that one example, if I reflect back to 2019, and I just looked at a trade in the first half of the year from Asia to the US East Coast, there was just under 300,000 TEUs of capacity that were removed via blank sailings in 2019. If I look at the first half of 2026, that number grew to just under 900,000 TEUs.

Chris Parker: Holy cow.

Adam Kord: Went up almost 3x.

Chris Parker: Yeah.

Adam Kord: So it just goes to show this is another tool in the carrier's toolkit that they will use to, you know, control that supply and demand. And if the market right now is on a course to be pretty soft, and I expect that for the remainder of the year, we could really see blank sailings take off.

Chris Parker: Yeah, yeah. And this is something that, I mean, even given the cost of fuel, I know that they use a different fuel than our cars or planes or anything like that, but that cost to keep those ships operating rather than parking them somewhere. I mean, that cost is still low enough for them to operate blank sailings, stay afloat, and be able to service shippers. Whenever the demand starts to rise, they can just turn on the capacity instantly. Is that is that true?

Adam Kord: I mean, that is absolutely true. Yeah, because it can show that those rates, especially on the market levels, can move pretty violently when you have not enough capacity to move that demand in that individual market.

Chris Parker: One could call this out as like a predatory thing. They're artificially squeezing capacity here and there. But no, this is so that they can be available when they need to. It's it's expensive because you still have to operate the vessels, but not nearly as expensive as parking them for carriers to maintain rates where they are. They can add that capacity as needed so that things aren't as volatile.

Adam Kord: And unfortunately, you know, Chris, we've all been there as well. We're taking a flight from one place to the other, and there's a flight every three hours. 

Chris Parker: Yeah.

Adam Kord: And the flight in three hours is only half full, right? Flights get canceled a lot of times, too.

Chris Parker: Yeah, they do.

Adam Kord: In concept, this is just moving cargo and not people.

Chris Parker: Interesting in terms of what listeners should be thinking about. What are some things that should be top of mind for others?

Adam Kord: Yeah. One thing we've learned, especially over the past couple of months, I don't think there was anybody expecting the market out of Asia to be as tight as it was in June or July. Everyone was predicting that the market was going to be full of capacity. Rates would probably be depressed. And, you know, this was just another reflection and a reminder of how fragile the markets are, and that things can turn very rapidly. So just as you know, I'm responsible for putting together our procurement strategy, the options for our many districts that are working in ocean operations to use. I think everybody should be thinking about, hey, make sure you do have that flexibility. Make sure you do have those options, right? A single carrier strategy doesn't doesn't work anymore because you don't know when that single carrier is going to blank sail or if something's going to happen in the market.

Chris Parker: Yeah, absolutely.

Adam Kord: That's how we've set up our base here in Expediters with a pretty vast carrier selection.

Chris Parker: Cool. Thank you so much, Adam. Appreciate it.

Adam Kord: Oh thank you Chris.

Chris Parker: You are now at our current position. Links to everything we covered today. Plus, some extra articles of interest are in the show notes. And while you're there, check out the events and webinars we flagged for the weeks ahead. Thank you for listening, and we'll see you next week.

Thanks for listening to today's episode. If you've got questions or want to learn more about today's topic, check out the show notes for more information.

And before you go, make sure you're subscribed to whatever podcast app you're using so you won't miss the next episode. To learn more about Expeditors, you can find us on LinkedIn, Facebook, Instagram, and X, or simply visit us at expeditors.com. Take care, and I'll see you next time!