Current Position | Weekly Briefing July 29th to August 4th [PODCAST]

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 ocean market insights from Senior Vice President Adam Kord. I'm Chris Parker, and here's the latest from July 29th to August 4th. 

First up, our global customs and trade market highlights. The European Union's new packaging rules take effect on August 12th, adding compliance obligations for importers. Under Regulation EU 2025/40 - the PPWR - any business placing packaged goods on the EU market must meet new requirements spanning cartons, retail multi-packs, palettes, and stretch and transport film. Importers are being urged to confirm supplier documentation and packaging compliance now to avoid customs and market access friction once the rules apply.

US Customs is piloting a new entry type 13 process as it modernizes cargo entry. In two cargo systems messaging service bulletins issued in July, CBP announced the deployment of an entry type 13 test, along with supporting resources for the trade community. Importers and brokers should review the guidance to prepare systems and filings ahead of a broader rollout.  

In the global ocean market, container spot rates in the ocean market fell again at the end of July as carriers discounted ahead of August rate hikes. gCaptain reported single-digit declines on the Trans Pacific and Asia-Europe trades, with Drewry's Shanghai-Rotterdam benchmark down 3% per 40-foot. Added vessel capacity and softer demand kept pressuring pricing, even as lines prepared new general rate increases, or GRIs, for August.

Issues such as rail disruption, low water, and terminal congestion are creating problems with equipment availability across the European ocean market. Customers should expect longer lead times, especially in locations dependent on rail and water corridors. On the larger ports of Hamburg, Bremerhaven, Rotterdam, and Antwerp, shippers should be aware of potential delays for both import and export cargo due to inland connectivity and higher yard density. Wildfires across Europe also continue to have an impact.

Ocean movement in Latin America has been heavily impacted by blank sailings and recent weather conditions, with carriers blanking sailings that amount to 36,000 TEUs in week 30. Many Latin American ports have seen omissions. Some services, such as the AN2 TPM, is already full through August. In Chile, recent weather brought heavy swells and rainfall that impacted port operations. While those have stabilized, port operators continue to work through backlogs that are accumulated.  

Moving on to the global air market, air cargo pricing steadied in late July, even as volumes and capacity pulled down. World ACD's weekly air cargo trends reported global tonnage was down 3% week on week, and capacity was off by 1%. Rates remained up due to higher fuel costs, and every region saw demand slip, with Africa leading the way with 7% less demand and Asia Pacific demand down 5%.  

And finally, in the global ground transport market, a US trucking coalition says enforcement reforms have reshaped cross-border operations. The Trucking Association Executives Council says in a recent report that coordinated federal and state action, including tighter cabotage enforcement, visa revocations, and non-domiciled CDL revisions, have strengthened oversight of cross-border trucking and driver qualifications. Freight Waves reports that the changes affect more than 194,000 non-domiciled CDL holders and are altering carrier competition and compliance expectations.

France temporarily eased driver hours rules to speed wildfire response transport in the southwest. A government exception gives drivers supporting the effort to fight wildfires leniency on their hours of service limits. Drivers offering support can add up to two hours of daily driving and four hours weekly through August 8th. Carriers operating in the region should factor emergency measures and related road disruptions into planning.  

That's it for the highlights, and up next, some ocean market insights.

Chris Parker: Adam Kord, welcome again. What is on your mind this week, sir? 

Adam Kord: Hello, Chris. There is always a lot on my mind. Um, and a lot on my mind has to do with supply and demand and this ever-swinging pendulum of capacity and what's going on. So a lot of headlines in the news, one of them we're watching really close is with regards to weather.  

Adam Kord: Particularly in rainfall in Panama. So for those of us who remember challenges we had with vessels going through the Panama Canal a couple years back when we had substantial droughts in the Panama area caused by an El Nino event. The Panama Canal is the water which allows those vessels to draft freely through the lock system in Panama. Uh, that water comes from Lake Gatun, and right now there's a drought that's hitting Panama, and there's been some restrictions for drafts that can go through, and we're gonna watch that close. So on any given day, the Panama Canal Authority allows about up to 36 container ships can move through. 

Adam Kord: Well, back when they had, uh, substantial droughts a couple years ago, those restrictions were brought down to only allowing about 18 vessels through a day.  

Chris Parker: Wow.  

Adam Kord: What that did is it cut capacity by about 50% and caused markets to go into turmoil. Um, what I mean by turmoil, just, uh, less capacity, rates were escalated.  

Adam Kord: So it's not to the level where it's as drastic as it was before, but we've heard our first restrictions, we've heard of a few vessels not being let through, and we've started to see our first glimpse into potential surcharges due to drafting and capacity constraints through Panama. So nothing super hot right now, but we're gonna watch it close.  

Chris Parker: You said it's like a day-to-day situation here, day-to-day calls that get made to allow 36 ships through. A decision made on a given day, how much time does it take for, I guess, the ripple effect to kinda level out after that?  

Adam Kord: Yeah, it takes some time. And, and what happens is the majority of container ships that go through, they have appointments well in advance. Over and a year in advance, they schedule those appointments. And then they might sell those, depending on supply and demand moving throughout the year. Appointments that we're seeing challenged is they're cutting those tier three or those last-minute appointments, and those are being eliminated. So it hasn't started eliminating the core services that move through, but again, we're gonna watch it close.  

Chris Parker: Yeah. Tier three, meaning what?

Adam Kord: Um, those are like last-minute appointments. So they're not scheduled as far in advance. But that's not the only area of the world where we're, we're paying a close attention to capacity. So I'm gonna flip over to, um, the Red Sea and the Suez Canal, which has been closed down for, for quite some time, dating back to the tail end of 2023 when Houthis started attacking vessels in the Red Sea. And then in order to, you know, keep ships safe, vessels changed the routings. Shipments from Asia into Europe started to go around the Cape of Good Hope, Africa. Capacity, ships moving from India to the US, ships moving from India into Europe. So everyone started to go around the Cape of Good Hope. And just to put these numbers into, into perspective back before the attacks happened, you could read different periodicals or talk to different analysts, but roughly 22% of all global containerized traffic passed through the Red Sea and the Suez Canal.

Chris Parker: Wow.

Adam Kord: When the Houthi started attacking, and the carriers changed their routing patterns through around the Cape, depending on, you know, the analyst that you're talking to the transit times extended by anywhere from 10 to 14 days, and that removed roughly 8 to 13% of capacity from the market elongating those transits. Yeah, yeah. I know in the past, you know, one of our discussions, Chris, we talked about how, how, uh, the majority of vessels move in loops. And when you add, you know, on a one way, 10 to 14 days of additional transit loops, that extends it greatly, and that's removing capacity from the market. And the reason why this is, this is top of mind this week is because we've had some recent carrier announcements, uh, from CMA, from Maersk, and, uh, a service from Hapag and Maersk as well from Asia to Europe, and the other services are from India to the US that they've decided they're gonna go back through the Suez Canal. They're gonna go back through the Red Sea. And, and those sailings have started already. So the reason I'm bringing this up is because, for one, uh, it shortens those loops. Uh, it adds capacity back into the market, which could be a really good thing. Um, it could cause some initial congestion as vessels arrive faster to places like Europe and the US, uh, East Coast. Um, but then, you know, I, I scratch my head as, um, for one, um, it's not all carriers that are doing this, but these three carriers have made their announcements, so it's starting. And then really what's gonna happen over the next three, six months. You know, I originally thought this would, this would never happen until the conflict really subsided. But carriers are deciding to go back through.  

Chris Parker: Is this as, as a result of a different appetite for risk, or is this a, a, just a really dire remedy that, that, that needs to happen in order to get things back on schedule and to return that capacity?  

Adam Kord: Yeah, that's, that's a... I, I think the appetite for risk is as high as ever. Um, I'm not, I'm not out shopping, and probably a lot of our listeners aren't out shopping, or they could be, you know, underwriting policies for vessels. Um, but I don't think AIG, Lloyd's, Zurich, the others are, are quickly insuring vessels these days, but what I do when I, when I look at everything, carrier on time performance is absolutely dismal.

Chris Parker: Mm-hmm.  

Adam Kord: Um, you know, it's usually a couple months behind. On time performance was in the low 60 percentile, and I know when we get the next months published, it's gonna be in the 50s.  

Chris Parker: Yeah.  

Adam Kord: So on-time performance is, is really bad. Shorter transit gets those vessels back on schedule. That's number one. Um, number two, you know, you also have to look at, at the cost of fuel, and I, I hate to bring in a cost component, but it's real. You know, when you have bunker fuel, what was that, that was at, you know, $600 a metric ton, $550 a metric ton, and then it crests over 800. That's real, and that, that's some substantial costs. So that the carriers are being really cautious. I'm sure they're heightening additional security. But this is a change. This is a change that, you know, firstly, I want everybody to be safe, but what this will do is it'll improve transit times, um, and could reduce some costs in the long term. But we'll, we'll continue to watch it close, but I thought this was something I was very surprised. Uh, but it's a, it's an impact to, to many of our customers' business.  

Chris Parker: Is this something that, you know, you, you mentioned last week too, like we've just seen more consolidation, um, with between carriers and stuff, that the, the number of carriers out there is decreasing and decreasing as consolidation happens. Are these one of those kinds of circumstances that could lead to something like that?  

Adam Kord: I think so. And you know, we always talk about challenging markets, and I talked about a challenging market a little bit last week with India, right? So exports from India, uh, especially to the US, have become very, very challenged at the moment. And one of the reasons is because ONE, um, they have terminated their service, which is called the WIN service India to the US East Coast. So that put a big void in capacity.  

Chris Parker: Right.

Adam Kord: Well, if you're another carrier, and there's only a few that service that market, and you're spending an additional 10 to 14 days going around Africa you decide to now go through the Suez, that shortens your loop and puts a quick injection of capacity into that trade.

Chris Parker: Yeah, absolutely.  

Adam Kord: Um, and, and that's happening as well.  

Chris Parker: Yeah. And so then, yeah, then it's almost, it's worth it now. It's becoming worth it now to take that risk to go through the Suez.

Adam Kord: I don't know if it's ever worth it, Chris, but let's just be, let's just be hopeful that the whole conflict ends soon and everyone remains safe.

Chris Parker: Thank you so much, Adam.  

Adam Kord: All right. Thank you.  

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.

Be sure to subscribe to your preferred podcast platform so you don't miss future episodes. 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!