WEEKLY MARKET UPDATE 09/26/2024

This Newsletter's Summary

Figure of the week

0.3% drop in Baltic Air Freight Index before China’s Golden Week, indicating stable rates...

Quote of the week

"Logistics isn’t just about moving goods; it’s about moving the world forward."

"John Manners-Bell"

Impending Port Strikes: Will They Sink US Supply Chains?

Strike action at?US East?and Gulf coast ports could disrupt?supply chains?into 2025, leading to calls for government intervention. If no agreement is reached with the International Longshoreman’s Association (ILA)?by September 30, 36 ports may completely stop operations.

Peter Sand, Chief Analyst at Xeneta, warned that ships carrying billions in cargo will likely wait outside ports, causing delays.

With over 40%?of containerized goods entering the US through these ports,?177 trade associations?are urging immediate negotiations to prevent a major?trade disruption.

Bangladesh Exports Lift Off: Delhi Becomes Airfreight Hub!

Airfreight?surged by 150% last April due to the Red Sea crisis, leading traders to export via Delhi to manage costs. Limited capacity at Dhaka airport?has driven up rates, making it hard to meet demand.

Despite an increase in handling capacity to?500-600 tonnes daily, it still falls short of the required 1,000-1,200 tonnes. With the year’s order cycle ending, demand is decreasing, and charges are expected to ease slightly.

Global airfreight?rates rose 14%?year-on-year in mid-September, with Bangladesh to Europe exceeding $5 per kilogram?and reaching $7.49 to the U.S. Exporters are shifting to Delhi, while sea freight companies are avoiding the Red Sea due to security concerns.

Weekly logistics trivia

David Ricardo?was a 19th-century British economist known for his theories on comparative advantage and trade, which laid the groundwork for modern economics and international trade.

• Comparative Advantage: Introduced the concept that countries should specialize in producing goods where they have a lower opportunity cost, promoting efficient resource allocation.
• Labor Theory of Value:?Proposed that the value of a good is determined by the labor required to produce it, influencing economic theories on pricing and value.
• Rent Theory:?Developed the idea that land rent is determined by the difference in productivity between the most and least productive land, shaping land use economics.

Ricardo's insights shape trade practices?today, emphasizing specialization and international cooperation. His work is fundamental to economics

Could China's New Carbon Fiber Freight Trains Revolutionize Rail Transport?

China?has developed its first carbon fiber composite heavy rail freight trains?after three years of research. The new material, which is 20% lighter?than aluminum alloys, enhances energy efficiency?and durability?while improving railway transportation?efficiency.

This advanced composite is used for the main load-bearing structure, offering strength and modulus significantly higher than aluminum.

The collaboration between?China Energy Group?and CRRC has a strong history, with a recent agreement to advance their efforts in modern energy transportation.

Customs & Regulations

U.S. Customs and Border Protection (CBP)?proposed regulatory changes to tighten enforcement on de minimis shipments, requiring a 10-digit tariff classification?and clarity on the ship-to party. These rules will extend Type 86 data to all de minimis shipments, with retailer support to prevent foreign exploitation. Congress is also considering bills to eliminate de minimis for goods under Section 301 tariffs?and impose penalties for violations. here are the main keypoints

• Data Requirements:?Stricter enforcement with the addition of 10-digit tariff classification numbers and identification of the person claiming the exemption.
• Ship-to Party Clarification:?Need for consistent enforcement across ports regarding who qualifies as the ship-to party (storefront vs. individual).
• Type 86 Extension:?Expansion of Type 86 data requirements to cover all de minimis shipments.

???Until Next Week

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Stay tuned for our upcoming market updates.

Sources

Port strikes in US will cause 'major supply disruption' into 2025 - Materials Handling World News (mhwmagazine.co.uk)

Airfreight still high amid sea routes disruption | The Business Standard (tbsnews.net)

China develops first batch of carbon fibre composite heavy rail freight trains - JEC (jeccomposites.com)

Tariffs targeting Chinese e-commerce could damp demand - FreightWaves