Trends to Watch

Talking Tariffs

• U.S.-EU Trade Agreement Took Effect July 1: The European Commission published implementing regulations on June 30, 2026, bringing the U.S.-EU Trade Agreement into force on July 1. The deal eliminates customs duties on the large majority of U.S.-origin industrial goods entering the EU and creates 20 tariff-rate quotas (TRQs) for selected U.S. agricultural and seafood products.
  • Two EU regulations govern implementation: Regulation 2026/1455 establishes duty eliminations and TRQs across industrial and agricultural product categories; Regulation 2026/1422 amends non-preferential origin rules to qualify goods for the agricultural and seafood TRQs.
  • Annex I to Regulation 2026/1455 provides immediate 0% duties on U.S.-origin chemicals, pharmaceuticals, plastics, metals, machinery, vehicles and parts, and other manufactured goods. Annex II offers partial relief for select fresh produce, eliminating the percentage-based duty component while leaving entry-price protections intact. Annex III covers 20 TRQs for non-sensitive agricultural goods, pork, bison, dairy, cheese, nuts, soybean oil, and seafood; standard most-favored-nation (MFN) rates apply once quota volumes are exhausted.
  • The agreement is set to remain in effect through December 31, 2029, with a formal review scheduled for June 2029 to determine whether it will be extended.
  • Because dedicated preferential rules of origin have not yet been adopted, importers must establish U.S. origin under the EU's standard non-preferential rules, either "wholly obtained" in the U.S. or subject to a qualifying "last substantial transformation" there, before claiming reduced rates on EU customs declarations.
  • A safeguard mechanism allows the EU Commission to suspend tariff preferences if U.S. imports cause or threaten serious injury to EU industries, or if the U.S. fails to uphold its commitments under the joint statement.
  • Shippers should cross-reference active U.S.-origin product catalogs against Annexes I, II, and III to identify duty-free eligibility and TRQ applicability. Audit supplier origin documentation against Union Customs Code (UCC) "wholly obtained" and "last substantial transformation" standards before claiming preferences. Coordinate with customs brokers to ensure preferential codes are filed on entries and TRQ procedures are in place.
  • Read more on the Flexport blog.
• CAPE Phase 2 Expands IEEPA Refund Eligibility to Reconciliation-Flagged Entries: U.S. Customs and Border Protection (CBP) launched Phase 2 of the Customs Automated Processing Engine (CAPE) in the ACE Secure Data Portal on June 29, extending IEEPA duty refund access to entries flagged for reconciliation.
  • Phase 2 covers entry types 01, 02, and 06 that are reconciliation-flagged, but only where the associated reconciliation entry (type 09) has not yet been filed. Entries where a reconciliation entry is already on file are excluded from Phase 2 and will be addressed in a future CAPE phase.
  • As with Phase 1, entries must be unliquidated or liquidated within the past 80 days to qualify.
  • Once a reconciliation-flagged entry is accepted on a CAPE declaration, the importer may then file the associated reconciliation entry. CBP will remove IEEPA duties from the flagged entries before reconciliation calculations are applied, keeping the two processes separate.
  • Key deadline: importers whose reconciliation filing deadline falls fewer than 30 days out should prioritize that filing before submitting a CAPE declaration.
  • All Phase 1 requirements remain in effect alongside Phase 2.
  • Importers should identify any reconciliation-flagged entries (types 01, 02, 06) where no type 09 has been filed and evaluate IEEPA refund potential. Check reconciliation deadlines, those within 30 days require immediate attention. Use the Flexport Tariff Refund Calculator to estimate refund amounts by duty category before filing.
• CBP Updates Section 232 Duty Offset Guidance for Auto and MHDV Parts: CBP issued updated operational guidance via a Cargo Systems Messaging Service (CSMS) message clarifying how importers should apply import adjustment offset licenses against Section 232 duties on automobile and medium and heavy-duty vehicle (MHDV) parts.
  • Importers should use the TR-015 report in ACE to monitor offset license usage. Amounts that exceed total offset license balances are subject to Section 232 duty liability and potential penalty action.
  • When claiming the offset, importers filing automobile parts (HTSUS 9903.94.05 or 9903.94.07) or MHDV parts (9903.74.08 or 9903.74.09) should report zero duty on the Chapter 99 lines, file the Column 1 duty amount on the Chapter 1–97 line, and include the offset license number on the entry line.
  • For imports originating in Japan, the United Kingdom, the EU, South Korea, and Taiwan, only the Section 232 portion of the applicable duty may be offset, not the incremental rate reflecting the difference between the Column 1 rate and the Section 232 rate.
  • When HTSUS subheadings 9802.00.40, .50, .60, or .80 appear on the same entry summary line as the automobile or MHDV Chapter 99 classification, importers should file zero duty on those Chapter 98 lines when claiming the offset.
  • Importers who previously paid Section 232 duties without applying offset licenses may submit a post-summary correction (PSC) to retroactively credit those payments against available offset license balances.

Ocean

TRANS-PACIFIC EASTBOUND (TPEB)

• Capacity and Demand:
  • Carriers canceled 10.6% of total scheduled TPEB capacity in Week 25 (June 15), declining to 4.7% in Week 26 (June 22). Week 27 shows near-zero blank sailing activity across all carrier groups.
  • July capacity (Weeks 28 to 30) shows cancellation rates below 1%, with a moderate uptick scheduled for Week 31. Total planned July capacity is at the highest level in at least three and a half years.
  • Section 122 tariffs will expire on July 24, accelerating front-loading activity.
  • U.S. wholesale inventories are at a 12-year low. The inventory-to-sales ratio has declined at the fastest pace in 34 years, excluding 2008 to 2009 and COVID, pointing to a sustained replenishment cycle.
  • Space is tight across all TPEB services. Shippers are advised to book 4 to 6 weeks in advance and confirm allocations before committing to delivery windows.
• Freight Rates:
  • Carriers have announced rate increases across all TPEB lanes, effective July 1, driven by space constraints. The Shanghai Containerized Freight Index (SCFI) West Coast and East Coast indices both rose approximately 7% week over week in Week 27.
  • Peak Season Surcharges (PSSs) are in effect through July 14.
  • Bunker Adjustment Factor (BAF) rates are set to increase for Q3 across all TPEB corridors.
  • The combination of tariff-driven front-loading and low blank sailing rates will sustain rate pressure.

FAR EAST WESTBOUND (FEWB)

• Capacity and Demand:
  • Carriers are maintaining Cape of Good Hope routing as the default for Far East Westbound trades, adding 10 to 14 days per voyage. Diversions are expected to continue through at least 2027.
  • Carriers cancelled 9.7% of total scheduled FEWB capacity in Week 25, with elevated cancellation activity in Week 26. Week 27 shows no active blank sailings.
  • A significant blank sailing program begins from mid-July, with cancellation rates rising toward 25-35% of scheduled capacity by late July into early August, concentrated on Asia-North Europe services.
  • Approximately 5,600 TEU of weekly capacity has been shifted from Asia-North Europe services to Asia-Mediterranean loops, tightening the North Europe supply picture.
  • Peak season is in full effect. End-of-June cargo rollovers are compressing first-half July space further.
  • The Strait of Hormuz closure is driving Gulf-bound cargo to reroute via Mediterranean-Suez, adding demand on Asia-Mediterranean lanes.
  • Space on North Europe lanes is expected to remain tight through the first half of July and into August. Shippers with routing flexibility should evaluate all discharge port options, and are advised to book at least 4 to 5 weeks in advance.
• Freight Rates:
  • The Shanghai Containerized Freight Index (SCFI) North Europe index rose approximately 6% week over week in Week 27; the Mediterranean index rose approximately 10%.
  • Peak Season Surcharges (PSSs) and rate increases are in effect July 1 to 14.
  • Bunker Adjustment Factor (BAF) rates are set to increase for Q3.
  • Asia-Mediterranean spot rates now carry a premium over Asia-North Europe at record levels not seen outside the Russia-Ukraine period. This premium is structural and will persist until the Strait of Hormuz closure resolves.

TRANS-ATLANTIC WESTBOUND (TAWB)

• Capacity and Demand:
  • The current week shows approximately 10-15% of total scheduled TAWB capacity cancelled, with one carrier group cancelling more than 50% of its scheduled sailings.
  • From Week 28 (July 6), a second carrier group begins significant blank sailings, accounting for approximately 25% of their scheduled capacity. Weeks 30 to 31 reflect continued near-full blanking from the first group.
  • Effective supply has declined from the record deployment seen at the start of 2026.
  • Demand from Europe to North America remains healthy. Carrier shifts at origin in the second half of June indicate demand is outpacing allocation on select carrier networks.
  • Shippers are advised to confirm space availability before committing to July to August programs, particularly on services with elevated blank sailing activity, and to book at least 4 to 5 weeks in advance.
• Freight Rates:
  • July rate levels from Northern Europe to the U.S. East Coast are unchanged; rates from Northern Europe to the U.S. Gulf increased for July.
  • Bunker Adjustment Factor (BAF) rates increased approximately 50% versus Q2 for Northern Europe corridors due to the rising fuel cost.

INDIAN SUBCONTINENT TO NORTH AMERICA

• Capacity and Demand:
  • The Indian Subcontinent to the U.S. and Canada market is in peak season.
  • Demand increased sharply beginning in May, and the trend has continued through June and into July.
  • Cluster of structural blanks in the second half of June and MSC's suspension of Indus Express service string constraining capacity.
  • Combination of increasing demand and constrained capacity have created a space crunch on the trade.
  • Indian subcontinent demand is strong. Nhava Sheva handled approximately 755,000 TEU in May, up 13% year over year.
• Freight Rates:
  • Rate increases were implemented July 1.
  • Peak Season Surcharges (PSSs) are in effect July 1 to 14.
  • Bunker Adjustment Factor (BAF) rates are set to increase for Q3.

Air

• Find the latest updates on global air freight operations on our Middle East escalation blog.
• North China:
  • Ecommerce and general cargo demand are weakening together, with no recovery catalyst visible at any U.S. gateway.
  • Airlines are adding capacity on China-U.S. lanes, with the heaviest additions on West Coast routes, putting rates there under the most pressure.
  • Falling jet fuel costs into July are removing a structural floor under rates.
  • On Far East Westbound lanes, ecommerce volumes are set to decline as EU summer holidays through July add a second demand headwind.
• South China:
  • TPEB demand eased over the weekend as the prior week's holidays and ad-hoc charter activity absorbed incremental volume, pulling both ecommerce and general cargo down and softening rates for both coasts.
  • FEWB demand continues to soften and is expected to stabilize.
• Taiwan:
  • Demand has softened modestly and rates are expected to ease slightly following a recent fuel surcharge decrease.
  • Airlines are offering discounted pricing for dense carton shipments.
  • Shippers are advised to book 5 to 7 days in advance where possible.
• Vietnam:
  • Demand remains firm heading into next week, with capacity staying tight across export lanes amid quarter-end volumes and hub congestion.
• Cambodia:
  • Demand is expected to pick up next week.
  • Shippers are advised to book at least 7 working days in advance to secure space.
• South Korea:
  • The market remains tight overall, with available capacity varying by destination and the earliest openings from early to mid-July.
  • Rates continue to climb as space stays constrained.
  • Europe is comparatively open with no notable capacity concerns.
• Malaysia:
  • Congestion at U.S. ports continues to limit capacity on TPEB lanes.
  • Spot rates are holding steady for now. Shippers are advised to book at least 10 days in advance to secure space and avoid volatility.
• Thailand:
  • Demand remains firm toward month end, with ocean-to-air conversions adding to volumes out of Bangkok.
  • Airlines report very tight connecting space and ongoing terminal congestion, with no signs of rates easing.
  • Shippers are advised to book 7 to 10 days in advance.
• Indonesia:
  • The market is stable, with no notable space constraints and booking lead times of approximately 7 days.
  • Rates have settled flat to soft following the easing of the earlier Middle East conflict.
  • A weaker Indonesian rupiah keeps Indonesian goods price-competitive abroad, though it is also raising local trucking and handling costs for carriers pricing capacity in USD.
• India:
  • Ocean container congestion and vessel backlogs at major U.S. ports are pushing shippers toward air, tightening capacity on India-to-U.S. lanes.
  • Shippers are advised to book approximately one week in advance.
• Bangladesh and Sri Lanka:
  • In Bangladesh, the EU lane remains reliable, while the U.S. lane is tighter and less consistent.
  • In Sri Lanka, capacity is tight across most services, with reliable schedules apart from Middle East carriers facing space constraints from rising perishable volumes.
• Pakistan:
  • Capacity is fully committed, with airlines quoting rate validity of a day or two.
• Transatlantic:
  • Capacity continues to return to Middle East and Gulf markets following the mid-June ceasefire and peace memorandum between Iran and the U.S., but the relief has done little to ease elevated rates on Middle East-to-Europe and Gulf-to-Europe routes, where pricing has stayed close to recent highs even as available capacity has grown faster than cargo volumes.
• U.S. exports:
  • Multiple carriers have announced fuel surcharge decreases effective July 1 on the back of softer jet fuel pricing, a tailwind for outbound U.S. air costs even as broader market conditions stay mixed.

(Source: Flexport)

Please reach out to your account representative for details on any impacts on your shipments.

North America Vessel Dwell Times

Webinars

The Capacity Squeeze Nobody Budgets For: Air Cargo 2026–2030

Wednesday, July 8 @ 8:00am PT / 11:00 am ET / 16:00 BST / 17:00 CEST

North America Freight Market Update Live

Thursday, July 16 @ 9:00 am PT / 12:00 pm ET

Trucking Market Outlook: Rates, Trends, & Regulatory Impact

Available On-Demand

Peak Season Prep: A CFO's Playbook for Cash Flow, Inventory, and Smarter Financing

Available On-Demand

Ocean Timeliness Indicator

Transit time remained stable from China to the U.S. West Coast, increased from China to the U.S. East Coast, and decreased from China to North Europe.

Week to June 29, 2026

Transit time remained flat at 35.4 days from China to the U.S. West Coast; decreased from 56 days to 54.3 days from China to the U.S. East Coast; and increased slightly from 57.5 days to 58 days from China to North Europe.

See the full report and read about our methodology here.