No signs of improvement for global air freight market as freight rates go through the roof

The air freight market is flying off the handle as forwarders experience a massive increase in terms of volumes as well as air freight rates, with lanes into the US particularly being affected.

According to a Shanghai forwarder, volumes going out of China have been increasing ‘week by week’. “The US market is the worst in terms of the rate level, while Hong Kong to the US could soon be more than HK$100 (US$12.88) per kg,” he said.

The higher yields to the US as always are attracting carriers to the routes. As one forwarder explained: “When the US gets busy, the rest of the world suffers as capacity is absorbed onto higher-rate American lanes.”

As per the Chinese forwarder, the airlines like IAG Cargo, ever on the search for higher yields, have looked to take a large chunk of the well-priced North American market.

As some countries set loose the lockdown restrictions, the demand has been heightened in some countries – but also hi-tech volumes. The Chinese forwarder said Apple began a large movement of goods two weeks ago in readiness for October’s planned iPhone 12 launch.

“By the way, those rapid Covid test kits are still everywhere here, on their way to Europe,” he added, noting that the airport terminals are currently full of trucks waiting to drop off the kits for export.

The increased demand is bringing an imbalance in the demand and supply of commodities. A forwarder in Singapore informed that China’s main airports, along with those in Vietnam and Thailand, ‘are all facing high demand with limited supply’.

“Rates to Europe and the US are still at a relatively high level,” he added.

Forwarders are once again reporting sky-high charter rates in particular to the US from both Europe and Asia. “The charter market has gone crazy too, in particular the transatlantic. Rates are monstrous – and that’s if you can get a plane within 10 days,” said one forwarder.

With monstrous rates and delayed availability of planes, even the express and e-commerce companies are facing delays.

“All the major express companies are suffering huge parcel delays, in general, they are more than a week slower than usual. And courier prices have increased by 20%-30% as well,” the Chinese forwarder informed.

He added that e-commerce volumes to the UK, which can no longer travel with EU shipments, had required ‘multiple charters, on fixed schedule flights from China’s inland cities to Heathrow’.

He concluded: “Anyway, there are no positive signs of any improvement of the air market over the next couple of weeks. Space is full until next week, and no doubt next Monday we will see another round of rate increases as we get towards the 1 May [US] Labour Day holiday.

“And as far as I know, none of the airlines have cancelled flights for then, which normally some might do.”

Source: Loadstar 

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