‘Outrageous’ air freight rates are making shippers squirm across the globe

In the pre-holiday rush, medical-related products have seen air cargo prices soar, despite prices as shown by the TAC Index continuing to oscillate around the ‘new normal’ levels.

Some carriers are seeking “outrageous” prices to fly dry ice and other medical equipment, but a capacity squeeze should ease in 2021 when the roll-out of COVID-19 vaccines is expected, the World Health Organization’s logistics chief said on Tuesday.

Paul Molinaro (WHO’s chief of operations, support and logistics) said that the distribution of vaccines to low and middle-income countries will be tricky, due to grounded passenger air services in some places, and may rely on charters.

He added that price inflation has been a growing feature in air freight, with “across the board increases especially since November.”

He cited a price quote just received for a dry ice shipment, needed to cool some lab re-agents, which is around 20 times the norm.

“I just had a quote from a cargo (company) – a big one that shall remain nameless – Dallas (Texas) USA to Sierra Leone, Freetown – at sort of $105 a kilo, which is outrageous actually,” he said. The ‘normal price’ would be $4-$6 per kilo, he said.

While mentioning the factors that are driving the high air freight rates, he said, a range of factors had driven prices, including a greater than usual pre-Christmas increase in e-commerce as lockdowns keep people at home.

“So we have air freight rates coming out of China going up because of the introduction of the new iPhone, because of the introduction of Play Station 5 and because of the fact that products are in high demand anyway,” he said.

By January, available capacity might increase, he added.

IATA’s chief economist Brian Pearce also said on Tuesday that Christmas demand has exaggerated the problem of soaring cargo rates, which should ease early next year in time for the ramp-up in vaccine shipments. “That’s the low season for the cargo business – that will free up a lot of capacity,” he said.

The WHO hopes to have half a billion doses of COVID-19 vaccines available for distribution by the global COVAX initiative in the first quarter of 2021, its chief scientist said on Friday.

The U.N. Children’s Fund (UNICEF), which is taking the lead on delivering COVID-19 vaccines to developing countries, last year spent $35-$40 million on international vaccine freight when it procured 2.43 billion doses for immunisation campaigns against polio and other diseases.

However, since then, prices have gone through the roof. As per reports UNICEF is negotiating lower rates with airlines for the airlift.

It is believed that WHO may help arrange delivery of COVAX vaccine supplies to hotspots such as Somalia or Yemen or to sanctions-hit Iran or North Korea, Molinaro said.

“It will be areas where it is not necessarily straightforward using the regular passenger/cargo network,” he said.

“Syringes will be sea freight, you wouldn’t have air capacity to move that, no way,” he said.

With vaccine awaiting government approvals, the WHO is providing technical guidance to all countries on cold chain issues, noting that the Pfizer vaccine requires storage at minus 70 degrees Celsius.

Source: Reuters

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