Aircargo News: Airfreight rates continue to rise as capacity crunch goes global

Below is an article from Aircargo News describing the current airfreight rates due to a global lack of capacity:

Airfreight rates continued their rapid ascent last week, breaching the $5 per kg mark on the transpacific trade lane for the first time in years.

The latest figures from Tac Index show that last week airfreight rates between Shanghai and North America increased by 18% compared with a week ago – the highest level since the data provider began monitoring pricing in 2016.

Meanwhile, prices from Hong Kong to North America increased by 19.4% on a week earlier. While this isn’t a record, it is 29.6% up on the same week last year.

There were also big increases on services from Shanghai to Europe, which saw average prices last week increase by 28.2% on a week earlier to $4.09 per kg – a record on the route for Tac Index.

From Hong Kong to Europe prices were up by 21.3% to $3.47 per kg. Not a record, but still 32% ahead of the year ago level.

Transatlantic rates also increased rapidly last week following a US ban on travelers from many countries in Europe, while Europe began to close its borders.

Prices from Frankfurt to North America jumped by 56.6% compared with a week earlier, while from Chicago to Europe there was an 87.6% increase.

The increases come as carriers have been slashing bellyhold capacity from the market – on the transatlantic it is estimated that belly capacity is down by 90%.

A freight forwarder said: “Global cargo capacity reductions are a reality at this point, [and] no longer just a China and intra-Asia issue.”

It reports capacity constraints on many key markets, including Asia-Europe, Europe-Asia, transatlantic, Intra-Asia, transpacific and the Middle East.

However, additional freighter capacity is being deployed out of China.

“Outbound airfreight capacity is under tremendous pressure among all mainland China export markets as production resumes and passenger flight cancellations are sustained,” the freight forwarder said.

“A trend of ocean-to-air conversions exacerbates pressure on capacity outbound China. However, more freighters are entering the market.”

“Customers may want to explore alternative transport models (Sea/Air option or Cross-border truck)”.

On intra-Asia lanes, it said that there is a massive capacity reduction resulting from passenger flight and freighter cancellations.

“Airfreight rates on Intra-Asia lanes are extremely high, volatile and have been increasing rapidly, which are in turn constraining the long-haul export capacity to both Europe and US,” the freight forwarder said.

On the Middle East and Africa, the freight forwarder said that committed capacity can no longer be guaranteed and that contractual rates and tariffs had been suspended.

They explained: “Rates for charters have doubled, and in many cases, are higher than that. Airfreight rates have reached unprecedented levels. Premiums must be paid to get cargo uplifted on a priority basis.”