AIRLINES are adding capacity into Asian markets to handle increasing long-haul passenger numbers, but the space is harder to fill as freight demand slows in the EU and North America, reports IHS Media.
The supply-demand imbalance is reflected in air cargo spot rates out of China that have fallen through the third quarter and into October as the Covid crisis and lockdowns affect manufacturing.
Energy in Process managing partner Franz van Hessen declared 'immense overcapacity' has developed in the market in the last couple of months as demand slows.
'Suddenly there is over capacity in the market, which is odd considering that over the past two years there was no passenger uplift and that took out half of the available air cargo capacity that is carried in the bellies of those aircraft,' said Mr van Hessen.
'Air cargo had to mostly be flown by freighters, but now those freighters are half empty, primarily out of Asia, which is the driver of the current overcapacity in the market.'
Average rate levels from Shanghai to North Europe in the third quarter were US$6.53 per kilogramme, down nine per cent compared with the second quarter.
The direct impact of surplus capacity can be seen in Japan's increase in passenger arrivals through the third quarter as Covid crisis restrictions are loosened.
No belly capacity data was available for the transpacific, but the Baltic Air Freight Index (BAI) shows a steep decline in average spot rates from Shanghai to North America.
The average third-quarter rate of $7.75/kg was 13 per cent lower than in the second quarter. The current rate of $6/kg is down 46 per cent year on year.
SEKO Logistics senior vice president Shawn Richard said demand out of Asia at the moment was 'very soft.'
'Relaxing quarantine rules will further add to overcapacity
The supply-demand imbalance is reflected in air cargo spot rates out of China that have fallen through the third quarter and into October as the Covid crisis and lockdowns affect manufacturing.
Energy in Process managing partner Franz van Hessen declared 'immense overcapacity' has developed in the market in the last couple of months as demand slows.
'Suddenly there is over capacity in the market, which is odd considering that over the past two years there was no passenger uplift and that took out half of the available air cargo capacity that is carried in the bellies of those aircraft,' said Mr van Hessen.
'Air cargo had to mostly be flown by freighters, but now those freighters are half empty, primarily out of Asia, which is the driver of the current overcapacity in the market.'
Average rate levels from Shanghai to North Europe in the third quarter were US$6.53 per kilogramme, down nine per cent compared with the second quarter.
The direct impact of surplus capacity can be seen in Japan's increase in passenger arrivals through the third quarter as Covid crisis restrictions are loosened.
No belly capacity data was available for the transpacific, but the Baltic Air Freight Index (BAI) shows a steep decline in average spot rates from Shanghai to North America.
The average third-quarter rate of $7.75/kg was 13 per cent lower than in the second quarter. The current rate of $6/kg is down 46 per cent year on year.
SEKO Logistics senior vice president Shawn Richard said demand out of Asia at the moment was 'very soft.'
'Relaxing quarantine rules will further add to overcapacity
