AIRFREIGHT rates out of China to the US and Europe have plummeted after December's record holiday season, reports London's Air Cargo News.
Prices out of China to the US peaked on December 13 at US$15.13 per kg, the highest rate ever recorded according to the TAC Index but have since fallen nearly 30 per cent to $10.68.
To-Europe rates hit their 2021 peak on December 27, at $8.82 per kg, and have dropped about 17 per cent, to $7.34/kg.
Bruce Chan, senior analyst for global logistics at Stifel, for the BAI Index, explained: 'Rates have finally begun to cool as we enter the seasonal first-quarter airfreight trough, with 2021 seeing a much higher and more pronounced peak than in any of the three years prior.
'Unfortunately, we expect little change in the situation for the new year. Ocean freight and port terminal congestion show few signs of amelioration and US road and rail infrastructure are contending with their own issues.
'As a result, airfreight is still the only option to address supply chain delays and shortages that must be addressed. And, while rates may be two-to-four times higher on average than pre-pandemic levels, ocean freight rates may be nearly ten times higher, depending on the lane.
'So, mathematically, the spread is narrower - and that doesn't even consider the speed differential.
'While air cargo pricing should cool sequentially in line with normal seasonal patterns, we expect them to come at high double-digit premiums to even last year's elevated rates, on a year-over-year basis,' he said.
Mr Chan noted that the Omicron variant had limited passenger travel, as well as freighter capacity in some cases (like Hong Kong), and ramp capacity. But he added that the new Covid wave had also 'stoked demand for PPE shipments'.
He said: 'We are experiencing the longest and strongest airfreight bull run in recent memory.
'With little relief coming to broader supply chain congestion, broad demand is expected to remain strong. With capacity still under pressure, we don't expect much relief any time soon. We think shippers must continue to plan and budget aggressively, as our timeline for a moderating market continues to get pushed out.'
SeaNews Turkey
Prices out of China to the US peaked on December 13 at US$15.13 per kg, the highest rate ever recorded according to the TAC Index but have since fallen nearly 30 per cent to $10.68.
To-Europe rates hit their 2021 peak on December 27, at $8.82 per kg, and have dropped about 17 per cent, to $7.34/kg.
Bruce Chan, senior analyst for global logistics at Stifel, for the BAI Index, explained: 'Rates have finally begun to cool as we enter the seasonal first-quarter airfreight trough, with 2021 seeing a much higher and more pronounced peak than in any of the three years prior.
'Unfortunately, we expect little change in the situation for the new year. Ocean freight and port terminal congestion show few signs of amelioration and US road and rail infrastructure are contending with their own issues.
'As a result, airfreight is still the only option to address supply chain delays and shortages that must be addressed. And, while rates may be two-to-four times higher on average than pre-pandemic levels, ocean freight rates may be nearly ten times higher, depending on the lane.
'So, mathematically, the spread is narrower - and that doesn't even consider the speed differential.
'While air cargo pricing should cool sequentially in line with normal seasonal patterns, we expect them to come at high double-digit premiums to even last year's elevated rates, on a year-over-year basis,' he said.
Mr Chan noted that the Omicron variant had limited passenger travel, as well as freighter capacity in some cases (like Hong Kong), and ramp capacity. But he added that the new Covid wave had also 'stoked demand for PPE shipments'.
He said: 'We are experiencing the longest and strongest airfreight bull run in recent memory.
'With little relief coming to broader supply chain congestion, broad demand is expected to remain strong. With capacity still under pressure, we don't expect much relief any time soon. We think shippers must continue to plan and budget aggressively, as our timeline for a moderating market continues to get pushed out.'
SeaNews Turkey
