Annual peak air cargo season at full tilt all the way to Christmas

THE peak season is in full swing for international air freight when shippers pay more for less, reports New York's FreightWaves

29 September 2020 - 05:00

THE peak season is in full swing for international air freight when shippers pay more for less, reports New York's FreightWaves.

Southeast Asian and China export markets are hot and will remain so till Christmas. Spot rates out of China to North America started climbing again early this month as air capacity tightened and are approaching US$6 per kilogramme, according to the TAC Index.

Air rates from Hong Kong dipped slightly due to an influx of recent charter capacity. German logistics companies DB Schenker and Dachser, for example, ordered Boeing 747 freighters for dedicated regular carriage for China and Hong Kong.

Denmark's DSV Panalpina said it will add a 747 freighter to its existing Shanghai-to-Luxembourg route and a new weekly service between Hong Kong and Luxembourg that can also carry 400 tons of cargo. Both flights will be operated by El Al through its new joint venture with CargoJetX.

And Unique Logistics took control of two Cathay Pacific passenger freighters for 12 weeks to move fashion goods between Hong Kong and Pittsburgh.

CargoJetX has purchased two 747-400 freighters for the joint venture and El Al will manage and sell the cargo space to freight forwarders. Flying the planes has been outsourced to Longtail Aviation International, a Bermuda-based executive jet operator that recently entered the air cargo market and received US permission to operate a leased 747 freighter.

Transpacific eastbound rates from Asia are even stronger, at $8 per kilo to the west coast and $9 per kilo to the east coast. The spread between the two markets has increased from $2 to almost $4 per kilo in the past couple of weeks but is expected to quickly narrow as airfreight volumes from China grow.

For buyers, that means higher costs and delays finding available slots for air and ocean shipments, while transportation and logistics providers reap bigger

Trade is strong because of traditional retail stockpiling for Christmas, huge growth in e-commerce and shippers moving orders ahead of factory shutdowns for the October 1 - 7 mainland Golden Week holiday.

Technology companies have also started to ship smaller product launches, such as the iWatch and iPad, but pushed back the release of other devices.

Apple's one-month delay in releasing the iPhone 12 compresses the time frame for getting it to market by early December, which will put extreme pressure on capacity and drive up rates next month, third-party logistics provider Flexport said in a customer update.

Air freight is also taking shipments from the ocean shipping where vessels are full, containers are in short supply as sea freight rates hit new records.

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