With very few route exceptions, the air freight market from India and Asia to Europe has generally been softening for a couple of months, reflected also in the US market, with only African and South American routes bucking the trend.
Lack of capacity continues to be an issue on most routes (with the exception of Thailand) and it is unlikely to be addressed in the short term, exacerbated as it was by regulations blocking the use of the passenger cabin for freight and the lack of belly-hold space, as passenger flight restrictions remain, due to subdued traveler sentiment.
Capacity is available from Vietnam and space is more flexible than before from Taiwan, with particular opportunities for high density cargo, but volume cargo might be liable to additional costs as carriers try to maximise their payloads with cargo that has a higher return.
There is little expectation that the government in China will open the door to allow more passenger flights, and the major freighter operators have no plans to increase capacity, while rates threaten to diminish their returns. In addition any returning passengers into China have to isolate and are subject to restrictions on arrival so this is reflected in the deployment of scheduled passenger flights from airlines.
Spot freight rates have been fluctuating recently, but there is little expectation that rates will drop much more, as carriers cancel some flights to reduce capacity and maintain rates levels, as happened recently in Shanghai and on many other trade lanes throughout the Asian networks.
The market is anticipating that rates will harden as volumes recover from the past two months and, while it may not be the normal peak season, there should be a Christmas squeeze and with capacity and demand in a very fragile balance, the scales will quickly shift in favour of the carriers. And even if volumes don’t surge for long, any congestion will reduce effective capacity, with carriers likely to take advantage of the supply versus demand dynamic, to capitalise on the opportunity.
In the face of challenges posed by the COVID-19 pandemic and the air travel restrictions that characterised much of 2021, ground handlers have enjoyed burgeoning revenue, thanks primarily to their cargo operations and the return of passenger flights.
Despite this background of success we are seeing the biggest and most powerful ground handling operators at London Heathrow and other air cargo hubs, increasing costs and maintaining elevated revenues, with some operators rebadging a ‘COVID surcharge’ as an ‘economic surcharge’, with further increases being imposed from the 1st October 2022.
The global air freight market, like all logistics modes presently, is a discombobulated arena to operate in, whether as a carrier, a logistics provider, or an end customer. Reliability and consistent services are the main differentiator presently.
Despite the ongoing challenges, we continue to find cost-effective solutions for urgent and time-sensitive shipments, using a blend of scheduled, dedicated and chartered air cargo services. Metro will always provide the latest and best fit options available in the market. Ensuring that your time critical shipments reach their market on time and by their deadline. Creativity, connections and planning will ensure this is achieved.
Contact Elliot Carlie for further insights and advice on our air cargo solutions and for information on the latest weekly market position for any urgent movements, regardless of their nature. Proven, bespoke and time definite solutions are our area of expertise.