Market Letters

International Airfreight Market Update – Week 44, 2020

After a swift jump in airfreight rates last week, the market appears to be stabilizing (or has it?).   Taiwan’s Civil Aeronautics Administration (CAA) and China’s China Aviation Development Foundation (CADF) met last week to discuss the outlook of airline stability in a post-Covid-19 world as preparations are underway in anticipation of the future distribution of a virus vaccine. Here is a quick summary of what we are seeing so far this week.

Market Rates Remain Volatile: After last week’s surge, transpacific airfreight rates from China have bounced around a bit with minimal increases and decreases. West Coast rates have increased by a nominal $0.08/kg while East Coast rates dropped by nearly $0.50/kg. Wide rate variation, and even a decrease, was not expected as rates and space issues quickly escalated by mid-week. Meanwhile, out of Taiwan, airlines already announced a 30-40% increase on rates effective Nov. 3rd. This could result in a rate above and beyond $10.00/kg.

Despite what seems to be overall stabilization or even a decline in market rates it is important to point out that space is still not widely available. Placing bookings as far in advance as possible, and allowing for extra lead time for longer transits, could help mitigate costs and product delays

Air Industry Preps for a Vaccine: While there is currently much effort going into preparation the impact a vaccine will have on the airfreight industry is still uncertain. TOWER, a cold chain equipment manufacturer, has developed a palletized airline container that stores dry ice and will sustain temperatures of below 60 degrees Celsius. They have self-reported that the temperatures have been successfully tested for a 94-hour transit time and up to 9 days in storage. Emirates Skycargo has announced that they will be dedicating their Dubai DWC cargo terminal exclusively for vaccine distribution, making it the largest dedicated airfreight facility globally for such purposes.

Since vaccine distribution strategies rely on information that is currently unavailable, it is too soon to say what the true affects will be on air cargo. One thing seems to be sure and that is that this will be an effort that exceeds well into 2022.

Taiwan Holds Summit to Plan for Post-Covid-19 Era: Industry executives met in Taiwan on Tuesday to plan for long-term recovery. What was once believed to be a pandemic scenario lasting until the summer, its impact is now expected to last well into 2024 (according to IATA estimates). To date, the local government has set aside NT$50 billion for the industry of which 60% has already been spent. To underscore why government aid for airlines is so critical, Taiwan International Airport has stated that their passenger traffic is only 3% of what it was this time last year. This remarkable number begs the question… how would your business survive if your core product shrunk by 97%?  Out of the 30 airlines that participated in the event, only 4 have turned a profit so far this year. The fortunate carriers were those that already had large stakes in cargo, such as China Airlines & Eva Airways.

Turmoil Continues for Airlines: Cathay Pacific’s Dragon Airlines becomes the latest airline to fall victim to Covid-19 related pressure. The company announced a massive layoff of almost 6,000 employees and ceased operations of Cathay Dragon, a regional outfit under the airline’s umbrella.

For over 70 years, Laufer Group International Ltd. has been helping customers improve the way they handle their logistics. To see how we can help, or for any questions, contact Thomas Marano, National Director of Business Development, Airfreight & e-Commerce or contact your local sales representative.