Market Letters

International Airfreight Market Update – Week 5, 2021

Rates Surge Ahead of Chinese New Year: Although the airfreight market started off slow in 2021, the last two weeks have shown a sizable increase in demand as planes out of Asia fill up. Record low inventory levels, port congestion, and lack of overall capacity remain the key factors in the surge. Market air rates have increased another $2.00 per KG to the west and central USA regions, hovering around the $6.75/kg-$7.00/kg mark. At the same time rates to the East Coast have increased by $1.30/kg, resulting in a lower but still substantial $6.50/kg.

These rate levels are not expected to last long as pre-CNY demand continues to grow. It is possible that spot market demand will increase this week and costs will exceed these indicators before our next update.

Factories to Remain Open During CNY: Many factories in China have confirmed that they will continue to manufacture through the holiday. This unprecedented move is driven by efforts to discourage travel in order to hinder the further spread of the virus. Workers that would normally return to their hometowns will stay put and therefore the shippers have the workforce available to continue operations.

While this may be good news for importers awaiting backorder production, this may cause backlogs with airlines and add to the growing pressure on rates. Following typical historical practice, the airlines have already announced cancelations during the holiday, which means there may be a backlog of new shipments lined up to be exported upon the post-holiday resumption of services.

Europe Braces for Airfreight Disruption: On January, 20th the Dutch airline, KLM, announced that they would be suspending at least 270 flights. Cancelled flights include both passenger and cargo aircrafts operating to/from The Netherlands as well as connections to other European cities. This action it is expected to have significant impact on global supply for the region as Amsterdam is a major hub for European destined cargo,

The decision is a result of new pandemic related precautionary measures. In effort to protect airline employees, KLM is canceling any flight where staff would normally be required to spend the night outside of the country.

Air freight forwarders are demanding an alternative solution that also takes employee safety into consideration. Not only will traditional supply chains be affected, but Covid-19 vaccine distribution will most likely be heavily impacted as well.

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, Air Freight or contact your local sales representative.