Market Letters

International Airfreight Market Update – Week 7, 2021

Market Levels Out, But Space Still a Premium: The countdown to Chinese New Year is almost complete with only a few days left before the holiday. Airfreight rates have not changed much since our last update, still hovering between $8-$9/kg from China/HKG to all U.S. major gateways.

Space however, is almost completely booked until then. Many importers will have to pay premium prices if they wish to get their cargo out over the next several days. An alternative option would be to wait and hold the cargo until after the holiday but there is risk with this option. With manufactures continuing to produce through the holiday period, backlogs are expected to exacerbate the post CNY cargo situation.

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What Happened to Long-Term Airfreight Rates? Cargo load factors have continued to improve over the last year and for the obvious reasons. Now that planes are flying much fuller than they have been in decades, airline carriers are replacing their long-term rate agreements in favor of short-term or per shipment pricing. If you have the flexibility to work with multiple airlines and a variety of flight schedules you may be better off procuring airfreight on a spot basis, rather than fixed.

Are Airlines Doomed by Their Own Cargo Handlers? You know the saying – you are only as strong as your weakest link. Cargo handlers are no longer just a thorn in the side for freight forwarders, some experts claim that they are creating a significant disadvantage for airlines when it comes to handling high-margin, urgent cargo.

As e-commerce continues to grow at light speed, carriers such as FedEx, UPS, Amazon, and others are able to reap the benefits due to their more efficient and speedy ground operations. In the past, airlines have looked at their cargo handling partners as a way to reduce costs, not create value. This mindset must change if they are looking to move beyond typical commoditized airfreight business.

This could mean a light at the end of the tunnel for the average airfreight importer as any improvement in turnover times, terminal communication, and cargo integrity would be warmly welcomed.