The airfreight market is seeing a sizable drop in rates, roll-out of new freighter services closes the capacity gap, at least one airline is a having a gangbuster year and a peek in what may lay ahead.
Here is a short list of what we are seeing so far this week:
China/Hong Kong Air Rates Slide: After a few weeks of somewhat stable price points, airfreight rates from China and Hong Kong have taken a bit of dive heading into week 47. Rates out of Shanghai have dropped almost $0.90/kg to the west coast and about $0.60/kg to the east coast. Meanwhile, rates from Hong Kong are in a free fall with rate reductions of up to $2.00/kg depending on destination.
Even with main airports seeing a significant week-on-week decline in rates, there are still additional ways to save even further. For example, utilizing WUH and TNA airports, as alternatives for departure, has saved our clients up to $1.50/kg. Ask us how by contacting lgiairquotes@laufer.com.
More Freighters, More “Preighters”, Still Less Capacity: More freighters have been introduced into rotation over the last couple of months but overall space is still down 25% YoY. In fact, though there are more freighters in rotation this year vs. last, there is still a capacity deficit due to the lack of available passenger aircraft belly space. On the upside, capacity from “preighters”, passenger aircrafts that have been converted to freighters, is increasing with about 2,500 such aircraft currently being operated.
What is the overall net difference in the market YoY when considering decrease in demand? Airfreight volumes have been down about 8% leaving a 17% lack of net space.
So Where is Demand Heading? With the Global Manufacturing PMI peaking at its highest levels since mid-2018, demand is expected to improve through the end of 2020. As usual, the best way to minimize airfreight costs is to book sooner-than-later and, if time allows, having some form of transit time flexibility. Make sure to communicate your absolute delivery deadlines with your forwarder so that they may find the most cost-effective carrier and routing for your specific needs.
Cargo Airline Makes Off Big with Profits & Bailouts: Atlas Air, which received $406 million in emergency Covid-19 aid, did not necessarily need it. The airline reported that their 3rd quarter adjusted net income increased 800% from the same time period last year. This dramatic increase was driven by the demand for freighter space and contracted freighter services during the PPE rush, as well as the lack of available belly space. The U.S. government has requested repayment of the aid but Atlas has no intention of doing so, claiming that the program was not needs-based and that they are in full compliance of the program’s requirements.
Carrier Updates:
- American Airlines resumes flights to Shanghai on Nov. 8th after nearly 10 months. The weekly service departs from DFW and stops off in Seoul (ICN).
- Delta Airlines will follow suit and resume direct inbound flights from Shanghai to Seattle and Detroit beginning Dec. 3rd.
- Qatar Airways has increased flights to Chicago, Miami, and New York over the weekend. They are now operating 9 weekly flights to ORD, 2 to MIA, and 14 to JFK.
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.