Air Cargo rates spike in Asia-Pacific, Southeast Asia

Shippers can take advantage of lower air cargo rates from Asia by diverting to smaller, regional airports, Flexport leaders said during a freight market update webinar this week. Global air cargo tonnages increased 10% year over year for the past five weeks while yields increased 9% YoY during the same period, according to the freight forwarder. [caption id="attachment_57139560" align="alignright" width="300"] (Photo/Air Cargo Next)[/caption] Rates and capacity, however, varied significantly by region, with higher-than-average rate spikes out of Asia not typically seen in early summer months, Alexis Boutet , vice president and global head of airfreight at Flexport , said during the July 11 webinar. “If you look at the comparison, year on year, rates from Asia [are] 19% over what they were last year, and rates from south Asia are 55% [higher YoY], so the rates have significantly increased, and they have continued to increase from [the first quarter] until now,” Boutet said. This is likely driven by an increase in sea-air shipments due to ongoing disruptions in the Red Sea, port congestion caused by weather and scheduling delays, and strong e-commerce demand , he said. E-commerce players expect a strong peak season, with 20% to 30% more volume and up to 60% more volume in the weeks leading up to Black Friday, Boutet said. Black Friday this year falls on Nov. 29. Rates by region The Asia-Pacific and Southeast Asia regions saw the largest YoY increases in air cargo rates in the past five weeks. In the same time, rates have shown: A 2% YoY increase in Africa; A 7% YoY decrease in Central and South America; A 15% YoY decrease in Europe; and A 9% YoY decrease in North America. Globally, average rates have increased 9% YoY for the past five weeks, Boutet said. “The one interesting point is that not all China ports are equal,” he said. “So, if you're departing from Hong Kong (HKG) or Shanghai (PVG), rates are going to be super high. But if you're willing to take a more deferred transit time and go via secondary airport ... there are better deals to be made.” Capacity also increased worldwide by 6% YoY, with Central and South America showing the greatest increase, 1%, and Asia showing the next highest increase, 9%. Forecast In addition to the continuing e-commerce boom , traditional retailers will have a strong peak season, particularly with Apple set to release a new version of the iPhone; this is expected to lead to increased volumes and demand during the holiday season, Boutet said. Delivery delays from Boeing will also play a role in increased demand but diminished capacity heading into the second half of the year, he said. In the long term, demand will outpace capacity. Projections show a 1% annual increase in capacity compared with a 3% annual increase in demand, Boutet said. “There's going to be some settling in rates in July and early August,” he said. “After that, it's going to be the product-launch season. So, from mid-August, into the U.S., [rates and demand] are actually going to pick back up, and that is pretty much a certainty, because we already have our client forecast, so we know how it's looking.”

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