Sustained factory output curbs Chinese New Year airfreight slowdown

The typical slack in cargo transport demand during and just after the Chinese New Year holiday is unlikely to materialize this year, freight forwarders with operations in the region said this week. [caption id="attachment_93615" align="alignright" width="450"] An Air China Cargo 777F. Photo/Air China[/caption] Instead, backlogs in filling factory orders will keep many Chinese factories in production despite the holiday. Cargo will also continue moving via airfreight, which currently has more readily available capacity than ocean on trans-Pacific routes. Ocean freight is heavily utilized on the trade lane, but container shortages and port congestion have exacerbated tight capacity on the route, contributing to increased utilization of airfreight during what would normally be a quiet period for Chinese production from Feb. 11-17. “Unlike traditional Chinese New Year time where factories and all of China goes on holiday, we’re seeing a very different demographic this year, particularly in South China factories,” said Akhil Nair, vice president for global carrier management and ocean strategy at SEKO Logistics, during a media call this week. “A lot of them are committing to staying open during Chinese New Year, albeit with reduced staffing numbers.” The factories are focusing on catching manufacturing up with order backlogs that have built up over months of capacity shortages for air and ocean freight and COVID testing in China, said Nair, who is based in Hong Kong. The supply chain pinches are currently felt most acutely in ocean freight, which is pushing more cargo toward airfreight. Freight forwarder C.H. Robinson is forecasting a drop in scheduled airfreight capacity mid-month on the Asia-Pacific-to-North America trade lane — typical as fewer scheduled flights operate during the holiday — but according to Hong Kong-based 3PL Apex Logistics, those aircraft removed from scheduled service during the holiday are being picked up for charter operations. See also: C.H. Robinson profits on air in Q4, launches online dashboard Many freighters will still operate under normal schedules, but “there have been some airlines that have decided to not make their flights commercial,” Mike Piza, senior vice president for corporate business development and customs brokerage at Apex Logistics, told Air Cargo World . “But as soon as those flights go non-commercial, they’re being gobbled up by someone that wants to operate a charter. The capacity will remain pretty steady throughout the Chinese New Year with no real break, which is the first time that I’ve seen that happen.” Normal shipping patterns around the Lunar New Year holidays include “a traditional peak before, then you have a massive slack,” SEKO’s Nair said. Now, more than a year into the COVID-19 pandemic and related logistics difficulties, “what is happening is a dynamic shift in the complete supply chain, that I think, and we all think, is here to stay for a while.” The problems affecting ocean freight capacity are likely to continue pushing cargo toward airfreight at least into March and possibly into April, although the situation varies across regions in China depending on specific restrictions in place. “If you look at a region like Ningbo on the ocean side that’s had a couple of months of really difficult capacity and equipment issues, it doesn’t seem like it’s really going to improve during this Chinese New Year holiday,” said Piza. With more initiatives now in place to return containers to Asia, “we feel encouraged that the equipment shortage issue should improve quite significantly by the end of March or beginning of April,” he said.

Sustained factory output curbs Chinese New Year airfreight slowdown

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