Transport Update 9th June 2021

Airfreight rates cooled as the month of May progressed but this is unlikely to signify the start of a return to pre-Covid levels.

Writing in the Baltic Exchange market round up, Bruce Chan, vice president of global logistics at investment bank Stifel, said this downward trend as the month progressed was unlikely to signify a return to pre-Covid levels. He said that belly capacity on international flights remained depressed due to the slow roll out of vaccination programmes and the emergence of new variants. Meanwhile, demand continues to be brisk even heading into the summer lull as consumption remains high, inventories are low and there is ongoing supply chain disruption.

Asia

US market

• Increase in demand ex PVG into North America, in particular, IT equipment and vaccine. The influx in demand means there is restricted space this week. Rates floating between $9.00-$10.00/kg.
• Rates ex North China (TSN/PEK) and South China (CAN/SZX) remain the same this week between $8.00-$10.00/kg.
• For all airports – rates and space must be checked on a case by case basis.

EU market (base airport like FRA/AMS/LUX, etc)

• Market out of PVG into Europe is not as hot this week but due to flight cancellations rates have not decreased by much. We are looking at rates between $5-6/kg.
• Rates and space must be checked on a case by case basis.
• Spot rates available for heavy/dense cargo as well as volume cargo.

UK market

• No significant change. Rates remain the same.
• There are direct flights with CA/BA, AIR-AIR by SQ and normal air-truck service. Space using deferred carriers is fully booked.
• Rates and space must be checked on a case by case basis.
• Spot rates available for heavy/dense cargo as well as volume cargo.

Americas

For more than a decade, 100% of shipments departing from the USA on a passenger aircraft were to be screened by either a Certified Cargo Screening Facility (CCSF) or by the airline itself. Shipments departing on an All-Cargo/Freighter aircraft were excluded, but not anymore, as of July 1st 2021, all shipments must be screened. That includes cargo on carriers such as DHL, Fedex, CargoLux, UPS and any other freighter airline.

Cargo moving on a passenger aircraft is limited by size to what can fit below the passenger deck of an aircraft, and thereby making the task rather manageable. You cannot fit a large piece through an x-ray machine nor hand search a large engine. It will certainly take some time getting used to the new regulations by the industry at large. Many airline terminals and General Handling Agents are very busy as it is. Adding the screening task is certain to create delays until everybody in the supply chain is familiarised with the new regulations.

• No real change from last week. Demand in several markets continues to outstrip supply as eCommerce traffic increases and economic activity strengthens in many markets
• Forwarders continue to move greater volumes to secondary, smaller airports to avoid ground handling bottlenecks at main air cargo gateways. Airports such as LAX and ORD are being overwhelmed by surging demand caused by large import volumes and increased freighter traffic from Asia and Europe.
• Delays expected are anything between 2 – 7 days.

Europe

• Global freighter capacity is “maxed out” for 2021 and 2022 and with continued COVID-19 outbreaks and travel restrictions likely to remain in place, it is unclear how much passenger orientated belly capacity can be added through 2021 as countries struggle to curb the impact of the pandemic.
• The freighters that are flying, are operating to maximum block hours and every available freighter aircraft has been put into service, which has enabled maindeck capacity to increase by 30% when compared to pre-COVID levels. But belly capacity, which prior to the health crisis represented 55% of all air cargo capacity, is still down by slightly over 50%, with an overall capacity shortfall of around 25%.
• With demand outstripping capacity, flights are full across the board, on pretty much all trade lanes and current market conditions are likely to continue through June, based on large amounts of cargo in the pipeline.
• European export demand stays strong to the Americas and Asia and space to USWC remains constrained.
  Space to India and Bangladesh is very constrained, due to aid and relief shipments into the COVID-struck region.
  Major airport hubs, as well as secondary gateways in Europe are reporting normal throughput for air imports and air exports, despite the significant reduction in passenger flights arriving and departing from the region.