Shipping bottlenecks and spending by stuck-at-home consumers will help drive increased demand for air cargo until mid-2022.
And with thousands of passenger planes, which usually carry about half of global air freight, still grounded, capacity constraints will continue to push up prices, according to Tim Scharwath, the chief executive officer of DHL Global Forwarding, Freight.
“People are very willing to spend, they have more money left because they didn’t go on holiday,” Scharwath said in an interview. Air cargo capacity “will also be scarce into 2022” because slow vaccine rollouts in Asia will dissuade people from traveling, he said.
Airfreight rates to North America from Hong Kong have risen as much as 24% this year after more than doubling in 2020, as the Covid-19 pandemic increased demand for electronics goods like gaming consoles and laptop computers as more people were forced to work from home. The cargo market has been a rare bright spot for Asian carriers such as Singapore Airlines Ltd. and Korean Air Lines Co., whose businesses have been decimated by the pandemic.
Demand for airfreight is growing in automotive and industrial industries as well as for plastics and chemical goods, as companies restock inventories as economies bounce back faster-than-expected, Scharwath said.
Delays in seaborne shipping due to bottlenecks at ports and a lack of containers have also diverted some cargo, such as garden furniture to planes, he said. Seafreight costs have surged, making air freight more competitive. The spot price for a 40-foot container to be shipped to Los Angeles from Shanghai has risen 34% this year, while rates for Shanghai-Rotterdam have surged 49%, according to the Drewry World Container Index.
Transporting goods by rail between China and Europe has also increased, with demand growing between 10% to 20% since last year, Scharwath said.
“We use rail now which is normally way too expensive, but because ocean-freight rates are so high customers demand it,” Scharwath said. “If ocean freight goes over a certain threshold, rail becomes more attractive.”
Source: Economic Times