Watch Now

Airfreight market may be turning corner as rates climb

Demand for airlift out of China is increasing as nation shakes off coronavirus slowdown

(Photo Credit: Flickr/Benedikt Lang)

The air cargo market took an expected dip in January, then plunged in February as demand from China dried up due to the coronavirus and is now beginning to rebound on certain lanes, according to the latest data from multiple sources.

How the dynamic market is viewed will depend on where one sits. Shippers and their logistics providers are expected to pay much more to move their goods, while all-cargo carriers will be able to command top dollar.

After six weeks of manufacturing and logistics gridlock in China due to massive quarantine efforts and other coronavirus precautions, factories are beginning to operate near full capacity. But with more than 130 passenger airlines having shut down operations in China and Hong Kong through March and April, cargo space in those aircraft has evaporated. 

Freighter operators that have resumed full schedules include Lufthansa Cargo, Qatar Airways, Emirates and Cargolux. 

Preliminary data and anecdotal reports from logistics companies indicates airfreight rates are surging for exports from China, especially to Singapore, Korea and North America, according to price benchmarking service The TAC Index.

“We are seeing unprecedented  demand for airfreight intra-Asia,” which is an indicator of what may happen on intercontinental air cargo markets, John Peyton Burnett, TAC’s managing director, said in an email.

Freight Investor Services, a London-based market intelligence and financial risk management provider, has also detected rapid upward movement in freight rates from China. Prices are up $0.33, or 12%, to $3.06 per kilogram on the transpacific lane, lead by a 20% spike ($0.48 to $2.92/kg)) from Shanghai. 

Hong Kong-to-U.S. rates are up 5.6%, or $0.17, to $3.20/kg.

During February, inbound air rates to China skyrocketed in the face of steep demand for freighters to carry medical supplies, sanitizers and protective gear needed to quell the coronavirus outbreak – a marked contrast from normal patterns in which air exports exceed imports.

Freight Investor Services noted that despite the upward trend, prices are still well below the $3.40/kg level seen at this time last year.

CLIVE Data Services, first out of the box with February traffic figures, said global cargo weight (measured in gross weight or by a dimensional formula) fell nearly 9% versus 2019 as the coronavirus. The Netherlands-based company normalized actual volumes to take account of the early Chinese New Year and extra day in February due to the Leap Year. 

Green shoots in December volume and the calming of trade tensions between China and the U.S. generated optimism among transportation providers that 2020 would be better than 2019, when demand fell 3.3% – the industry’s weakest performance since 2009. 

In January, air cargo throughput decreased 3.3% compared to the same month in 2019, according to figures released this week by the International Air Transport Association. Data compiled by market intelligence firm World ACD measured a decline of almost 6% in air cargo weight for the month, with a drop in yield of 5.6%.

The 10th consecutive month of year-over-year declines in cargo volumes was predictable given that the Chinese Lunar New Year fell in January, 11 days earlier than last year. During the nearly two-week holiday, factories close and city residents travel to their hometowns to spend time with family, creating a lull in shipping activity. Under normal circumstances, freight would have picked up in early February. 

The Asia-Pacific region lost the most cargo traffic in both measurements, with IATA reporting a 5.6% decline based on freight-ton-kilometers and World ACD figures showing a 13.5% drop in chargeable cargo weight – based can be based on volumetric features depending on the shipment’s characteristics. 

The Association of Asia Pacific Airlines similarly reported international air cargo demand fell 4% in January, with increased capacity lowering load factors to 53%. 

(Correction: The story has been updated to reflect the correct spelling of John Peyton Burnett’s name.)

One Comment

  1. Sanjana Mishra

    Eric Kulisch, So true Air frieght holds its importance and the need of air freight is growing day by day. Eric, please put some light on this also – Does coronavirus going to put an impact on the logistics industry?


Comments are closed.

Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. He won Environmental Journalist of the Year from the Seahorse Freight Association in 2014 and was the group's 2013 Supply Chain Journalist of the Year. In December 2022, Eric was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. He has appeared on Marketplace, ABC News and National Public Radio to talk about logistics issues in the news. Eric is based in Vancouver, Washington. He can be reached for comments and tips at [email protected]