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Several regions experience air cargo lull ahead of peak season

Virgin Atlantic is gradually adding passenger and passenger-freighter capacity, but a shortage of transport space still remains for moving goods. (Photo: Virgin Atlantic)

The rate pause for airfreight is in its third week and spreading beyond the China market, but industry experts expect spot rates to rise again in September as the peak shipping season kicks into high gear.

The per-kilogram price to ship from China to the U.S. fell 7.9% to start last week, with the rate from Shanghai down 10.7% and from Hong Kong down 5.4%. The price drop was greater than the prior week and included exports from Hong Kong this time, according to The Air Freight Index Co.

Airfreight users, however, report strong demand and rates in other parts of Asia outside of China, as well as for intra-Asia shipping. Hong Kong’s adherence to strict COVID testing and quarantine protocols for air crews continues to suppress activity there by some airlines, limiting available space for shippers.

In Europe, the market is experiencing decreased demand for the holiday season, with the trans-atlantic westbound market stable and decent capacity availability in and out of Asia. The outlier is the Frankfurt-to-U.S. corridor, where rates increased.

Airlines are adding back international routes to their networks as coronavirus travel restrictions slowly recede, but the number of frequencies is still far below last year’s level and not expected to catch up until 2024 because most people are reluctant, or unable, to fly. Many airlines are making up for the paucity of passenger service by putting some aircraft to work as dedicated mini-freighters for cargo customers. 

Virgin Atlantic has operated more than 1,800 cargo-only flights since late March and said on Sept. 12 it will add Milan, Italy’s fashion capital and center of the nation’s largest industrial area, to its passenger freighter network. The airline will use Airbus A350 and Boeing 787 aircraft for the twice weekly service. In December, Virgin will also add three passenger routes between the U.K. and Pakistan, which will add cargo capacity to Pakistan’s third largest export market. 

Meanwhile, Singapore’s Scoot is removing seats from two narrowbody planes to increase cargo capacity for regional runs.

The Association of Asia-Pacific Airlines said that freight volume, measured in freight-ton-kilometers, continued to improve in July, but was still 16% below the monthly level in 2019.

Air cargo operators are bullish about the remainder of 2020 because manufacturing continues to increase worldwide, online shopping is extremely strong, retailers are building up inventory in the fall for the holidays and tech giants are poised for major product launches this fall. 

Apple anticipates selling about 65 million to 75 million iPhones globally in the fourth quarter despite the impact of COVID-19, with Samsung likely to sell a similar amount of its latest device, said David McQueen, research director for consumer devices at ABI Research, in an email.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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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, he 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. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]