Alongside ongoing high rates, a significant level of disruption is expected during the upcoming air peak season.

China is currently contending with the contagious Delta variant of the COVID-19 virus. Strict social distancing measures, quarantine rules and lockdowns have significantly reduced the workforce, where manpower has fallen by approximately two-thirds. Pickup services, delivery services and air cargo operations have seen the greatest level of disruption, with 15 airports identified as having been affected.

Due to the depleted workforce, there is a temporary ban on passenger freighters out of China, reducing an already limited capacity further. Charter approvals are also on hold.

At present, it is not clear whether passenger freighters will be able to resume in the next few weeks. As they account for a large proportion of early air freight capacity, this could cause significant issues, with some suggesting this year’s chaos may be worse than that of 2020.

Rates are also rocketing. High rates to the US mean that some airlines are prioritising US-bound cargo over Europe-bound cargo due to its higher yield. The severe capacity crunch has similarly made it difficult to move bigger shipments of cargo – in excess of 40cu metres – from major Asian export airports.

Hanoi, Ho Chi Minh, Phnom Penh and Bangkok are experiencing high levels of demand to both Europe and US destinations.

Manufacturing in South-east Asian countries is seeing significant disruption, which is leading to many buyers looking to airfreight in order to reduce lead times and return stock to market and further exacerbating the imbalance between supply and demand.

With demand for air freight services high, our global experts are committed to helping you find the right solution. If you have cargo you need to move urgently, or if you would like to find out more about our range of air and sea-air services, please get in touch today for an informal chat: hello@ligentia.global

On Friday 20th August, new local cases of COVID-19 were reported at Shanghai Pudong International Airport. Pactl terminal was closed as a result, with around one third of flights out of PVG airport affected, most of which were cancelled.

It is reported that EAL terminal and Shanghai Airline terminal III are both operating well at present. Various carriers (such as JL, EK, SQ, BR, CI, TK, etc.) are still flying as normal.

In recent days, due to increasing cases of the contagious Delta variant of COVID-19 in China, new lockdowns and stricter quarantine measures have been introduced. This has impacted cargo operations at both airports and seaports.

Air cargo operations have been most severely affected, with Beijing, Shanghai Pudong (pre-closure) and Xiamen Airport operating at 43%, 33% and 66% capacity respectively.

In addition to equipment shortages, there has been a surge in resignations from ground handling staff following the introduction of strict quarantine rules. At Shanghai Pudong, for example, staff have been asked to work for seven days, quarantine in a hotel for seven days and then quarantine at home for a further seven days.

As a result of staff quitting, long handling times (2-3 times longer than normal) have been recorded and some cargo flights have taken off with very little or no cargo over the weekend. This has, in turn, created a backlog for upcoming flights.

Meanwhile, airlines are also dealing with crew quarantine rules. Long delays have resulted in cancellations or empty returning flights. China Southern and China Eastern have announced a significant number of cancellations in major US schedules until the end of August, placing further pressure on trade lanes from mainland China.

An increase in air traffic ex-Hong Kong and Incheon is expected, with some cargo flights already having been diverted to Hong Kong.

Rates from China are rising, and with news of today’s closure we expect this trend to continue. Prices to the US have increased by $1.5-$3 per kg, while rates to Europe have gone up by $0.7-$1.5 per kg.

Volume has returned to pre-pandemic levels, however the industry is still facing considerably reduced capacity. The supply and demand imbalance continues to grow, with some warning that rates in the open market may reach extraordinary levels.

At Ligentia, we are operating alternative services to provide additional capacity and reliable transit times. Please get in touch for more information.

Why air charters can be the ideal solution

As air freight rates continue to rise, lack of passenger aircraft has led to a major reduction in capacity. Meanwhile, a distressed shipping industry adds further pressure. With Chinese New Year fast approaching, now could be the right time to consider using air charters.

In recent months, we have seen a dramatic surge in enquiries from new customers looking for agile, resilient and reliable solutions to move their goods – as well as a specialist provider with the relevant expertise. We have now supported numerous customers with air charters and have moved a wide range of goods – from fashion to PPE – around the world.

There are a great number of advantages to using our air charter services, which include:

  • Increased speed and agility
    Faster turnaround, reduced risk of delays and 24/7 availability through our Rapid Response team
  • Cost efficiency
    Ligentia’s robust network of contacts mean we are able to find the most cost-efficient solution for you
  • Flexibility
    With exclusive use of the aircraft, the process can be scheduled to suit your specific requirements
  • In-flight tracking and visibility
    We provide full visibility and transparency through our PO management platform, named Ligentix
  • Specialist knowledge
    Our team is experienced in handling urgent shipments of both a sensitive and complex nature
  • On-the-ground support
    Our experts are on-hand to assist you to ensure smooth operations throughout the process

If you would like more information on the air charter services currently available from Ligentia, please email lee.aldermandavis@ligentia.global

Last week IATA released their May 2019 Air Freight Analysis report, stating in seasonal adjusted terms the level of freight tonne kilometres (FTK’s) ticked up modestly for the third consecutive month, suggesting we may be past the low point of this cycle, although the recovery remains tentative at this stage.

The weakness in freight volumes compared with a year ago remains broad-based. As was the case in April, Africa and Latin America contributed positively to industry-wide- on-year- FTK growth result.

From the recent G20 talks it appears that US-China trade relations have thawed somewhat and negotiations will recommence shortly.

This follows the end-June announcement of President Trump cancelling the planned 25% tariff on an additional $300bn worth of Chinese goods.

Airlines have responded to the period of weakness in freight demand partly through reducing capacity in the market. Growth in available freight tonne kilometres (AFTK’s) slowed to just 1.3% in May 2019 compared to May 2018.

While this represents a relatively modest increase, the growth of supply is still around 5 percent points higher than that of demand growth. Consequently, the industry-wide freight load factor maintained the downward trend seen in the last 13 months, and is currently a substantial 2.3% points below its level a year ago.

Asia Pacific & Middle East

Amidst the implementation of a new round of tariffs on US-China trade in mid-May, international FTK’s flown by airlines based in Asia Pacific fell by around 7% year-on-year in May, after a revised 11% decrease in April.

The effect of the US-China trade war has clearly had an impact on the regional growth in Asia Pacific. This is despite evidence suggesting that production lines had shifted within the region to try to counter the adverse effects of the rising trade tensions between China and the US.

North America

North America has seen the weakest outcome since early 2016, with international freight volumes deteriorate by 3.2% year-on-year.

Latin America

After three consecutive months of international freight growth, Latin America returned to negative year-on-year growth in May. International FTK’s are currently 0.5% below their level of May 2018.

Europe

International FTK’s for the European carrier are currently unchanged from their year –ago level. This represents a substantial improvement from an annual decline of 6.7% last month.

Africa

Airlines in the smaller Africa international market posted a swift 8.3% growth compared to the same period last year, making Africa the strongest performer on that measure for the 3rd consecutive month.