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    The Coronavirus pandemic is having a huge impact on the air freight industry. Demand is down 20 percent from last year.

    AIR FREIGHT MARKET OUTLOOK

    Air cargo rates on some of the world’s busiest routes began to pick up again in August while the outlook remains uncertain.

    Market demand is increasing especially ex Asia Pacific leading to the expected peak season situation.
    As capacity remains, rates are increasing especially out of the major key export countries.
    Overall, the spike in volume is again reflecting how volatile the market remains and how critical proper supply chain planning has become during COVID-19.
    Even though various airlines announced passenger flights to return to the market, the impact is very limited.
    The number of flights only increased incrementally compared to previous months, especially international long-haul flights.
    Many aircrafts remain suspended / on the ground and currently COVID-19 is considered to impact the airfreight market until at least 2024.

    Besides, maintenance schedules of freighter aircrafts have immediately led to a supply reduction in the airfreight market.
    These maintenance schedules from airlines come into effect as the utilization of aircrafts (block hours per day) was significantly increased during the first half of 2020.
    The additional flights and operating hours were required to provide capacity in the first weeks and months of the COVID-19 pandemic as many passenger flights got cancelled causing an immediate shortfall in supply.
    The airlines are preparing themselves with the current maintenance schedules for the upcoming peak season in which a shortage in capacity supply is expected and forecasted.
    How critical airfreight supply is currently was already immediately observed as rates were increasing on major trades due to the freighter capacity shortfall.
    In addition to the already tight capacity situation, the demand for medical equipment (e.g. personal protective equipment = PPE) remains volatile as the COVID-19 pandemic impacts vary highly from region to region and country by country and a potential demand due to second or third wave cannot be forecasted.
    Therefore, an even more advanced and detailed planning for the peak season is required to ensure capacity access.

    The latest figures from TAC Index show that prices on services from Hong Kong to both North America and Europe increased in August compared with both a month earlier and a year ago.
    Looking ahead, the market appears to be unsure what to expect for the rest of 2020.
    At some stage it is expected that there will be another bout of urgent demand when a Covid-19 vaccine is ready for distribution.

    Meanwhile, the capacity situation is uncertain given the unknown future of passenger operations and there will also be the usual peak season increase in demand.

    SEA FREIGHT MARKET OUTLOOK

    The heavy spike of volumes on Asia to North America continues, exports from Asia to Europe are at a very comfortable level, on both trades all carriers are successful in pushing strongly for increased revenue through general rate increases or ad hoc rate premiums to ensure equipment and space.
    Several loops are already fully booked into the month of September.
    At the same time capacity reductions on the two main trades are disappearing.
    There is a severe equipment shortage especially for 40’HC in all main ports in Central and South China as well as in main Origins in Southeast Asia.
    This makes it very important to plan volume forecast.
    Carriers continue with blank sailings in order to keep the rate levels stable.
    With all stakeholders in the supply chain, the unpredictability and constant changes of the last weeks have underlined the need to stay flexible and to be able to adapt at any time.
    It is not a surprise that carriers announce that their booking acceptance will not go beyond six weeks due to possible future changes.
    Expect the situation on all trades subject to continuous changes.
    With massive vessel withdrawals, an uncertain outlook on vessel utilizations and partly huge impacts on port terminals, one needs to prepare for changing schedules and transit times (due to slow steaming, port omissions or additional port inclusions as a result of service mergers), sudden / unexpected delays in uplift, increased bottlenecks of equipment availability, less frequent departures and sudden surcharges possibly resulting in higher costs for the supply chain.

     

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    August 21st update :

    AIR FREIGHT MARKET OUTLOOK

    The latest data suggests that normality is still a long way off for the air cargo industry. The demand side of the industry is slowly improving, with volumes in July up 8.2% compared with June. 

    However, demand is still down by 18.5% year on year, there is a “huge capacity drop” on last year and the price of air cargo is 62% up compared with 2019 levels at $2.83 per kg.

    There is such a lack of capacity in the market that ‘normality’ still seems a long way off. There is a 20 percentage point gap between the year-on-year drop in capacity and demand in July.

     

    SEA FREIGHT MARKET OUTLOOK

    Sea freight carriers have put in place massive blank sailings in order to avoid a collapse of sea freight rates. This has created an artificial shortage of capacity, putting pressure on rates. The very strong dynamic of supply and demand controlled by ocean carriers is pushing rates to be stronger in Q3.

     

    Shippers from Asia to North Europe face a severe capacity crunch, and carriers are set to add to their misery with mid-month FAK rises and peak season surcharges.

    NVOCCs reported in the past few days they were experiencing three-to-four-week delays for FAVs (first available vessels) to North Europe, and even longer for the UK.

    Spot rates on the trade lane have been relatively stable, which although some $100 higher than a year ago, have not seen a spike so far – unlike rates to the US west coast which have doubled during the pandemic.

    It follows that carriers are unlikely to reinstate more capacity than they need to in Q3 and, and still intend to blank 17% of Asia-Europe capacity during September.

    Moreover, there is concern that the unexpected demand recovery could disappear, with mid-term visibility remaining “unclear”.

     

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    August 4th update :

    AIR FREIGHT MARKET OUTLOOK

     

    Airfreight rates from key Asian hubs continued to climb last week as ocean capacity shortages and personal protective equipment shipments increased.

    The latest figures from TAC Index show that average airfreight rates from Hong Kong to North America last week climbed for the fourth week in a row as they increased by 4.6% week on week.

     

    From Shanghai to North America, average prices increased for the second week in a row as they jumped by 10.2% on a week earlier. From Hong Kong to Europe there was a 1.5% decline but from Shanghai to Europe there was a 14.8% increase.

     

    Rates continue to track ahead of last year’s levels but they are down on the high levels recorded in mid-May. Ocean capacity shortages could be having an impact on the market (see below).

     

    The high rates and additional lead times to ship by ocean are pushing some time-sensitive shippers from ocean to air, contributing — together with the increase in personal protective equipment demand and peak season electronics — to the recent increase in air rates.

     

    Besides,  electronic product launches are beginning to affect the market, along with an uncertain capacity outlook.

    Rates remain way above last year’s levels.

     

    SEA FREIGHT MARKET OUTLOOK

    Global container demand lost 4.4 million TEU’s and reached 50 million TEU’s YTD April 2020.

    Year in Year demand dropped by 16.7%

    Sea freight carriers have put in place massive blank sailings in the second quarter, and this will continue in the third quarter of 2020 in order to avoid a collapse of sea freight rates. This has created an artificial shortage of capacity, putting pressure on rates. The very strong dynamic of supply and demand controlled by ocean carriers is pushing rates to be stronger in Q3.

     

    Space restrictions due to void sailings remain the main issue for Q3 of 2020. This market trend will lead to more delays, disruptions and higher ocean rates.

     

    On the Asia/Europe and Asia / North America trade lanes, 15% more capacity will be removed from the market through August. The number of blank capacity is announced to reach 4 million TEU’s. Ocean carriers justify these additional void sailings by data and information they got from most retailers about their purchases in Asia. 

     

    They want to ensure a sustainable rate level by creating an artificial shortage of capacity.

     

    AFG alternatives:

    Asteelflash consol box from Hong Kong to Europe is working normally. There are charter flights out of China to Europe and USA (price upon request) and vice versa with our Global Approved Carriers. There are charter flights out of Europe to USA and vice versa (price upon request) with our Global Approved Carriers. 

    There is also the rail road alternative from Asia to Europe

     

     

    July 28th 2020 :

    AIR FREIGHT MARKET OUTLOOK

    The coronavirus pandemic is having a huge impact on the air freight industry. Demand for air freight services is down 20 percent from last year. At the same time, there was and still is much less capacity available on the market, owing in part to the fact that sometimes only just fewer than 10% of the usual volume of passengers have been flying at peak times.

    The airlines cut their flight schedules back to a minimum, which meant that belly capacity was also reduced.

     

    As of today, experts assume that the shortage will become even more acute as the economy slowly starts to recover, because it will take some time for the airlines to return to operating at their usual capacity.

     

    It is also being said it will take at least three years for the airline industry to return to the level it was at before the Covid-19 outbreak. Many airlines are in a critical financial situation, and airports are set to see some shifts as well. Airlines will concentrate on a few large airports and will no longer serve every small airport. There are fewer routes, and accordingly, fewer capacities and departure options on the market.

    Besides, passenger traffic will be impacted, too. It is generally expected that passenger traffic in 2021 will be between 32 and 41 % lower than the level originally forecast. This means that capacities of cargo shipped in passenger planes will be reduced as well.

     

    Airfreight rates out of major Asian origins to North America showed signs of increase last week as demand showed signs of picking up.

    Figures from data provider TAC Index show that the average airfreight rates from Shanghai to North America, last week, increased by 9.7% compared with a week earlier, which is the highest level in seven weeks.

    From Hong Kong to North America average rates increased for the second week in a row, this time jumping by 6.4%.

     

    Rates remain way above last year’s levels.

    Besides, it is expected that airfreight rates will rise over the coming weeks as a result of reduced capacity and increasing demand: the catalyst is a relatively stable commercial demand coupled with reduced capacities driven by freighter maintenance cycles and higher fuel costs that are reducing the number of flights by passenger freighters.

    In addition, there has been a bump in demand for personal protective equipment (PPE) in the US as virus cases increased there.

    Air cargo rates from China to the US ticked up this week due to tighter capacity as few converted passenger jets are still in use, and new restrictions on US crews arriving in Hong Kong has led to US carrier cancellations.

    This bump is driven by a jump in PPE demand as the virus surges in the US and the scheduled fall rollouts of consumer tech like the new iPhone and PlayStation.

     

    AFG alternatives:

    Asteelflash consol box from Hong Kong to Europe is working normally. There are charter flights out of China to Europe and USA (price upon request) and vice versa with our Global Approved Carriers. There are charter flights out of Europe to USA and vice versa (price upon request) with our Global Approved Carriers.  There is also the rail road alternative from Asia to Europe

    Collaboration réussie pour la fabrication de badge COVID avec Zozio!

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