Our customers are being impacted by the volatility of air cargo rates as congestion in China and a lack of passenger flights obliterate air capacity. We are seeing that the specialty types of merchandise that we handle that is not personal protective equipment (PPE) is not getting the air freight space and because the flights are so reduced that these products, especially live pets, are not being accepted. Because the rates have been extremely high we expect they’ve become a deterrent. Now as businesses reopen and they try to quickly get inventory, the rates are somewhat stalling those efforts.
Increases in the air freight rates are slowly stabilizing, and in the case of the China to Europe trade lane, falling for the first time since mid-February which gives shippers some light at the end of the pandemic tunnel. With an increase in the passenger bookings coming in June as summer travel plans start to ramp up, forwarders are looking forward to a return of ample belly cargo space which fell apart when travel restrictions started at the early point in the pandemic.
The charter demand is and will remain strong because it’s the best and fastest way to ensure cargo is moving on a critical scale. The volatility of the market requires quick reactions because prices aren’t stable and can jump when demand peaks. The slow stabilizing of the rates on air cargo will have a strong market impact once the backlogs of cargo are cleared out of airports. Chinese Shanghai airport Pudong (PVG) has cut back on the ability for shippers to deliver cargo more than 24 hours before the flight as inventory swells have lead shippers to drop early and make space in trucks and warehouses. As more flights return, these bottlenecks should clear up and return to a normal flow.
Coppersmith is committed to keeping an eye on these trends and bring our readership the most current information and forecasting. While the situation is difficult we are hopeful that the indicators in this blog are a sign of improvement. We’re in no way out of the woods, but it’s not too much to hope we can see a path to follow back to normal.