The peak season of air freight demand is expected to last until Chinese New Year
The "Super Peak Season" of FEWB air cargo will last until the Chinese New Year. According to a leading freight forwarding company, the current freight rate is unlikely to undergo any major changes due to the slim prospects for capacity improvement.
In Flexport’s latest cargo market update webinar, Camille Cararenton, the company’s FEWB European Air Trade Route Manager, said: “Globally, demand has become stronger and there is a large number of sea-to-air conversions, especially on far east-west routes. This has further tightened capacity. The'super' peak season will last at least until the end of December, and is even expected to last until the Spring Festival at the end of January."
She pointed out that the passenger flight capacity of the FEWB route is still about 46% lower than the level before the epidemic, and it is not expected to resume full operations before mid-2022. Other commentators believe that it will take longer for capacity to return to pre-covid-19 levels, including various estimates for 2023 and 2024.
At the same time, Asia's "unstable" blockade measures and COVID-19-related restrictions have caused "interest rates on the spot market to fluctuate wildly" and "all key hubs have obvious terminal backlogs." These market dynamics are putting pressure on interest rates and extending transit times, whether from the'super peak' in the fourth quarter to 2022. "
European airport congestion
Speaking of airport congestion in Europe, especially the air cargo hub airports in London, Frankfurt and Amsterdam, Kaleton pointed out: “It all started in Frankfurt and produced a snowball effect, which caused very tension in most major European airports. (Ground handling) the situation.
"At London Heathrow Airport, we recommend (customers) avoid the most crowded WFS terminal; if you take an airline flying to this terminal, your transit time will increase by 2 to 4 days .
"In Frankfurt, the congestion situation has not improved. We expect the traffic time will increase by 5 to 7 days. For Amsterdam, we are still adding two to three days of freight, but the situation is getting more and more tense, mainly because the ground crew finds it difficult Handle all the goods arriving for the holidays."
She said that Flexport uses Liège in Belgium and cdg in Paris as another less crowded gateway between Amsterdam and Frankfurt.
Regarding the transatlantic market, Carleton commented: "With Thanksgiving and Black Friday, and Christmas a month later, we can still see that major US airports such as New York, Los Angeles, Chicago are still very congested. This adds 3-5 days of transportation time.
"But passenger flights are now recovering, which allows us to add a little capacity in the market. The transfer of capacity through US secondary hubs is reducing the pressure on all hubs, and we still strongly recommend using them."
Carton said that Flexport’s policy is to “target airlines based on the capabilities of the airport terminal to avoid congestion as much as possible and reduce the amount of bulk cargo, because customs clearance now requires more time.”
Flexport also recommends that customers make reservations "at least three to four days before the cargo preparation date (CRD)". We will even strongly recommend (before CRD) 7 days to get the best route and best price. "
When asked about the prospects of house prices before the Spring Festival in January and the peak house prices in December, Carleton pointed out: “We don’t have a crystal ball. But the production capacity (the situation) will not improve in January. Therefore, we expect it to be between December and January. There will be no major changes in interest rates during the month. We believe that the "super peak season" will continue until the Spring Festival."
When asked whether Hong Kong’s current measures to isolate pilots have had an impact on capacity and rates, Caledon replied: “The current impact is very small, but I am not saying that this situation will continue. Most are affected by this. Airlines affected by the quarantine measures are now training their passenger pilots so that they can fly cargo planes to avoid shortages."