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Air Cargo Capacity Crunch

November 13, 2017

 

Airlines are reveling in the strong market, but with demand rising far above capacity, shippers should prepare for increases in freight rates. Capacity is expected to remain tight through the peak season until the Chinese New Year.
IATA has said the strong performance of air freight demand corresponded with the pick-up in global trade. World trade volumes grew 4.2 percent in the first seven months of 2017 compared with 2016, their strongest performance since 2011 according to WorldADC.
Year over Year double digit volume growth in September for Asia Pacific was +12.3% for outgoing and +11.3% for incoming business.

Through the first three quarters of the year, Asia Pacific +14.2% and Europe +12.6% remain the strongest performing areas in volume growth, consolidating their top positions in the world’s air cargo business.
Asia Pacific can add the distinction that it is also the only area with double digit yield growth Year over Year for each month in the period Jan-Sep. Where did most of the growing volumes go to? Four destinations account for 30% of the growth in 2017: China East, USA Midwest, Germany and Japan.

 

As of Week 46 the following is the capacity status in both Shanghai and Hong Kong:

Shanghai: Demand for space to all regions is very strong to all regions. Cargo backlogs are ranging between 2 – 3 flights. Air freight rates to the US increased approximately 5% last week and space must be confirmed on a case-by-case basis.
Hong Kong: There has been no abatement in demand for space. Airlines are dealing with overbooked flights and backlogs. Air freight rates went up another 20% last week and “normal” service transit times are running 5+ days longer than normal. Most cargo is being booked on Premium service in order to secure space and minimize transit delays. Demand for space is anticipated to increase in the coming weeks.

 

To learn more on the current air freight market condition, please contact your local KWE Representative.

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