Jennifer Chang       Photot :  Peter Nguyen 

Freight forwarders and customers look for  air freight capacity  and  are forced to pay high prices in the last quarter.

The fourth quarter is the traditional peak season for air freight.  In addition, the  port congestion and high ocean freight rate this year , a large number of cargo transportation by air has increased .  The price ratio of sea and air freight has been significantly reduced from approx. 12 : 1 to 3:1 .  According to the International Air Transport Association (IATA) and  freight forwarder, Before covid-19, air freight rate was about 13 to 15 times higher than ocean freight rate. Now, air freight rate is only about 3 to 5 times higher than ocean freight rate.

According to Boeing's statistics, in the first eight months of 2021, compared with 2019 before the outbreak, freight volume increased by 9%, but revenue increased by 79%. Among them, freight volume from Northeast Asia to North America was two - triple times higher than before the outbreak.  half of the 2,600 passenger and cargo flights in the world come from the Asia-Pacific region.

The severe covid-19 in Southeast Asian countries caused delays in delivery previously. The factory  immediately caught up with the order after they resumed work as well as the consignee wanted to speed up freight arrival , so the product had to be transported by air service  in stead of ocean service. At present, major export airports such as  in Singapore, Ho Chi Minh, Hanoi, Phnom Penh, Bangkok and other  major export airports. Many Buyers rent charter flights. As major retailers like Apple and Hewlett-Packard continue to secure massive numbers of air charters from Asia to destinations in the United States and Europe, expect rising rates and extended transit times for both short and long-haul shipments. Too much air cargo is  waiting to be digested there, freight forwarders expect that the air market will still be booming in the first quarter of next year. In addition, the  Chinese New Year holiday in China and Vietnam is from late January to early February, which is usually a two-week holiday. The factories are shut down during this period, and all goods must be scheduled to be shipped before the New Year holiday. By then, the space of  air freight   is  as expensive as gold.

What worse is as the omicron variant spreads rapidly recently. In China, because the epidemic policy requires " 0", once an epidemic infection case is discovered,  Some or even all of the port areas will be closed immediately, which has caused a large number of vessels  to line up outside Chinese ports. In such an uncertain bottleneck of the epidemic, a surge in demand for air freight has led to a shortage of aircraft, and prices have doubled on some routes.  Major countries have tightened anti-epidemic measures at airports and ports. Airlines have begun to reduce passenger flights, and passenger planes have reduced cargo space. The demand for air cargo in Asia will be strong, which will support the continued increase in freight rates by the Spring Festival next year.

Appreciate if you could share TGL Blog among your friends who are interested in first-hand market information of supply chain and updated economic incidents.