baby truck (1)

Air Freight - June 17, 2020

Posted by Mihlfeld & Associates on Jun 17, 2020 7:00:00 AM

Air Freight Rates: China and North America

Rates for China to North America as of the week of June 2 were $10.83/kg, down 30% compared with the week of May 25th, but still 141% higher than the year-ago level. China-Europe rates were down 12% to $8.65/kg, but up 254% year over year, according to the TAC Index. This week China-US West Coast ocean rates climbed 17% due to tight capacity and a bump in demand. Rates are at their highest level for over one year, dating back to January 2019. Demand is still expected to lag through September, with ocean carriers announcing another string of cancellations. Air rates out of China continue to drop towards more standard levels and passenger capacity is also slowly coming back online. WebCargo data shows a 63% increase in air cargo eBookings in May as compared to April, indicating a slow return to business as usual. China-US West Coast prices jumped 17% since last week to $2160/FEU. Rates are 48% higher than rates in 2019 at this time. China-US East Coast prices increased 8% since last week, reaching $2875/FEU, and are 7% higher than rates for this week last year.

Post COVID-19 Air Freight Predictions

Cancelled flights, congested lanes, and a new level of airport security has certainly taken its toll on the air freight sector, but there may be some good news. ING senior economist, Rico Luman, reminds us that “airfreight goods flow in a more cyclical way so when we’re looking at the future, we can expect a quite early recovery.” The global industry will see that recovery in one of two ways: either passenger demand will rise and there will be a decreased need for full freighter aircrafts or passenger demand will stay at lockdown levels and the industry will focus on full freighter air shipments. So far shippers have seen a shift from the traditional carrier to full freight carriers, due to the cancellation of passenger flights caused by the worldwide lockdown measures, this means that full freight carriers will take some of the market shares from belly freight. This may change as the world opens back up again.

Cranfield-led research has assessed the initial impact of COVID-19 on air transport and found that the mid and long-term effects we’ll see for the air freight industry will be that:

  • Full-service network carriers (FSNCs) are likely to be the major losers since the recovery in international markets will be slower and they may face new competition with the potential (and already visible) entry of new airlines in their home hub markets.
  • Regional airlines may be a possible short-term winner during the recovery period as they could help FSNCs adjust their feeding capacity.
  • Low-cost carriers are expected to concentrate in primary markets and possibly enter into hub airports, and a general reduction in frequencies at the route level.
  • Regional and secondary airports are likely to be the losers as capacity is freed up in larger markets who will be attracting airlines and enabling larger hub airports to reinforce their positions.

How are we Faring Now?

Basic infrastructures like airports, logistic service suppliers, and professional service suppliers are all having very different experiences, depending on their sector, at this time. While some non-essential business has seen profit loss, essential goods have seen large booms. Many companies had to find ways to adapt to the changing marketplace such as Intradco Global, a Chapman Freeborn company that has typically chartered aircraft for animal shipments, has now pivoted during the pandemic to arrange shipments for critical personal protective equipment. While some businesses struggle to get by during these harsh times, others are thriving and even expanding.

Amazon to Expand Air Fleet

 Amazon announced they will be leasing another 12 converted 767-300 freighters from ATSG, bringing its fleet to a total of 82 aircrafts.Amazon has plans to open a new regional air hub at Lakeland Linder International Airport, Florida, within the next couple of months, as well as a San Bernadino hub and Cincinnati /Northern Kentucky International Airport that should be operational next year. Last month Amazon opened new gateway operations at Austin-Bergstrom International Airport in Austin, Texas, and Luis Muñoz Marín International Airport in San Juan, Puerto Rico.

Sarah Rhoads, vice president of Amazon Global Air, said: “During a time when so many of our customers rely on us to get what they need without leaving their homes, expanding our dedicated air network ensures we have the capacity to deliver what our customers want – great selection, low prices and fast shipping speeds.”

Topics: Insider, Continuous Improvement, 3PL, COVID-19, Economy

New call-to-action

Recommended For You

Mihlfeld & Associates

Logistics & Technology 

We specialize in custom solutions for transportation management, software, cost reduction, invoice processing, and much more. In short, we exist to save your company money on transportation and logistics. We hope this blog helps you in your journey toward better transportation practices.

Welcome to the Mihlfeld Mile.


Become a member of the Mihlfeld Mile Blog:

  • Quality Articles and Logistics News in your inbox weekly!
  • Tips, Best Practices, and Trends!
  • Transportation Management, TMS, Supply Chain, CIP, Cost Reduction, Invoice Processing, and More!

Subscribe to the Blog

Recent Posts