Air freight rates have reached a new ceiling!
Freight forwarders said that following the skyrocketing prices of ocean shipping and near-ocean shipping, civil aviation freight prices have also increased by about 2-3 times recently.
Taking the China-US route as an example, before the epidemic, the price for the whole section was around 35 yuan/KG, and the main line price was around 29 yuan/KG.After the epidemic (in the past two months), the price for the whole section is about 79 yuan/KG, and for the trunk line is about 73 yuan/KG. The price increase is mainly affected by market supply and demand.
Mainly, the upstream and downstream supply chains of the electronics industry, semiconductor equipment, electric vehicles, etc. are shipping large quantities of goods. Not only are they scrambling for shipping space, but they are also spending big bucks to charter aircraft to rush shipments.
Spillover effects from the maritime port congestion: The fourth quarter is the traditional peak season for air cargo. However, this year due to the spillover effects of the maritime port congestion, a large amount of empty cargo was transferred to sea. As the epidemic in Southeast Asia slowed down, factories resumed work to catch up with orders.
China has also recovered from the impact of power cuts and is driving out shipments. It is expected that the demand for air cargo cargo in Asia will be strong before the Spring Festival next year, supporting freight rates to continue to rise.
Since December, air freight rates for China’s exports to the United States have increased significantly.
Freight forwarders revealed that in response to the surge in demand for air cargo, flights at major airports have been significantly relocated, including merging passenger flights from Shanghai to Los Angeles, converting flights to all-cargo services, and adding services such as cargo charter flights, package boarding, and high-priced cabins to expand cargo business opportunities. .
New policies may intensify the rise: Freight forwarders say that we will introduce new policies next year, which may further intensify the rise in air cargo.
The Civil Aviation Administration of China announced that it is expected to prohibit "passenger-to-cargo conversion" on January 1, 2022. The cargo hold can carry cargo, but there are new restrictions on the passenger cabin, which will limit air transport capacity in Asia.
It is worth noting that the high freight rates of container shipping and port congestion have weakened the low-cost advantage of shipping, which is also the reason for the surge in the volume of empty cargo transferred by sea.
Industry insiders said that the price ratio between sea and air freight has narrowed significantly to 3:1 from about 12:1 before, and the freight price gap has narrowed.
According to estimates by the International Air Transport Association (IATA) and industry experts, air freight prices before the epidemic were about 13 to 15 times higher than sea freight. Now air freight is only about 3 to 5 times higher than sea freight.
Manufacturers bid for charter flights
In order to earn high freight rates, the industry estimates that China Airlines and EVA Air have diverted approximately 12 flights per week to charter flights, which is equivalent to a 25% reduction in normal flight capacity in the market.
Currently, manufacturers in Singapore, Ho Chi Minh, Hanoi, Thailand, etc. have chartered flights. Currently, the shortage of space in the Western United States is the most serious. Urgent shipments in time for the year-end holiday sales season in the United States have chosen to be transported by air to achieve timeliness and avoid the bottleneck of port congestion.
According to Boeing statistics, in the first eight months of 2021, compared with 2019 before the outbreak, cargo volume increased by 9%, but operating profits increased by 79%.Among them, the freight volume from Northeast Asia to North America is two to three times higher than before the epidemic. Half of the world's 2,600 passenger flights carrying cargo are from the Asia-Pacific region.
With too much air cargo waiting to be digested, freight forwarders estimate that the market will be strong by the first quarter of next year. Recently, the mutant virus Omicron has spread rapidly, and major countries have tightened epidemic prevention measures at airports and ports.Airlines have begun to reduce passenger flights, and the cargo carried in the belly of passenger planes has been reduced, and the supply of space has become tighter.
For charter flights, pure cargo planes such as Boeing 747 aircraft have a cargo capacity of about 90 tons to 100 tons. Calculated based on the full price, the charter price is about 7.9 million yuan.
Industry insiders said, “Charter cargo terminal prices have about doubled compared to before the epidemic, mainly because charter flights across the ocean have no goods to return to Europe and the United States, which means that the charter price has changed from one-way to round-trip.
Combined with factors such as the recent surge in overseas oil prices, airline costs have increased a lot. Therefore, some airlines' previous charter fees have been replaced by hourly fees, plus return costs and local fuel prices, and then a little profit. Therefore, on the surface, charter prices do not appear to have increased as much as retail freight, but in fact, for airlines, Profits haven't increased much. "
Freight rates continue to rise and the crisis is not over yet
Recently, the load factor of routes from Shanghai to Europe and the United States has continued to remain close to the full load level, and freight rates are at a high level, with signs of continuing to rise.
Data show that last week, the China Export Container Freight Index (CCFI, reflecting the settlement price of container shipping companies) remained unchanged month-on-month, while the Shanghai Export Container Index (SCFI, reflecting the booking prices of container shipping and freight forwarding companies) rose 2.7% month-on-month.
The Baltic Container Freight Index (FBX, which reflects freight forwarding settlement prices) has fallen by about 15% from its September high, but rose by 1% month-on-month last week.
Drewry's latest comprehensive world container index rose 2.3% to $9,262.02 per 40-foot container on the 9th. And it's still 170% higher than a year ago.
The year-to-date WCI average composite index assessed by it is US$7,484 per 40-foot container, which is US$4,745 higher than the five-year average of US$2,739 per 40-foot container.
Spot freight rates between Shanghai and Los Angeles surged 5 percent, or $440 to $10,138 /FEU, according to the Drury Index.
Spot freight rates for Shanghai-New York and Shanghai-Genoa increased by 4% and 3% to $13,118 /FEU and $12,801 /FEU, respectively.
Freight rates in Shanghai-Rotterdam are hovering around the levels of previous weeks. Drury expects rates to remain stable in the coming week.
On the other hand, freight rates for long-term Marine contracts continue to rise sharply.
According to a report released by shipping data consultancy Xeneta, the average price of long-term contracts worldwide rose by 16 percent in November, with a cumulative increase of 121 percent year-on-year.
Port congestion has not been alleviated, and the demand for consolidated transportation is at a high level.
The latest data show that the relevant indexes reflecting freight rates continue to rise, which confirms from the side that the demand for consolidated transportation remains strong.
In addition, the emergence of the new strain of "Omicron" has intensified concerns about the global economic recovery, and some insiders believe that the epidemic will benefit freight rates, and high freight rates will continue in the short term.
