Freight forwarders expect to see an increase in demand – and rates – from China once the lockdowns ease.
Air freight rates started to climb last week on routes to Europe (+7.7%) and the United States (+8.4%), according to the TAC index, but demand remains sluggish .
“Right now there’s not a lot of freight demand from Asia to Europe, honestly,” said a European freight forwarder.
“The lockdown in Shanghai has reduced production and caused delays in the local transportation element. I expect that once the lockdown is lifted, there will be an increase in demand, especially as manufacturers try to absorb their backlog. »
Hans-Henrik Nielsen, director of global development for marine air specialist CargoGulf, acknowledged that the closures “have caused problems”.
He added: “Some factories are open again and we are taking bookings, but it has been slow and there is no denying that FCL spot rates have taken a hit, especially in Shanghai.
“Our intelligence suggests that a large freight backlog awaits the reopening of China, and when that time comes, spot rates from China will rebound sharply.
“No one is giving long-term contract rates at current levels – that would be foolish, when we know the market will rebound soon.”
CargoGulf’s air-sea service continues to grow, he said, on both LCL and FCL, with major loading ports in Shanghai, Shekou, Ho Chi Minh and Laem Chabang. Major freight forwarders book containers on the company’s liner services, while other customers opt for ‘the full package’.
Current rates for LCL sea to air are approximately $4.50 per all-inclusive billable kg from Asia arriving in Europe by air, while for FCL the rate is approximately $3.80 to $4. He added that fares were higher for smaller European airports.
Aeromar, another air-sea service, noted that business in Southeast Asia had also been affected by the China shutdowns.
“Ship delays in China are creating gaps in departures from Singapore, and 13 days from Cambodia and Vietnam to Europe is now a dream. Currently, the average transit time is 17 days. We are also seeing destinations infrequent, like Canada.”
Metro Shipping, which offers air-sea services via Dubai and Singapore, noted that while Dubai was more cost-effective, there was a longer transit time and greater likelihood of delays on the initial leg of ocean transit.
Meanwhile, news that EU authorities will end cabin cargo after July 31 has been tempered by expected increases in hold traffic.
“Belly capacity appears to be increasing, so if the trend continues we are optimistic that the passenger freighters taken off the market will not have too much of an impact,” a forwarder said.