The Business Times: Airfreight rates ease from peaks but remain elevated amid passenger flight cancellations

AIR freight rates are marginally lower compared with the record highs achieved during the holiday rush in early to mid-December. This is despite a raft of flight cancellations which have trimmed the belly capacity from passenger aircraft.

That being said, they are still extremely elevated. For co-founder and chief executive officer of Quincus Jonathan Savoir, this is a sign of freight demand stabilising, as people have “better adjusted to living with Covid-19”. “Overall, the number of cancelled flights is quite insignificant, with just less than 2 per cent of all global flights cancelled over Christmas,” he added. “The air freight market was relatively unaffected due to the availability of more contingent supply.” In the first week of January, Hong Kong announced a 2-week ban (from Jan 8 to Jan 21) on incoming flights from 8 countries.

On Jan 6, Cathay Pacific announced “very substantial reductions” to Cathay Pacific Cargo’s long-haul capacity in the first quarter of 2022. More recently, the US government said it would suspend 44 China-bound flights from the US in response to China’s decision to suspend some US carrier flights over Covid-19 concerns. But on the flipside, companies such as Japan’s ANA Group have announced plans to utilise passenger aircraft for cargo operations. The group, which includes All Nippon Airways, Air Japan, ANA Wings and Peach, said last week “for the freighter routes, ANA will maximise the use of its 11 freighters through its network to operate charter flights and additional flights along with regularly scheduled flights”. “We will also utilise passenger aircraft to operate cargo flights in order to flexibly capture demand.” For Judah Levine, head of research at Freightos Group, any new disruptions to passenger capacity will make the situation “more challenging” and keep rates elevated.

“The deficit of passenger travel continues to restrict supply,” he said. According to the global freight booking platform, rates for China-North Europe rates were US$8.50/kg last week – down from more than US$11/kg earlier in January but still well above the more typical US$2- US$2.50/kg range. “The other issue is airport ground handling congestion. There have been reports of flights departing with cargo space available simply because the ground operations are not able to keep up due to high volumes and labour shortages, which corona outbreaks and restrictions have only made worse,” said Levine. In its air freight market update on Jan 25, freight forwarder Flexport noted that in South-east Asia, demand ex-Bangkok “continues to be soft” with no peak expected prior to the Chinese New Year. On the China front, demand is picking up in the lead up to the Chinese New Year.

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