Air freight capacity crunch

In November the air freight sector has been confronted with a serious capacity crunch driven by high demand and insufficient extra-peak season supply. It has led to higher rates and cargo backlogs at several airports, especially in China.

Surging cross-border demand triggered by the online retail event in China, “Singles Day” on November 11th led to traditional “hard” air freight being put aside because of a lack of air cargo space.

The situation got worse in w/c 20th November because of the rush to ship products for Black Friday on November 24 and for Cyber Monday on November 27, especially from Asia to USA. The latest figures from TAC Index show that average prices from Asia to North America increased by 17.7% year-over-year in October.

The available aircraft are flying record hours to meet demand which necessitates more technical and maintenance stops. This in turn causes delays and puts additional pressure on the rotations.

In addition to the high demand out of Asia over the past few weeks, there was now a surge in Europe outbound shipments into Asia and Latin America.

Airport ground handling infrastructure in Europe is “bursting at the seems” with Frankfurt, London and Luxembourg among the airports most affected. Growing truck congestion in the vicinity of air hubs is an aggravating factor too.

It is thought that this year’s peak in air freight industry could be prolonged beyond the first week of December, traditionally the point at which things start to slow down. Due to e-commerce stocking up in the second half of December the peak may go into January and slow down after Chinese New Year.

 

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