Supply-Demand Imbalance Continues to Vex Air Cargo Shippers
The new year is off to a hot start for the air cargo market, with no signs of slowing down. International transport activity typically softens following the holiday peak season, but demand and rates remain elevated because of unusual shipping patterns and a severe shortage of airlift triggered by the coronavirus pandemic.
Experts do not expect air cargo volumes to subside before the Chinese New Year, which runs February 12-26, because many manufacturers plan to continue operating without a traditional break.
Factories normally close for 10 days or more so workers can celebrate with their families, but this year a large number will stay open because the Chinese government is discouraging workers from traveling home due to COVID-19 outbreaks in many parts of the country. That could create backlogs because a large number of freighter flights were cancelled weeks ago in anticipation of a dead shipping period. Any backlogs will depend on whether factories keep producing or workers just take vacation at home.
The heightened demand for air transport is heavily driven by continued inventory replenishment, with inventory-to-sales ratios near record lows for consumer goods, and a saturated ocean container market. Port and rail congestion as well as a shortage of empty containers continue to drive up ocean prices and cause significant delays, especially on trunk routes from Asia, pushing more incremental demand to air.
Shanghai Deemed High-Risk Area, Additional Lockdowns Putting Crunch on Truck Capacity in Asia
A drastic increase in COVID-19 cases in recent days has prompted Shanghai to be declared a high-risk area by the Chinese Government. Officials are requiring that all truck drivers entering and exiting the city to be tested for COVID-19, which is causing significant delays. More lockdowns have also been instituted in the Hebei Province, which has made trucking between these high-traffic areas difficult and highly congested. As such, many truckers have already returned to their hometowns for the Chinese New Year holiday, further exacerbating the crunch on available truck capacity.
For many truckers, all their capacity is fully booked through the Chinese New Year holiday. In addition to Shanghai; truckers serving cities such as Ningbo, Nanjing and Xiamen, many truckers have also already returned to their hometowns over COVID-19 travel concerns or are planning to return this week. In other cities such as Fuzhou and Shenzhen, truckers are still honouring bookings through February 5, but no new bookings are being accepted. It is also anticipated that trucking volume may be slow to return after the holiday due to the quarantine requirements of various provinces. Hong Kong truckers are still operating until February 10, but capacity is limited and bookings must be secured at least five days prior.
As shippers are scrambling to secure containers for their clients to load their freight before the Chinese New Year Holiday (Feb 11-17) and also for after the holiday, as ships are filling up as well. For those US consignees whose suppliers arrange the own origin trucking, we highly recommending that clients instruct them to print the Equipment Interchange Receipt (EIR) on the first date that it is available and for all container sizes available. For most carriers the equipment window opens six days prior to vessel departure and closes when vessel space has been fully allocated. This allows the maximum opportunity for suppliers to secure equipment for your shipment.
Sources: China Daily
Keeping you informed!
BR International Logistics.Back to News Page