According to the information published on The Loadstar, June’s 6% month-on-month improvement despite falling demand for PPE is a sign of the sector taking ‘its first steps to a structural recovery’, reports market specialist.
Higher air freight volumes in June compared with May are a sign of the air freight sector taking “its first steps to a structural recovery”, according to air cargo market analysis but
Air freight volumes are on the rise – however forwarders remain concerned about capacity and airport congestion.
While global volumes are still 25% lower than in 2019, June improved on May, when year-on-year figures showed volumes 31% down on a year earlier. Capacity last month broadly stayed flat, but was beginning to creep up in the last fortnight by some 1.5% a week.
Air freight rates have sunk to mid-March levels, while jet fuel prices rose 7% last week, putting more doubt on the viability and demand for cargo-only passenger aircraft services.
The TAC index shows air freight rates out of China, to both Europe and the US, sank nearly 10% in the previous week. However the biggest drops were out of Hong Kong, where prices fell 16% to the US, to $4.29, and 15% to Europe ($3.25).
Transatlantic rates remain well above last year’s, but it is as yet unclear whether much passenger capacity will return soon, with Americans currently unable to travel to Europe, amid claims the country has not managed to control the spread of the virus.
On the Ocean side, while container lines have done relatively well financially during the COVID-19 pandemic, cargo owners have faced inflated transport costs and lower service quality, with many shippers reporting cargo roll-overs and carriers prioritising higher-paying spot cargo, according to container shipping consultancy and analyst Drewry.
Freight rates set to soften: Highlighting its expectations on rates for the second half of 2020 (2H20), Drewry concluded: “Drewry expects freight rates to soften in 2H20 as carriers will cautiously reintroduce capacity to meet any demand recovery, but not at the expense of a large collapse in rates to uneconomic levels.”
Ocean freight prices on the transpacific trade have been “exploding” in recent weeks, according to a key global ocean freight forwarding executive, as US importers restock at a time of tight container shipping capacity.
Peak season is difficult to predict, according to US retailers, since many did not ship in April or May, including many large retailers, so June is big, month on month. The uncertainty explains the decision of lines to bring capacity back cautiously. “We see an extra loader or two coming in, but they're not re-establishing regular loops because they don’t see it as sustainable,” said von Orelli[" . He forecasts that the transpacific ocean market will probably contract overall by around 15% this year irrespective of the recent bounce-back in demand.
Container lines are bringing capacity back far more quickly on the transpacific trade than on the Europe-Asia lane as coronavirus lockdowns are eased, according to the latest industry analysis by Alphaliner. As a result, while vessel capacity on the Asia-Europe trade is still far below pre-coronavirus levels, capacity available to shippers on the Asia to North America lane is now edging close to 2019 levels.
For the latest statistics on Coronavirus situation, please refer to the link HERE.
You can also find the latest of these bulletins on LinkedIn, twitter or Facebook. Kindly note that additional access to these bulletins has been added to GEODIS' Intelligent Real-Time Information System (IRIS) as well.
Please rest assured that we will keep you updated of any changes to the current situation. Should you have any concern and/or queries, please feel free to contact your GEODIS Local Representative.
GEODIS Management Team