- Businesses race to meet the increased shopping demand before Christmas has pushed airfares to nearly double on important flight routes connecting China with the US and Europe.
- Supply chains are always the busiest in the fourth quarter of each year as they have to cope with shopping demand before Christmas.
Air freight rates soar
“Everybody understands that if they want something on the shelves before Christmas, they have to use air freight”, said Yngve Ruud, Global Head of Air Freight for Kuehne + Nagel.
Rates on routes from Shanghai to North America hit $14/kg for the first time last week, up sharply from $8 at the end of August. And breaking the previous record of $12/kg, which was set when the Covid-19 pandemic started hitting supply chains in early 2020.
According to data from two air freight data providers, Baltic Exchange Airfreight Index and TAC Freight, rates have increased by a similar amount on routes from Hong Kong to Europe and the US and on routes across the Atlantic Ocean between Frankfurt (Germany) and North America.
Freight rates on the route from Frankfurt to North America have also increased from $3.5 to $5.4/kg since the US announced the opening of its borders to international visitors in early November.
After 2021, the year that marks the return of growth, 2022 is forecast to keep the positive momentum of the aviation industry. The International Air Transport Association (IATA) said: “We forecast the value of international air trade this year will be $7.5 trillion, 15% higher than in 2019, and will increase by 7.2% by 2022.
The reason why air freight rates are so high
Supply chains are always the busiest in the fourth quarter of each year as they have to cope with shopping demand before Christmas. But the seasonal spike in demand comes as the shipping crisis and port congestion have yet to cool. The price of shipping a container by ship has increased by more than 300%, the waiting time for loading and unloading has also increased by about 10 times.
Problems with ocean freight have resulted in a 29% jump in air cargo traffic in November, year-over-year. Cumulatively for the whole year, freight transport by air has increased by 26% over the same period in 2020.
Besides, the problems in road transport are also the reason for the high air freight rates. The lack of drivers, delays in the delivery of manufacturers, etc., has made businesses want to have enough goods for Christmas to switch to air freight.