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No relief from high demand and high air freight rates into 2022

Forwarders are reporting that they expect no real break in air cargo demand – or high prices – in the first part of 2022.

Even the Chinese New Year (CNY) holiday, from 31 January to 6 February, could stay busy, according to one Shanghai-based forwarder.

“Due to the Beijing Olympics, there is a strict quarantine regulation and, I guess, it’s most likely that the government will again encourage people to reduce unnecessary travelling during CNY. That means some factories will still produce goods, so we might not expect a very quiet moment, like previous CNYs.”

In addition, the rapid spread of Omicron in Europe is triggering high demand for Covid-related products.

“I think, to Europe, it depends on how the Covid situation is developing. If it becomes worse, then those rapid test kits won’t stop moving, and I’m sure January will still be a busy month. I can hardly imagine what kind of general cargo could afford to move at such a high rate level as at present.”

And the airlines are keen to keep rates high, added a forwarder in Singapore.

“Airlines are reporting rates on a weekly basis, but it is uncertain if rate levels will reduce during the Christmas week as airlines are trying to keep them high,” he said, although he believes the current rates are “unsustainable” and, therefore, likely to fall by CNY.

However, he added: “As airlines and ocean lines are trying their best to keep rate levels high, any reduction will not be too drastic, and definitely not to the rates levels we were familiar with pre-Covid.”

Out of India, where one forwarder reported a rate of $25 per kg to New York this month, Covid restrictions are increasing and passenger numbers falling, reducing belly capacity, while cargo facilities are expected to operate more slowly, owing to a shortage of labour.

The forwarder added: “The market expects peak season and market demand for air freight to continue until March.”

And he warned shippers needed to prepare: “Customers need to be mentally prepared that their rates are not going to be valid for the long term. They have to plan space and rates issues, aware that the market will keep on changing. Sea freight may not vary much, but air freight is going to create havoc, I think. The only chance of improvement is if all passenger flights return to normal.”

One Sri Lankan forwarder said that, while rates had slipped recently, he expected them to tighten again in January. And, in Pakistan, a forwarder told The Loadstar “currently air rates are up, and increasing day by day, due to the upcoming holiday season and new year, although we expect some relaxation in rates after 20 December”.

But he added: “We are expecting the same volumes until March, both in ocean and air.”

Meanwhile, a sea-air specialist in Dubai said the market was strong, adding: “The peak season is continuing and this is unexpected. We are seeing a lot of sea-air shipments moving to the EU, during and after Christmas and new year. There is no break and we suspect this will continue until June.”

Credit The Loadstar By Alex Lennane

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