MercoPress. South Atlantic News Agency

Airfreight in Asia skyrockets as Chinese industry restarts with passenger flights grounded

Freight forwarder Agility Logistics said that China's air cargo capacity was down 39% in February relative to last year because of the passenger flight cuts.

Airfreight rates are skyrocketing after the grounding of many passenger flights in Asia has left shippers scrambling to book limited spots on cargo planes as Chinese industrial production restarts, according to industry insiders.

About half of the air cargo carried worldwide normally flies in the belly of passenger jets rather than in dedicated freighters. But deep flight cuts in response to the COVID-19 outbreak have made the market more dependent on freight haulers.

Freight forwarder Agility Logistics said on its website that China's air cargo capacity was down 39% in February relative to last year because of the passenger flight cuts.

Shippers wishing to rush products out of China by air face sticker shock, said Refael Elbaz, chief executive of Israel-based Unicargo, which specializes in freight forwarding for Amazon.com sellers.

“The price is three times higher – at least - because there is just no capacity,” Elbaz said.

Freight Investor Services said in an update to clients on Monday that cargo pricing on China-to-US routes had reached “abnormal highs” and that intra-Asia traffic was up by 22% over the previous week. TAC Index data shows China-US cargo rates have tripled over the last two weeks to more than US$3.50 a kilogram.

The price surge will benefit freight haulers and help cargo-heavy Asian airlines like Cathay Pacific Airways, Korean Air Lines and Japan's ANA Holdings offset some of the steep revenue losses from halting many of their passenger flights.

Chris Mu, who runs a small logistics company in Shenzhen, China, that often uses air transport to supply Amazon sellers in Europe and to transport UK-made car parts for assembly in China, said prices had tripled since before the Lunar New Year and are rising by the hour.

DHL's express volumes have started to recover in China and the company is putting planes back into the network, Deutsche Post AG finance chief Melanie Kreis said on Tuesday, noting that its fleet is a major asset given the grounding of many passenger planes.

In mainland China, the number of freighter arrivals has increased in recent weeks as factories resumed production. China's aviation regulator said the number of freighter flights was expected to reach 870 this week, up from 788 in the week starting Feb 17.