China airfreight rates spike while Cathay mulls cargo only PAX flights

By Damian Brett

Airfreight rates from China increased rapidly last week as demand from China begins to ramp up but spare capacity remains tight.

The latest figures from TAC Index show that last week average airfreight prices from Shanghai to North America increased by 32.3% on a week earlier to $4.02 per kg, while prices from the Chinese city to Europe jumped by 15.8% compared with the prior seven days to $2.71 per kg.

Prices from Shanghai to North America are now above the $3.29 per kg that carriers were charging on the route at the corresponding point last year and to Europe they are just slightly lower than the $2.75 per kg reported in early March 2019.

Meanwhile, prices from Hong Kong to North America increased by 11.5% week on week to $3.59 per kg and there was a 3.2% increase to $2.58 per kg on services to Europe.

The price jump from China comes as factories continue to ramp up production following an extend Chinese New Year break as part of efforts to contain the coronavirus.

Meanwhile, capacity remains tight as passenger flights – and therefore belly space – has been cut.

Peter Stallion of derivatives broker FIS said the price spike doesn’t really come as a surprise.

He adds that carriers are set to benefit from an emerging price war between oil producing OPEC states and Russia.

“However, the ongoing impacts of coronavirus dull the benefits of lower input costs, whilst the high airfreight price, although beneficial to the global freighter fleet, cannot be booked as revenue due to the missing belly capacity,” Stallion said.

“Thus, we’ve seen carriers with a highly abundant fleet of parked passenger aircraft utilise these assets to provide much needed cargo lift.”

Cathay’s passenger only cargo flights

Elsewhere, Air Cargo News sister title FlightGlobal has reported that following cuts made to its Japan passenger network, Cathay Pacific is considering operating cargo-only services on its passenger aircraft.

In a notice sent out to its clients, Cathay’s cargo arm says it only expects passenger belly cargo operations to be impacted by recently-announced cuts. However, it is looking at ways to “continue serving our cargo customers to and from Japan”.

“This includes the retention of certain passenger services for cargo carriage only,” the notice reads.

Cathay cut most of its flights to and from Japan for March, following newly-imposed travel restrictions – related to the coronavirus outbreak – by Japanese authorities, which said Chinese and Hong Kong passport holders will face a mandatory, two-week quarantine on arrival.

From 9 March, the airline cut all passenger flights between Hong Kong and Fukuoka, Nagoya, Sapporo, as well as Tokyo Haneda. From 13 March, Tokyo Narita and Osaka Kansai, as well as services between Taipei and Tokyo Narita and Osaka Kansai, will be cancelled.

The carrier says its freighter operations to Japan remain unaffected. “We will communicate a revised schedule in a timely manner,” it adds.

Beleaguered Cathay has recently cut capacity across its network, after the coronavirus outbreak hit its already-weakened performance.

 

Share this story

Related Topics

Latest airfreight rates news

Airfreight rates continue to decline on key trades

By Damian Brett

Airfreight rates out of Shanghai continued on a downward trajectory last week as air cargo capacity on key routes remained…

Read More

Share this story

Airfreight rates from Shanghai decline as outlook remains uncertain

By Damian Brett

Airfreight rates out of Asia Pacific appear to have peaked, with prices from Shanghai to Europe and North America both…

Read More

Share this story

Rates from Hong Kong decline but continue to climb from China

By Damian Brett

Airfreight rates from Hong Kong to the US fell last week while pricing out of China continues to increase as…

Read More

Share this story