Hong Kong-North America rates soar as capacity crunch tightens

By Damian Brett

Cathay Pacific Cargo B747F

Average airfreight rates on services from Hong Kong to North America last week breached the $9 per kg mark as stricter quarantine rules and strong demand hit the market.

The latest figures from the Baltic Exchange Air Freight Index (BAI) powered by Tac Index showed that average prices from Hong Kong to North America were last week higher than any point during last year’s PPE demand surge/cargo capacity crunch – although that was more felt on services from Shanghai.

This comes as the trade lane has been one of the hardest hit by Hong Kong quarantine measures that meant all aircrew on most international journeys were required to isolate on their return.

The restrictions, which have since been eased, resulted in a 25% reduction in Cathay Pacific’s cargo capacity in March, with freighter frequencies between Hong Kong and the US reduced from the usual 34 to around 21-28 flights per week.

In the quarterly DHL Hong Kong Air Trade Leading Index, DHL said: “The capacity supply of air and sea transportation were tense owing to the tightened quarantine arrangement for aircrews flying into Hong Kong and severe weather in the Americas and Europe early this year.”

Meanwhile, demand into the US remains strong. The US National Retail Federation said that government stimulus and the country’s vaccination programme was fuelling consumer spending.

“The dramatic increase of nearly 18% in March retail sales over the same period last year confirms that a confident consumer is driving the economic rebound, and that should continue through the remainder of 2021,” NRF president and chief executive Matthew Shay said.

“American households are clearly feeling the full effect of additional fiscal stimulus, gains in the job market and the reopening of the economy. Although there have been some recent issues related to vaccines, consumer confidence remains high and an optimistic outlook for the future continues to grow.

“Retailers remain committed, transparent and emphatic about prioritising customer and employee safety as they welcome shoppers back into their stores this spring.”

Meanwhile, the US container shipping trade continues to face delays as major ports backed up and vessels having to wait days before being able to berth.

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