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Will air freight rates from China decrease?
The increase in air freight rates in China is primarily due to the impact of the COVID-19 pandemic, as well as supply chain shortages, which have been significantly affected by the Russia-Ukraine war, among other uncontrollable factors. It is expected that air freight rates this year will remain higher than pre-crisis levels for an extended period. Below, we will explore other reasons that have significantly impacted the rise in air freight rates.
Reasons for the rise in air freight rates in China:
Ongoing Global Disruptions
The escalation of global disruptions has led to countries closing at different times, which has significantly affected the production of goods and changed the demand for them. This is especially true with increased demand and the limited capacity of shipping companies to transport these orders, resulting in higher air freight rates from China.
Christmas Holiday Season
The period leading up to Christmas is always a peak season for shipping goods from China to many countries worldwide, as many people wish to give gifts to their loved ones. This results in increased demand for various types of Chinese goods, especially right before Christmas, coinciding with the year-end sales season for all kinds of products. This situation always leads to congestion and increased demand for air freight, thereby raising air freight rates from China.
Container Shortages
Although companies are producing more products and there is a growing demand for these products to be supplied to various countries, this has increased the demand for shipping companies to deliver these shipments. However, the shortage of containers used in maritime shipping has led to the cancellation or delay of many shipments. Consequently, exporters have increasingly turned to air freight to fulfill these shipments, which has been one of the reasons for the rise in air freight rates from China.
Decline in International Air Capacity:
The second half of the year is typically the peak season for traditional air transport. However, due to winter in the Northern Hemisphere, airlines canceled many fixed routes due to weather conditions, such as the route from Shanghai to Moscow, from Beijing to Cologne, and from Guangzhou to London. This resulted in a decrease in the number of tourists and business travelers, prompting many airlines to reduce flights to save costs.
Since air cargo is often transported in the passenger cabins of commercial aircraft, the reduction in the number of passenger aircraft has significantly decreased the total air freight capacity. This is also why the cost of air freight for Chinese exports starts to rise sharply, particularly in September each year.
Limited Space on Aircraft
As air carriers have limited space on their aircraft, they cannot ship everything. This leads to competition among airlines to secure small spaces on planes. Therefore, those wishing to send their parcels via air freight urgently must pay extra fees, contributing to the increase in air freight rates.
