Air cargo rates out of China have risen for four straight weeks, surging upward through Chinese New Year with no sign of a slowdown in demand traditionally seen over the holiday period.
Many factories have elected to remain open through the seven-day holiday that ends Feb. 17 to clear order backlogs, process new export orders, and because the Chinese central government has discouraged travel to limit the spread of the coronavirus disease 2019 (COVID-19). The continued demand has pushed air cargo rates up steadily since early January on both the trans-Pacific and Asia-Europe trade lanes, with a slight dip on the week of Jan. 18.
Rates from Shanghai to North America rose sequentially this week by 13 percent to $7.75 per kilogram, but the rate is up 33 percent on the mid-January level, according to the TAC Index. Compared with the same week last year, the rate is up 174 percent.
On Asia-Europe, the rate increase was not as dramatic, but has climbed 22 percent since Jan. 18, increasing this week by 7 percent to $5.43/kg. Year over year the rate is up 142 percent.
“While post-Chinese New Year February is normally the slowest month of the year, reports that many manufacturers in China will stay open over the holiday to keep up with demand suggests that the surge could persist through February and even beyond,” said Judah Levine, research lead at Freightos.
With air cargo capacity still tight, and ocean shipping at record lows — 22.1 percent on the trans-Pacific, and 40.6 percent on Asia-Europe in December — data from Freightos.com marketplace also show air cargo rates from China to US and European destinations rising sharply.
Data from air cargo analyst WorldACD for the last week of January show the tonnage in Asia growing by 2 percent, while the available capacity increased by 1 percent. The upward pressure on rates from the limited available capacity can be seen in the air cargo tonnage out of east China to North America in week four, when the rate rose 9 percent with a 3 percent increase in demand.
About half of all long-haul air cargo is carried in the bellies of passenger aircraft, but travel bans and quarantine measures to restrict the spread of COVID-19 have kept most of the widebody passenger fleet on the ground. The International Air Transport Association (IATA) is not expecting passenger travel to return to pre-pandemic levels before 2023, or even 2024, which will keep air cargo rates elevated.