Due to the extreme backlogs and congestion in ocean freight along trans-Pacific trade routes, international shippers have begun turning to airfreight, maxing out capacity from select origins and driving early peak season demand.
PORT CONGESTION
COVID lockdowns combined with severe year-round weather impacted supply chain operations at both origin and destination ports across the world. The reduction in manpower and efficiency added to already imbalanced equipment market, further deteriorating ocean capacity.
On Monday, September 20, the Marine Exchange of Southern California tweeted a startling picture of cargo vessels stacked to the horizon, reporting a new record for Los Angeles and Long Beach Ports “97 are container ships including 70 at anchor or in drift areas & 27 at berth.”
AIR CARGO DEMAND
The airfreight market has been severely impacted by the pandemic as countries implemented travel restrictions. Airports and handling crews have been at risk for new variants; in August, for example, Shanghai cargo handling operations was closed for two weeks after a positive case.
“This week, the U.S. made an announcement that travel will re-open to 33 countries, including China, India, Brazil and most of Europe to those who are fully vaccinated, in November. This will bring back much needed capacity during the 4th Quarter but will unlikely meet the overall demand for traffic between these countries,” said Troy Rybandt, Director of Operations, Time Critical Services, Green Worldwide Shipping. “I expect to see increasing airfreight costs stall during this time and normalize during Q1 of 2022. However, trucking capacity and manpower shortages will continue to impact escalating costs within the U.S. market.”
Within the last week, Atlas Air made two announcements regarding ACMI (Aircraft, Crew, Maintenance and Insurance) contracts with DHL and FEDEX for 22 aircraft, further exacerbating the available widebody freighter charter capacity in the market. Many freight forwarders have also began signing contracts for multiple flights per week from the APAC to the U.S. to keep up with 4th Quarter demand. Over the summer, aircraft deliveries surged by 157% year-over-year, exceeding pre-COVID 2019 projections.
While this could mean additional capacity may be available in the near future, it doesn’t spell relief for shippers heading into the holiday peak season.
Need international airfreight solutions? Contact Green supply chain experts at greenworldwide.com.
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