By: Beroe Inc --
19 April, 2020
Global Air freight capacity is shrinking further as more airlines shut down operation. Global capacity has decreased by 22 percent compared to last year, and additional declines are expected.
There is a shift from belly capacity to freighter capacity owing to travel restrictions. However, the increase in freighter capacity is far less than what is required.
Belly capacity decline in recent weeks were sharpest in Asia and Middle East. While Transatlantic and Intra-Asia lanes have seen the sharpest declines in overall capacity.
Airports in Northern China are operating normally, however, through-put volumes are restricted due to the lack of belly-freight for international traffic.
China faces a shift in demand from ocean-to-air, increasing the pressure on outbound capacity. However, more freighters are entering the market. Additional freighter capacity is being deployed out of China.
On intra-Asia lanes, there is a large capacity reduction resulting from passenger flight and freighter cancellations. Air freight rates on Intra-Asia lanes are extremely high, volatile and have been increasing rapidly.
The bans imposed by many of the European countries on the entry of non-citizens has brought the air transport network to a near-halt, resulting in a shift in demand away from belly-freight to freighters.
Belly cargo capacity on the transatlantic is estimated to have decreased by 90 percent.
Rates in the trans-Atlantic trade lane have increased due to the availability of heavy freighter traffic.
U.S. domestic air freight is less affected although flights are still down 30-50 percent. State quarantine measures are affecting the operations of some airports. Canada and Mexico routes are badly affected although freighter traffic is increasing.
Latin American countries such as Argentina, Chile, Peru, Brazil etc have also closed borders resulting in reduction of the available capacity.
Middle East & Africa
Passenger flights have been halted ,however, there are no restrictions on cargo movement, and freighters continue to fly across the Arabian Gulf.
Carriers are operating scheduled freighters, but cargo is also moving on an adhoc / unscheduled freighter or charter basis.
The impact of COVID-19 (Coronavirus) has spread rapidly beyond China and the biggest challenge now is space congestion, manpower and container availability across major ports of the world. The numerous vessel cancellations to/from China due to very limited export volumes have resulted in considerably less space and fewer containers available in all countries trading with China.
APAC : Asia , Indian subcontinent, Australia and Oceania
Currently the situation is improving with some of the factories moving back into production.
The number of announced blank sailings has dropped for March and April, but with the advent of weak demand, we can expect more blank sailings.
Production in China has re-started and volumes are increasing, however, we see a slow recovery due to economic shutdown in other countries.
Impact on major Trade lanes:
Asia to North Europe and Mediterranean: The utilization level in the trade lane is around 85 percent and blank sailings have been announced to continue in March and April.
Transpacific: Vessel utilization is now reaching 95 percentage to the USWC and around 85-90 percent to the USEC.
Middle East, Indian Subcontinent, Intra-Asia: Volumes to Middle East, Pakistan and South-East Asia are ramping up quickly with utilizations in the mid- and high 90 percentage range and have seen space shortages on some sailings.
Port and Terminal operations:
Major ports in China are back in operation and volumes are recovering to normal levels in some of the ports.
Surplus of reefer containers has fallen substantially, which is leading to cancellation of the surplus charge by most carriers.
Road Freight China:
The trucking services in China continue to recover from COVID -19. The cross – border trucking operation to and from Hong Kong (SAR, China) remains normal. Currently, the congestion at the China/Vietnam border (Pingxiang border) is also easing out.
For cross-border trucking to Central Asian countries, China/Kazakhstan border (Horgos border) was opened on March 18. Currently, congestion is prevalent at the border. The Central Asian border authority are yet to announce the details of health safety measures. Trucking to Europe via the China/Russia route (Manzhouli border) are also facing congestion. Border regulation might ease in the next couple of weeks.
Situation in Wuhan:
All major carriers have received instruction from the Chinese government to resume trucking operation in Wuhan. In Hubei Province, transport connections outside the city of Wuhan are to be reopened from April 8, 2020. Traffic controls in other parts of the province have already lifted. The COVID-19 risk level has been downgraded from high to medium.
Air Freight China:
There is an increasing pressure on the outbound air freight capacity in all of mainland China as production resumes along with cancellation of passenger flights.
This situation has led to more backlogs on the outbound air freight shipments. A trend of ocean-to-air movement also exacerbates pressure on the outbound capacity. However, more freighters are currently entering the market to ease the pressure.
General Transportation Condition in Europe:
Several European countries have imposed nationwide travel limitations, mainly on private movement. The transport of goods is still permitted in most countries. Major European locations are operational, and a high number of logistics companies are offering limited services.
However, increasing restrictions in individual countries and markets are leading to declining freight volumes. Majors industries have suspended their production for weeks and this deficit volumes are reflecting in the various transport networks.
Commodity / Category
Road Freight in China
Air Freight in China
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