According to The Nikkei on November 28, air freight rates from China to Europe and the Americas have risen by 50% from recent lows. There is strong demand for exports of low-cost garments and other goods on e-commerce platforms. Flights to North America via Japan are also increasing, with freight rates rising due to tight capacity on flights from Japan to North America.
The report states that according to the TAC Index, an international benchmark for air cargo rates, as of November 20, the freight rate from Shanghai to North America was $5.94 per kilogram, up 50% compared to the first week of July. The freight rate from Shanghai to Europe was $4.64 per kilogram, up 53%. Freight rates from Hong Kong to North America and Europe rose by 32% and 37%, respectively.
Air cargo is transported in the cargo hold of passenger aircraft or dedicated freighters. After the outbreak of COVID-19 in 2020, many passenger flights were suspended, reducing cargo capacity. Coupled with disruptions in maritime transportation such as container ships, freight rates surged. As passenger flights resumed and maritime transport normalized, the supply-demand balance for cargo space improved, and freight rates had been trending downward since 2022.
Freight rates for air cargo departing from Shanghai and Hong Kong started to rise again after July this year. E-commerce demand has driven market conditions.
Nippon Cargo Airlines (NCA), which operates dedicated freighters, revealed, "Chinese shippers request charter flights every week. If we decline due to capacity issues, they will even offer higher freight rates to re-commission, so demand is very strong." Exports of goods from low-cost cross-border e-commerce platforms like Temu, owned by Pinduoduo Holdings, and Shein, an online fast-fashion retailer, seem to be rapidly increasing.
In Europe and the United States, long-term inflation and tightening monetary policies are dampening consumer demand. Retail inventories cannot be absorbed, and imports of ordinary consumer goods remain weak. Consumers appear to be seeking cheaper products.
The report states that the robust demand for Chinese products has also affected Japan. Until October, the volume of outbound cargo from Japan had been lower than the same period last year for 22 consecutive months. However, since around September, spot freight rates from Japan to North America have rebounded. Transshipment cargo from China via Japan to North America has surged, making cargo space increasingly tight. (Translated by Liu Jieqiu)
Source: Reference News