The novel Coronavirus or COVID-19, pandemic continues to affect the world, and severely impact global freight routes. While the majority of the world’s shipping usually happens via ocean freight, the immediate and sudden drop in available ocean carrier inventory has affected supply chains everywhere.
Governments in countries around the world have adjusted the international freight system by putting a priority on the transport of medical supplies where needed. As a result, air freight is becoming increasingly important due to its quicker transit time.
The high demand and limited capacity for air freight have put a strain on all shipping activities. Deemed essential, Medical supplies take priority, and non-PPE shippers are keeping inventories light in uncertain times. Freight Logistics teams must deal with higher volumes and get creative to secure scarce space.
The events of the pandemic have transformed the way shippers and logistics teams do business. Supply, demand, and shipping rates for air freight have seen high volatility, with rates spiking dramatically in mid-May, but have retreated some since then. From China to the US, air cargo rates are hovering around $10-15 per kilogram.
Supply and Demand
Supply and demand have dramatically affected priority and pricing by air freight during the pandemic. Commercial airlines grounded due to low passenger numbers are forcing shippers to route via the overtaxed cargo plane fleet.
Approximately half of annual airfreight volume ships via passenger airlines. Cargo planes currently don’t have nearly the capacity to handle the additional volume of shipments.
The current total cargo capacity is down by more than 30%. As a result, suppliers must either switch to ocean shipping or wait for enough cargo capacity to send their goods on a cargo plane instead.
Naturally, rates increase when demand dramatically outweighs supply. Because of the limited capacity, air freight rates had tripled. This price makes air transportation too expensive to be cost-effective for some shippers.
Some suppliers are turning to ocean freight shipping, rather than increasing the cost of their goods for customers. While more cost-efficient, ocean shipping takes significantly more time, reducing a shipper’s speed to market for their inventory and reducing availability to their customers.
At Dedola Global Logistics, we understand the current crisis impacts suppliers and shippers. We keep our clients updated in real-time as the situation changes. It’s our job to minimize the impact on our clients, allowing them to operate optimally during challenging times.
Contact our dedicated representatives to get advice or a free consultation on how to best proceed in this new shipping landscape.
Airfreight rates went up almost 400% over the last several weeks, to a peak of over $20 per kilogram.
Prices for China to Europe air freight almost doubled what they were a year ago.
Some East Asian and Southeast Asian cargo flights are in the air for more than 12 hours a day, up from an average of just below 10.
LCL (Less than a Container Load) shipping is in the highest demand as requests for inventory shrink due to uncertainty.
Despite the rise in airfreight shipping rates and massive demand, ocean freight rates remain relatively stable and have experienced lower demand. Final Thoughts
Uncertain times lie ahead for the world of commerce, logistics, and shipping. At Dedola Global Logistics, we monitor and interpret changes and help you negotiate the new normal. We provide exceptional service and seek to find advantages for our valued clients. That’s the Dedola Difference.
For more general information on air and ocean freight shipping or to speak with one of our air and ocean freight professionals, call Dedola today for a free consultation at (562) 594-8988.
Popular Resource: Air Freight – A Quick Reference Guide