Freight forwarders report high levels of modal shift to rail and sea-air, along with greater use of their own air and ocean charters, as air and ocean congestion and high prices continue.
Freight forwarders report high levels of modal shift to rail and sea-air, along with greater use of their own air and ocean charters, as air and ocean congestion and high prices continue.
Yigit Saricinar, regional air freight director for Asia Pacific (APAC) at freight forwarder Geodis confirmed to Lloyd’s Loading List that ex-Asia transpacific air freight spot rates in particular had spiked in recent weeks, in response to strong demand for high-tech goods and COVID-19 related products.
“In the last few weeks, prices from Shanghai and Hong Kong to the US and to Europe have rebounded back to their levels in December,” Saricinar noted. “There has been a sharp increase in rates, especially into the US and average transpacific prices have increased more than 50%.
“China-Hong Kong to Europe rates remain at more modest levels but we still see spikes. Demand continues to surge especially for high-tech goods and COVID related products such as test kits and capacity continues to be extremely tight.”
Charter capacity key
He said Geodis’ “own controlled” freighter network of flights, AirDirect, had become a key element in the company’s efforts to surmount the capacity squeeze, noting: “We operate a scheduled weekly flight from Shanghai to the Mexican city of Guadalajara and another from Hong Kong to Guadalajara. These solutions offer more than 800 tonnes per month of additional direct capacity to Mexico from Shanghai and Hong Kong for our clients. We continue to see high demand especially for high-tech goods and we will continue to invest in LATAM services with fixed capacity through Block Space Agreements.”
The AirDirect network also extends to Europe-US-Europe and Shanghai-Europe routes. “We are currently working on an initiative to connect South China and India,” Saricinar revealed.
The congestion at some Asian seaports has also led to some shippers and forwarders making a modal shift for their cargo shipments from ocean to air.
Modal shift to rail
“We have seen a switch of PPEs (gloves) from ocean to air on a small scale from Malaysia and Vietnam starting from March,” he noted. “There are more clients requesting sea-air or air-sea solutions in order to minimize costs and reduce the transit times on ocean.”
There has also been a shift from ocean to rail and ocean to road, Saricinar noted.
“Our rail ‘product’ has more than doubled out of China into Europe in the first quarter, year-on-year. In comparison with 2019, Geodis is carrying 2.5 times more tonnage by rail.
“We continue to see a strong, upward trend as we offer customised block trains services to our multinational customers – a reliable means of moving their cargo into European consumer markets. Our road product volumes have also grown 45% in comparison to last year.”
As reported today, ex-Asia air freight spot prices have surged again in the last week above their already “super-peak” levels, with prices from Shanghai to the US west coast rising by almost 15% in the week to 26 April, according to figures from TAC Index. The latest price spike builds upon rates that have already surged by more than 50% in the past few weeks, rebounding back to and beyond their super-peak level in December to an average of US$8 per kilo.
Meanwhile, a composite average price from Shanghai to key European airports rose by almost 9% in the week to 26 April to an average of US$4.77. Average prices from Hong Kong to European destinations rose by more than 6% to just over US$5 per kilo during the same period.
Source: Lloyd´s
