News / Alert to shippers as airfreight capacity becomes scarce and rates increase

© Nikolai Sorokin

As air cargo’s peak season approaches, shippers are faced with limited capacity, allowing forwarders to up their sell rates on major trades. 

The Loadstar previously reported how airlines were bracing for a busy Q3, as the steady drum of ecommerce traffic beats alongside the extra capacity taken up by modal switch to avoid the Red Sea and the usual pre-holiday volumes.  

And market analytics platform Xeneta noted that as the north-east Asia-to-Europe trade “heats up”, freight forwarder air cargo sell rates have hit their highest level in nearly a year-and-a-half. 

According to Xeneta, newly contracted long-term general cargo sell rates have reached $4.42 per kg, up 30% on the same period last year. 

“Peak season surcharges introduced in May and June have now been removed, but the increasing base rates were clearly enough to elevate the market,” said the analytics platform.

Robert Jubb, head of cargo UK for Air Partner, told The Loadstar: “The huge demand for FMCG [fast-moving consumer goods] and ecommerce is dictating pricing ex-Asia into both Europe and North America. Carriers are reporting significant forward booking of charter capacity into Q4. Usually, we would expect this demand to continue until mid-December.” 

And Mr Jubb added that while rates remained relatively flat for other tradelanes, such as US-to-Europe and Europe-to-Africa, “a capacity squeeze in these regions, as carriers look to re-assign assets to other, more profitable routes, will inevitably see a rate increase into Q4.” 

Indeed, Xeneta said: “Airlines remain optimistic about the year-end peak season and they seem to be more prepared this time. Several airlines are adding capacity to the north-east Asia-to-Europe corridor, with some even shifting their freighter capacity away from Latin America.” 

Meanwhile, DB Schenker has partnered with cargo.one to digitally connect with more than 50 airlines ahead of the expected annual peak season. It explained:“The demand for rapid short-dated sourcing of air freight capacities and market prices has grown in relevance as global supply chain disruptions have become a normality and e-commerce demand for air transport keeps rising.”  

The collaboration has increased DB Schenker’s live capacity access from nine airlines to more than 50, allowing it to obtain an average of four times as many airlines for quote requests and “better identify suitable capacities and fitting rates for ad-hoc shipments of its customers”.  

Some direct API interfaces established recently by DB Schenker include Cathay Cargo, Emirates SkyCargo and Avianca Cargo. 

 Its global board member for IT and digitalisation, Christa Koenen, said: “The more carriers DB Schenker connects to digitally, and thus automates and optimises processes, the better the final choice for our customers. The concept is comparable with automated last-minute deals from airlines or travel agents.”  

According to Xeneta, more than a third of cargo volumes are procured by freight forwarders in the spot market, 10 percentage points above pre-pandemic levels.  

And it urged: “Shippers need to take action. They should align with freight forwarders on peak season mechanisms before freight rates get uncomfortably high.”