Date: Sep 05 2017
Title: Air Freight Market Update Report for Week 36

Demand for airfreight space out of the major gateways of Shanghai, Hong Kong and Guangzhou eased last week; however, Xiamen, Qingdao and Tinjin are reporting that available capacity is barely keeping up with demand. Export air cargo continues to be strong out of Southeast Asian countries and is impacting available capacity at transit hubs in Korea, Taiwan and Japan.

Trans Pacific airfreight cargo volumes are expected to increase in advance of the end of September and the third quarter followed by the Mid-Autumn festival holidays in early October. Most air carriers appear to be expecting a strong peak season and have been aggressively increasing rates in tandem with demand.

Following are highlights from around our Asian network.

Bangladesh: Heavy congestion continues to impair the uplift of cargo and cause freight to be rerouted via sea/air from Sri Lanka.  There is approximately 4,000 to 5,000 tons of backlogged air freight cargo at DAC.

Shanghai: The market situation is stable – no backlogs although some congestion for Express service to DFW and JFK. Available space to YYZ is booked until September 8th at which time rates are expected to increase approximately 8%. Airlines are expected to increase their flight schedules and increase rates in September.  Apple’s September product launches should not impact available space since most products have been shipped by charter flights.
Shenzhen and Guangzhou: Market conditions are little changed from last week - many air carriers continue to operate below maximum payload because of hot weather conditions. Available space to the US is tight and advance booking is a must. 
Qingdao: Due to limited cargo allotment ex Narita, NH/TAO cannot meet demand for space. Large shipments (+3000kgs) are normally routed via Beijing or Zhengzhou; however, space is tight from these gateways as well. A few carriers such as BA and DL are booked until further notice.
Tianjin: Space is tight and requires advance booking.  The City will host the National Games beginning this week, so airport security will be especially tight. 
Xiamen: Although there are no cargo backlogs, the city will be hosting the ninth BRICS (Brazil, Russia, India, China and South Africa) Summit from September 3rd – 5th. All freighters have been cancelled by CX/NH/CI/CV and most air carriers will only accept passengers and luggage during this period. CX/NH/CZ will receive cargo at designated warehouse facilities and truck to HKG/CAN/PVG gateways for uplift by air to their booked destination. 
Hong Kong: Market demand for space dipped last week; however, air carriers are projecting demand to gain strength throughout the month. 

India: Most air freight gateways are reporting transit delays for a variety of reasons ranging from the infamous Indian Customs system, to transit hub congestion and flooding in Mumbai. Many airlines are only accepting cargo on Express service (i.e., higher rates lower service) and subject to onboard confirmation. 

Korea: Demand for space continues to exceed capacity. As forecast, most carriers including OZ & KE increased rates to US gateways effective September 1st. The second round increases ranged between $0.30/kg ~ 0.40/kg.  The market expects carriers to implement another rate hike in the middle of September in advance of the end of the third quarter, the impending peak season, and strong demand before the Mid-Autumn holidays.

Sri Lanka: Air volumes have spiked because of large volumes of transit cargo from DAC. Space to US and European gateways is in short supply and many secondary carriers are having difficulty in securing first sector space. 

Taiwan: TPE continues to report backlogs of cargo to the US and Europe of approximately 120 tons. Demand remains strong and carriers were able to impose rate increases in the range of 12 – 17%.  Transit cargo from Xiamen continues to be impacted by onward delays of 6 – 7 days.

Thailand: Demand for space to US and European gateways remains strong and is subject to congestion at transit hubs. One week advance booking is required. 

Vietnam: The market will be challenging following Vietnam’s national holidays which run from September 2nd – 4th.  Compounding the situation will be a partial shutdown of SGN’s runways for construction. Airline capacity will be adversely impacted by the construction which began August 30th and is scheduled to last 45 days.

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