Date: Mar 13 2017
Title: Air Freight Market Update Report for Week 11


Demand for air freight space throughout Asia continued to grow allowing air carriers to increase rates.  Compounding the situation was the cancellation of a number of flights by Chinese carriers which has caused cargo to be rerouted to Southern China Gateways and Hong Kong. Congestion at transit hubs is causing transit times to be extended.

Following are highlights from around our Asian network.

Bangladesh: Demand for space to the US and Europe surged last week. Air carriers increased rates approximately 5% - 8%, discontinued spot quotes and imposed 4 to 5 days advance booking requirement. 

China
Shanghai: The volume of exports moving by air freight to the US and Europe continued to build upon last week’s levels resulting in large backlogs of cargo, especially to the US West Coast. Carriers exacerbated the situation by cancelling a number of freighters in order to support higher rate levels. The average rate increase imposed last week was about 17% to the US and 5% to European gateways. 
Shenzhen & Guangzhou: Space to the US is tight because of strong demand for space to meet quarter end deadlines.  Rates are expected to increase approximately 15% to 30% this week. 
Xiamen: Similar to other Chinese gateways - space keeps getting tight and advance booking (2 – 3 days) is required.  Total transit times are running 2 - 3 days longer than usual. Most air carriers increased their airfreight rates about 20-30%.
Hong Kong: Demand for space is especially strong because of a combination of heavy quarter-end shipping patterns and the routing of cargo from Northern China down to Hong Kong in search of cargo space. Air China (CA) canceled several flights causing cargo that would normally transfer in PVG to be routed to other air freight hubs. Air freight rates are up approximately 10% this week and may well go higher if demand remains strong or increases.  These market conditions are expected to persist through the end of March. 

India: Major gateways report adequate space to meet demand and stable rates although DEL notes that local demand for air export space is higher than last week to European and Asian gateways whereas demand for space to US gateways is less.

Korea: Volumes of cargo transiting from Asian origins via ICN has been gradually building and is expected to continue through month end primarily because of rate hikes and flight cancellations by Chinese carriers. OZ/ICN postponed its rate hike to US gateways until March 15th because KE decided to not follow suit. It is unclear if OZ will follow through on its announced rate hike if KE holds off on increasing rates.

Longer term, OZ announced flight cancellations and aircraft downsizing on its Chinese Lanes in anticipation of the adverse impact on passenger travel in response to the announcement that the THAAD missile system will be deployed in Korea.

Taiwan: There is approximately 130 tons of air freight cargo backlogged on both CI and BR.

Thailand: Demand for space continued to build last week and carriers have stopped quoting spot rates.  Transit times are running longer than normal because of congestion at transit hubs.  Advance bookings are required. 

Atlanta: Truckers have been experiencing severe delays lasting up to 14 hours when picking up freight from airlines at Hartsfield International Airport. Consequently truckers have begun to charge wait time/detention fees.  These charges vary by trucker, but seem to be organizing around a fee (e.g., $45.00) per hour

Vietnam: Very strong demand for space is expected to continue through the end of the month.  Airlines do not have sufficient space to meet demand and have been offloading approximately 250 cbm’s of cargo ex SGN and HAN.  Air freight rates have increased 60% since the end of January. 

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