Transatlantic air cargo rates climbed this week, though US importers were hoping that the additional air cargo capacity accompanying the influx of Europeans now able to fly to the US would bring down rates propped up by a capacity shortage.
Airlines have added transatlantic flights to accommodate vaccinated European travellers who are now allowed to enter the US. Importers hoped the additional cargo space on those flights would bring down air cargo rates which had been more than twice typical levels due to a shortage of capacity.
But so far that has not been the case, as the Freightos Air Index saw Europe-US air cargo rates climb 4% to the East Coast to $5.24/kg, and hit $6.08 to the West Coast, a 10% increase since the start of the month.
Rising rates could indicate that despite the increase in capacity, climbing peak season demand and congestion caused by scarce warehouse space and under-staffed ground handling crews in both the US and Europe – that limit how much cargo can be processed regardless of the space on planes – are enough to blunt the impact of the added capacity.
In ocean freight, following their significant, post-peak season fall last week, transpacific ocean rates were stable this week, increasing 3-4% to both coasts, though they remain extremely elevated at 8-9X the pre-pandemic norm.
The easing prices are not being driven by any significant improvement in the port congestion that is tying up a significant share of the lane’s capacity.
Following some improvement in the number of boxes waiting to be picked up from their container yards, the ports of LA/Long Beach were able to delay the implementation of a new fee on boxes that overstay their welcome. But the number of ships waiting for a berth hasn’t fallen yet, leading some carriers to cancel upcoming West Coast services and others to move capacity to the under-served intra-Asia services, especially as manufacturing in Vietnam recovers.
Continued struggles with disrupted schedules and the resulting port congestion have been enough to keep Asia-Europe rates from experiencing a rate dip similar to the one on the transpacific. But the rise and fall of prices around peak season for Asia-US lanes suggests that normal – though outsized – seasonal trends will take place this year, meaning that the recent lull will likely end as we approach Lunar New Year at the start of February.
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