The pricing trend is good for carriers, but it means higher costs for cargo owners, especially with a large amount of all-cargo capacity already committed to big gadget launches in the next couple months. There also is uncertainty about how many aircraft passenger airlines will put in the air as coronavirus outbreaks pop up.
Rates from China to Europe and the U.S. increased 6.7% and 5.8%, respectively, according to data compiled by The Air Freight Index Co. The Shanghai market was even stronger, rising 14.8% to Europe and 10.9% to the U.S. in the past week. Chicago to Europe rates also increased, but eastbound rates from the key hub of Frankfurt to the U.S. fell 3.8% as new capacity outstripped new demand.
On average, planes were filled at 70% of capacity during July. The figure is very high considering summer is typically the low season for air shipping and the load factor during the traditional peak shipping season before the holidays is about 68%.
Cargo volumes increased 8% monthly in July, further evidence transport demand is trending upward as manufacturing and retail activity pick up following quarantine measures.
The refusal of some pilots to fly to Hong Kong after the city imposed aggressive COVID testing procedures and quarantine measures for air crews is reducing some air supply from a critical logistics hub.
The wild card for cargo rates is the extent to which airlines resume passenger service. Although there has been some increased travel activity this summer, airlines are reluctant to commit more resources to flights because the new outbreaks are deterring travelers from buying tickets. The U.S. State Department last week lifted its global advisory against travel, replacing it with country-by-country warnings about COVID-19.