European forwarders are reporting air freight rates are still climbing, as the peak season – boosted by distressed sea freight – continues.

As the UK becomes the latest European country to enter a four-week lockdown, mirroring Germany, France and Belgium among others, forwarders indicate that consumer demand will likely continue despite closed shops. This is in part because of the scheduled end dates of the lockdowns at the start of December, and the lockdowns (some of which come with travel bans) are also expected to impact passenger demand, and therefore air cargo capacity.

One forwarder said the latest lockdowns were “more predictable” and that “we know what is happening, what the restrictions are and what the protocol is.”

“As long as goods can be sold through stores that remain open, or through other channels, there will be demand (maybe even increased), and therefore continued requirements for air freight and also ocean freight.

“Also, with the issues with ocean freight, this is creating more demand for distressed sea freight and substitute orders being shipped by air to ensure that sales are achieved by retailers. So it is self-perpetuating.”

It is anticipated that the market will remain at these high levels through at least the end of November, but likely even well into December, given the late expected surge of e-commerce volumes. The air peak season has been exacerbated not just by the limited capacity, but also with a return to PPE shipments, as well as hi-tech launches such as the Playstation 5, which launches globally this month.

Strong air freight demand versus tight capacity drives up rates. Due to all the new product launches and congestion at all major hub points, strong demand for air freight continues to come up against a shortage of capacity, and more or less the entire market is spot rate driven.

WorldACD showed yields rising again in week 43: Capacity and chargeable weight rose 1% in the week, while yields have increased 7.6% in the past two weeks.

Source: The Loadstar