To Our Valued Customers:
Airfreight rates take another deep dive while the U.S. steps back on plans to retaliate against Chinese foreign airline carrier policy. Many airlines have begun to reopen international routes in an attempt to rekindle passenger travel and the air cargo terminals plan for virus prevention safety.
Here is a shortlist of what we are seeing so far this week:
Airfreight Rates Continue to Stumble: After a leveling out last week, rates from China and Hong Kong have dropped again and did so by 10-20% depending on origin. Rates that were once close to $20 per kilogram, or above, are now sitting more comfortably in the $5-$7 range. While this is most certainly a relief, it is still considered peak season levels which is not usual for June. For the remainder of 2020, costs are expected to remain 30% higher than in 2019.
Trump Administration Reneges on Carrier Ban: Last week, the U.S. government announced a ban on Chinese airline carriers from flying to/from the states that was set to take effect on June 16th. The ban was to be put in place as a response to strict limitations China was placing on the reinstatement of U.S. passenger services into the mainland. Shortly after the announcement, China softened their stance and ultimately resulted in a retraction by the Trump admin.
Passenger-Freighter Services are Expected to End: Another sign of weakened demand, as well as the resurfacing of true passenger services, is that passenger-freighter services, nicknamed “Preighters”, are expected to cease operations during the summer months. These cancelations should not have any negative impact on space availability.
A Paperless Airfreight World Set to Accelerate: The airfreight industry has been sluggish in adapting a 100% paperless environment. Initiatives to transition to e-AWBS have been long-lasting and in piecemeal, leaving many shipments to at least require some hard copy documentation. Guidelines for safe air cargo operations, recently established by the ICAO for Covid-19 transmission prevention measures, calls for digital systems and data exchanges where possible. While the guidelines do not specify what this means in detail, it is expected that airlines will expand on current paperless programs as well as increase fees for those late adapters that have be reluctant to make the switch.
Virgin Atlantic services from London Heathrow to New York (JFK), Los Angeles (LAX), and Orlando (MCO) are scheduled to resume on July 20th.
Emirates resumed passenger service in 16 additional cities including JFK.
Turkish Airlines will resume international flights to 40 countries on June 10th.