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November 12 2018

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Shippers welcomed September's resumption of Nippon Air Cargo's Tokyo-Chicago route. 16 The Journal of Commerce | November 12 2018 International Maritime $10 since early August, and in the same period, Europe-US rates have barely moved," the online forwarder noted. Air cargo shippers on the Chi- na-Europe routes can expect to pay an average of $0.50 more per kilo- gram through 2019 compared with this year as supply begins to equalize with demand. This is the expectation of Freight Investor Service, although the com- modity and freight broker said rates, currently around $2.93 per kilogram ($1.33 per pound), would increase to $3.55 per kilogram by December. Asian airlines believe belly cargo and flexible freighter flights should be able to handle cargo owners front-loading shipments ahead of the Jan. 1 round of US trade tariffs on China. "There should be enough space as supply catches up with demand, but it is still possible to have a peak like we did last year [2017]," a spokesman for FIS told The Journal of Commerce. The decision by Japan's Nippon Cargo Airlines (NCA) to resume flights between Tokyo and Chicago in September — suspended over maintenance issues — has added Air chief operating officer. "This year the cargo market was very strong, and we do have a lot of concerns about next year's market. We are hoping for a better resolution between the two countries [US and China] and hope they can think in terms of consumers instead of egos," he said. The International Air Trans- port Association (IATA) said in its third-quarter air cargo report that the inventory restocking cycle that helped air freight growth to outperform that of wider global trade in 2016 and 2017 has now run its course. The association said this slowing growth comes against a backdrop of rising trade protection- ism measures, and wider momen- tum in global trade is weakening. Last year, beginning in October, air freight prices started ramping up as demand exceeded supply. Freigh- tos said carriers have been adding capacity this year but not enough to keep up with the continuing growth of e-commerce shipments. "Prices have been running higher than last year, but as of yet, they haven't started taking off. China-US general rates have only increased by urgently needed capacity to the space-constrained trans-Pacific routes just ahead of the peak season. The air cargo market has been particularly tight this year since NCA took all 11 of its Boeing 747-8 freighter fleet out of service in June after Japan's Civil Aviation Bureau found inconsistencies in the carrier's maintenance records. With the resumption of its To- kyo-Chicago route, the space NCA is adding to the trans-Pacific trade will be welcomed by shippers forced into the air because of an early increase in demand for ocean freight ahead of the US trade tariffs. C.H. Robinson noted that tight space is pushing load factors up into the middle- to high-90 percent range in some cases. "Ocean vessels are overbooked, so shippers are coming to us to convert required shipments to air," the forwarder said, with China's e-commerce boom adding extra air volume to the amount of freight that typically moves this time of the year. JOC email: twitter: @greg_knowler

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