China to suspend air cargo flights to North America until the end of August
We are receiving reports that China's Commerce Commission has announced it will suspend all overnight air cargo flights to Europe and North America (United States & Canada) from Aug 10 through the end of the month due to a severe COVID outbreak according to a recent report by Zhang Peifen/Taipei of ETToday, a Chinese publication.
"Starting from the last flight on the 10th of this month, all cargo flights on the European and American routes will be suspended overnight until the end of August," Peifen reported.
UWL Director of Air Freight, James Constantinidis said of the update, "If this is true, airfreight capacity out of China to the US and Europe is about to become even worse overnight. China suspending all freighter services to the US will reduce capacity purely to passenger aircraft only."
Air freight typically moves in two ways: via passenger aircraft (belly freight) also known as PAX or via cargo aircraft only (freighter) also known as CAO in air industry terms. Passenger aircraft have less space available for cargo compared to CAO for obvious reasons (the passengers).
"This will likely put a stop to any charter services as well because they utilize freighter aircraft for their service," he said.
Our partners in China shared in their notice, "As far as we know, overnight cargo charter flights in North America (the United States, Canada), Paris and France will all be suspended until the end of August (the last flight is withdrawn). Except for non-overnight European flights (London, Milan, Madrid, Eminem)."
Freight rates are expected to rise as the suspension will take a lot of capacity out of the European and American markets.
Less capacity, higher rates :(
China's major airlines announced additional capacity reductions in August.
"China Southern Airlines has announced the cancellation of 25% of European and American freighters and all passenger-to-freight aircraft; China Eastern Airlines’ European and American passenger-to-freight aircraft will be cancelled until the end of August," the update from Hippo stated.
Rising COVID cases have lead to restrictions in cities like Nanjing and Shanghai, including a new 14-day isolation requirement on overseas crew, which could cause a pilot shortage for many airlines, the Loadstar's Sam Whelan reported.
Rates could skyrocket due to this drop in capacity as demand for air freight is entering its peak season in August. Delays and lack of capacity in the ocean freight market will only further compound the issue.
"This is pretty huge," said Constantinidis. "I would not be surprised if we see rates climb past $13.00/kg, possible even hit $20.00/kg if demand does not decline."
Cathay Pacific is expected to export some of mainland China's cargo through Taiwan since that fleet is still operating, however, expect prices from Taipei the United States, Europe, the Middle East, India and Southeast Asia to go up as a result.
What should shippers expect in the coming months?
Constantinidis warned shippers to be prepared for price increases and possible rolled bookings in the future due to the COVID-related issues.
"Capacity will be tight through the month of August and space will be at a premium so it will definitely effect the cost our customers pay. It is likely that there will be delays getting freight on board aircraft, with possible rolled bookings. We may see a premium vs standard service come into play, as was the case with ocean freight," he said.
COVID has recently resurged in China with more than a dozen cities reporting cases of the Delta variant since July 20. Government officials have been increasing local restrictions to stop the spread of the virus which may hinder supply chain movements in the near future.
If you have any questions related to this update, please contact your UWL Rep. You can also reach our air freight team directly via email at airquotes@shipUWL.com
- Read full update from Hippo.
- Crossley, G., & Liu, R. (2021, August 9). China reports more Covid-19 cases; some cities kick off new tests. Reuters.
- Lennane, A. (2021, August 10). Edgy air cargo market could see 'a crazy' peak season rates boom. The Loadstar.
- Peifen, Z. (2021, August 7). Exclusive/Mainland China suspends freighter overnight air freight rates will skyrocket next week. ETToday. (Translated from Mandarin via Google Translate).
- Whelan, S. (2021, August 4). Airfreight rates out of China rise as new Covid restrictions impact airports. The Loadstar.