According to a large forwarder, a boom in e-commerce volumes out of China has caused a squeeze on air cargo capacity, resulting in certain consignments being transhipped to other ports in Asia for further forwarding to ultimate destinations like the US and Europe.
According to Jan Kleine-Lasthues, COO of airfreight at Hellmann Worldwide Logistics, there are reportedly between 2,000 and 3,000 tonnes—possibly even more—of e-commerce items departing Hong Kong each day, as reported by The Loadstar.
The German company has a lengthy history in China, having organized air freight capacity for some of the biggest e-commerce companies in the nation.
Perhaps Christmas is the only reason for this spike, but at least some of it will be sustainable volume. It’s a remarkable development because, throughout the last two months, it has increased ex-Hong Kong air cargo rates.
The amount of goods being sent out of South China at the moment is insane; some of these shipments are even being trucked to gateways across the nation to be transshipped to various airports throughout Asia. For example, because Hong Kong cannot handle the volume of products coming in, Vietnam is being used for shipping.
Xeneta claims that the spike in air cargo volumes and rates out of Hong Kong and China last month was almost entirely due to the e-commerce giants Shein and Temu, causing some much-needed “havoc” in an air cargo market that lacks a traditional peak season.
How long is this going to last is the key question. questioned Xeneta’s chief air freight officer, Niall van de Wouw.
Since air freight depends on speed, it is an essential component of the e-commerce paradigm. The market is being severely disrupted by this capacity requirement, but this is a local change rather than a sign of a turning tide in the world economy. More lower-value goods purchases from these vendors by US and European consumers are the main cause of it.
Also, Mr. Kleine-Lasthues We were only anticipating a little peak earlier in the autumn, but over the last four to five weeks, demand has dramatically surged, owing in large part to e-commerce, which has entirely changed the landscape, raised prices, and produced a real end-of-year high.
He mentioned that there was a severe shortage of space on the transpacific route leaving China, forcing some commodities to be shipped first to Europe and then to the US.
According to him, the going market price per kilogram for China exports to the US was roughly $10, and slightly less for Europe.
The spot rate on the market is the same regardless of the type of product you are sending. Automobile parts are shipped at spot price if the price hasn’t been negotiated in advance, according to Mr. Kleine-Lasthues.
He continued, saying that ex-Vietnam rates this summer were lower than pre-Covid levels and that the rising trend was most likely due to two factors. In my opinion, the market has witnessed a rise in demand for fashion items, particularly sportswear, and some positive hi-tech businesses. On the other hand, certain volumes have been moved out of China and into the Vietnamese market.
Additionally, he mentioned that the sea-air section of the market was receiving a significant boost from the rate hikes out of China and Asia.
There was no financial benefit to using Singapore, the United Arab Emirates, or other transshipment hubs this summer due to the extremely low rates out of Asia. However, doing sea air today makes a significant difference and lowers CO2 emissions.
Mr. Kleine-Lasthues cited recent market assessments that examined the value of items imported through e-tailing channels as evidence of the causes behind the spike in demand for Chinese e-commerce goods. These reports showed that the market was being oversupplied with extremely cheap goods from Chinese online marketplaces.
Interest rates have increased, inflation has increased, and people’s purchasing power has decreased in the context of the global economy. The focus is on conserving money, which explains why consumers in the US and Europe like to purchase items that are not just inexpensive but also much more so.
Finally, Mr. Kleine-Lathues I’m not sure if this e-commerce-driven peak will continue past Chinese New Year, according to my crystal ball. However, it is currently maintaining a veritable peak season, increasing rates, and interfering with negotiations for long-term contracts. More shippers are returning to the spot market in the hopes that the prices will drop.