With the world’s ports, rail yards and truck depots jammed up with holiday merchandise, the relentless demand for goods and limited capacity to ship them is pushing the price of the fastest and most expensive form of transportation to new heights.
The rate to fly goods to Europe from Hong Kong hit a new record this week and the cost of air freight to North America from Hong Kong is staying elevated around a peak reached a month ago, according to the latest TAC Index.
Air cargo rates from Asia to U.S. and Europe are soaring to new heights
Source: TAC Index
Freightos.com just launched an Air Index based on cargo transactions and its latest readings also reflect surging prices. Spot prices from Germany to China, for instance, have more than doubled in the past three months to $3.53 per kilogram.
As U.S. companies like Crocs, Nike and Levi Strauss pay premiums to import their goods on planes, the boom in air freight has been the sole bright spot for the global aviation industry as Covid-19 travel restrictions and lockdowns curb passenger travel.
But even as people slowly start flying again, spurred by rising vaccination rates, demand for air cargo continues to surge, driven by e-commerce and an ongoing global supply chain crisis on the ground.
Some experts warn that some demand for cargo-only planes could disappear as long-haul passenger aircraft return, restoring capacity to the system. But planemakers are banking on the cargo craze to continue to drive freighter demand.
Boeing and Airbus are looking for customers for cargo-only variants of their largest models, which they say will offer better fuel efficiency and lower emissions than existing aircraft.
Boeing could announce a cargo version of its 777X model at the Dubai air show next month, Bloomberg News reported, while Airbus began to market the coming A350F this summer.
Meanwhile, aircraft lessors are looking to repurpose their oldest aircraft for cargo use as airlines retire them in favor of the latest models. This month, Avolon said it will work with Israel Aerospace Industries to convert 30 Airbus SE A330 wide-bodies for cargo use.
The continued demand has also led companies from Amazon to the logistics arm of Chinese e-commerce giant JD.com to shop for freighters.
Amazon is looking for used long-range Boeing and Airbus cargo planes, according to people familiar with the matter, while JD Logistics is planning to set up its own fleet of no fewer than 100 planes by 2030, Chief Executive Officer Yui Yu said in an interview with Bloomberg News on Monday.
—Siddharth Philip in London
Actual and forecast consumer-price inflation
Source: Official data, Bloomberg economist surveys
The global economy’s supply crunch is propelling inflation at such a fast pace that central bankers may be forced to respond, even though fixing that imbalance is beyond their power. Their dilemma is that it’s hard to tell just how much of the inflation is being driven by a resurgence of demand as lockdowns end, and how much by supply strains caused by log-jammed ports and shortages of materials and workers. Click here for today’s full story.
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