Strong Market Demand, High Freight Rates in 2022

Market Demand and Freight Rates Will Remain Strong Through 2022 - Hangzhou MedAsia
WongDylan

A freight forwarder reports that no real disruption or significant decline in air cargo demand is expected in the first half of 2022, and rates may remain high.

 hangzhou medasia

Even the Lunar New Year holiday, which runs from Jan. 31 to Feb. 6, is likely to be busy, said one Shanghai-based freight forwarder.

"There are strict quarantine regulations due to the Beijing Olympics, and the government will likely again encourage people to cut back on unnecessary travel during the Chinese New Year. This means that some factories will still be producing goods and there may not be as long a hiatus as in previous New Years."

In addition, the rapid spread of Omicron in Europe (the new king of poisons, Omicron, has struck! Just now, Israel sealed the country directly! The U.S., U.K., France and more than 20 other countries announced an emergency...) This has triggered a high demand for Newcrest's vaccination-related products (e.g. masks, protective clothing, Newcrest test kits, etc.).

For Europe, depending on how the New Crown outbreak situation develops, January will remain a busy month if the situation gets worse and then those quick test kit commodities will not stop flowing. It's hard to imagine what kind of groceries can move at the current high rate.

A Singapore-based freight forwarder added that airlines prefer to keep rates high at the moment, "It is customary for airlines to communicate rates on a weekly basis, but it is uncertain whether rate levels will be reduced over the Christmas period as airlines try to keep rates high for higher margins,"

While he believes that current rates are "unsustainable" and may fall in the New Year, he added: "As airlines and carriers are doing their best to maintain high rate (high profit) levels, any future rate reductions, if any, will be modest and definitely not come down to the pre-epidemic rate levels we are familiar with/expect."

Outside of India, a freight forwarder reported rates of $25 per kilo to New York this month, where New Crown epidemic restrictions are increasing, passenger numbers are down, reducing capacity, and freight facilities are expected to operate more slowly due to labor shortages.

The forwarder added, "The market expects the peak season and air cargo market demand to continue into March."

He warned shippers that they need to be prepared: "Customers need to be prepared that their rates will not be in effect for the long term. Realizing that the market will continue to change, they must plan for space and rate issues. Sea freight may not change much, but I think air freight will wreak havoc. The only chance for improvement is for all passenger flights to return to normal."

A Sri Lankan freight forwarder said that while rates have slipped recently, he expects them to tighten again in January. And, in Pakistan, a freight forwarder said, "Although we expect rates to ease after Dec. 20, air freight rates are currently going up - are going up every day - because of the upcoming holidays and New Year.

But he added: "We expect the same volume of business by March for sea and air."

Meanwhile, a Dubai-based sea and air specialist said the market is currently very strong and that "the peak season continues, which is unexpected. During and after the Christmas and New Year period, we saw a lot of cargo being flown by sea to the EU without interruption, and we suspect this will continue into June."
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