As the airfreight industry approaches its peak season, and with Typhoon Yagi expected to hit southeast China this week, cargo owners are encountering a growing challenge in securing capacity out of Asia. Origin and transit points are already grappling with congestion, and securing capacity more often requires paying premium rates. According to a recent market update from Hong Kong-based logistics provider Dimerco, some Asian airfreight gateways are experiencing tight conditions, further exacerbated by high demand from large e-commerce companies with pre-booked peak charter flights, especially out of China. This heightened demand is causing a ripple effect across the industry, affecting rates, transit times, and overall capacity.
This month, the consumer electronics sector is expected to be a major demand driver. Expectations include shipments of the new iPhone 16 models, which Apple is now manufacturing in China. This shift has resulted in spot rates for airfreight climbing, but the surge in demand is not limited to China; Southeast Asia, which has become a hub for manufacturers migrating from China, is also feeling the pressure. Key transit points like Hong Kong, Taiwan, Korea, and Japan are experiencing significant congestion, resulting in delays and the need for advance booking to secure space.
The airfreight situation from Asia to Europe is seeing backlogs of up to two days at several gateways, with capacity tightening across most others. Similarly, shipments to North America are encountering backlogs, particularly in Manila, where the situation is rated as ‘critical.’ Dimerco has reported that some bookings are rejected outright, forcing cargo owners to consider alternative routes.
To secure capacity out of the Philippines, express rates are necessary, and transit times are stretching beyond three days, significantly affecting transit cargo. Compounding these challenges, Manila port is dealing with congestion, leading to delays of two to four days for berthing and a shortage of 40ft high-cube containers for export.
Other Southeast Asian gateways, such as Ho Chi Minh City and Hanoi, are also experiencing backlogs, especially for airborne exports to North America and Europe. The situation in Singapore is the same, with capacity further constrained due to some airlines avoiding flights over Iranian airspace and ceasing to accept bookings to destinations like Europe, New York, and Houston.
This raised concerns about growing backlogs, extended transit times, and escalating rates. Dimerco’s analysts predict that airfreight rates and demand for long-haul routes from Singapore will remain elevated through the end of Q4.
The tightening airfreight capacity is not confined to Southeast Asia. Northern China, Korea, Japan, Indonesia, Malaysia, Thailand, and India all report limited capacity in North America and Europe. Meanwhile, pricing from East and South China to Europe, which had softened over the summer, is expected to increase. The same trend is expected for rates from South China to North America. Despite these challenges, cargo owners will likely avoid intense competition from companies looking to shift from ocean to air transport due to the current state of ocean freight rates.
Five carriers have announced general rate increases from mid-August to counter further erosion, but some container lines have already blanked 37 sailings, most of which are in the transpacific market.
Thailand, entering its peak export season, faces tight ocean and airfreight capacity. Similarly, Taiwan has seen an increase in container rates to North America and airfreight pricing to Europe and North America. These developments underscore the importance of proactive planning and early booking for shippers moving cargo out of Asia during this peak season.
Partnering with a seasoned logistics provider like Edward J. Zarach & Associates is crucial for cargo owners navigating these challenges. We understand the complexities of international freight and provide comprehensive solutions tailored to meet our clients’ needs. Whether airfreight, ocean freight, or ground transport, we can ensure your cargo moves smoothly, even amidst capacity crunches and fluctuating rates. Contact us today to discuss how we can support your logistics needs in these challenging times.