November is the peak season for freight transportation, with a noticeable increase in shipment volume.
Recently, due to the "Black Friday" in Europe and the US and the domestic "Singles' Day" promotion in China, consumers worldwide are gearing up for a frenzy of shopping. During the promotional period alone, there has been a significant surge in freight volume.
According to the latest data from the Baltic Air Freight Index (BAI) based on TAC data, the average freight rates (spot and contract) from Hong Kong to North America in October increased by 18.4% compared to September, reaching $5.80 per kilogram. The prices from Hong Kong to Europe also rose by 14.5% in October compared to September, reaching $4.26 per kilogram.
Due to a combination of factors such as flight cancellations, reduced capacity, and a surge in cargo volume, air freight prices in countries like Europe, the US, and Southeast Asia are showing a skyrocketing trend. Industry experts have warned that air freight rates have been increasing frequently recently, with air dispatch prices to the US approaching the $5 mark. Sellers are advised to verify prices carefully before shipping their goods.
According to the information, besides the surge in e-commerce shipments caused by Black Friday and Singles' Day activities, there are multiple other reasons for the increase in air freight rates:
1.Impact of the volcanic eruption in Russia.
The volcanic eruption in Klyuchevskaya Sopka, located in the northern region of Russia, has caused significant delays, diversions, and mid-flight stops for some trans-Pacific flights to and from the United States.
Klyuchevskaya Sopka, standing at a height of 4,650 meters, is the highest active volcano in Eurasia. The eruption took place on Wednesday, November 1, 2023.
This volcano is located near the Bering Sea, which separates Russia from Alaska. Its eruption has resulted in volcanic ash reaching as high as 13 kilometers above sea level, higher than the cruising altitude of most commercial aircraft. Consequently, flights operating near the Bering Sea have been affected by the volcanic ash cloud. Flights from the United States to Japan and South Korea have been significantly impacted.
Currently, there have been cases of cargo rerouting and flight cancellations for two-leg shipments from China to Europe and the United States. It is understood that flights such as Qingdao to New York (NY) and 5Y have experienced cancellations and reduced cargo loads, resulting in a significant accumulation of goods.
In addition to that, there are indications of flight suspensions in cities like Shenyang, Qingdao, and Harbin, leading to a tight cargo situation.
Due to the influence of the US military, all K4/KD flights have been requisitioned by the military and will be suspended for the next month.
Several flights on European routes will also be canceled, including flights from Hong Kong by CX/KL/SQ.
Overall, there is a reduction in capacity, a surge in cargo volume, and the possibility of further price increases in the near future, depending on the strength of demand and the number of flight cancellations.
Many sellers initially expected a "quiet" peak season this year with minimal rate increases due to subdued demand.
However, the latest market summary by price reporting agency TAC Index indicates that recent rate increases reflect a "seasonal rebound, with rates rising across all major outbound locations globally."
Meanwhile, experts predict that global transportation costs may continue to rise due to geopolitical instability.
In light of this, sellers are advised to plan ahead and have a well-prepared shipping plan. As a large volume of goods arrives overseas, there may be accumulation in warehouses, and processing speeds in various stages, including UPS delivery, may be relatively slower than current levels.
If any issues arise, it is recommended to communicate with your logistics service provider and stay updated on logistics information to mitigate risks.
(Reposted from Cangsou Overseas Warehouse)
Post time: Nov-20-2023
