Christmas rush sees freight go sky high

The cost of flying cargo reached $14 a kilogram for the first time last week as companies around the world scramble to get goods on the shelves before Christmas.

The fourth quarter is always the busiest for supply chains, but amid chaos in the shipping industry, where there are bottlenecks at ports and a shortage of containers, companies have switched to using air cargo.

The surge in demand has led to a shortage of aircraft, and prices have doubled on some routes that link manufacturing centers in China to consumers in Europe and the United States, the Financial Times reported.

Along with consumer electronics and fashion goods, industry executives say a rush to order COVID-19 tests and personal protective equipment, as the Omicron variant of the coronavirus spreads, is also having an impact.

The British newspaper noted that prices on high demand routes between Shanghai and North America have now jumped above the previous record of $12 a kilogram seen when the effect of the pandemic first impacted global supply chains last year. It said components including auto parts and semiconductors are also now being moved by air.

The Financial Times cited cargo data from the Baltic Exchange Airfreight Index and TAC Freight that showed significant price rises on routes between Hong Kong and Europe and the US, and on trans-Atlantic routes between Frankfurt and North America.

Growing e-commerce

Growing e-commerce means airfreight operations are more in demand than ever, reported Air Cargo News, which noted that East Midlands Airport, a cargo hub in the United Kingdom, predicts that by the end of this financial year it will have handled 470,000 metric tons of goods, compared with 370,000 tons before the pandemic.

Bharat Ahir, chief executive of supply chain consultancy 28one, told the Financial Times that consumers will inevitably be hit by rising costs.

"There are two clear impacts－availability will be lower, and what you have got is going to be more expensive," Ahir said.

Industry executives told the newspaper that half of air cargo would normally be carried in the belly holds of passenger jets, but the spread of the Omicron variant is disrupting leisure traffic and spare capacity is limited.

The Journal of Commerce reported last week that shippers can expect a long-term reduction in the capacity provided by belly cargo.

"The Boeing 747, for example, may not return to the skies as airlines opt to renew their fleets and buy newer, more fuel-efficient, but smaller, aircraft for international passenger transport," Justin Barrow, head of airfreight for China at Maersk Asia Pacific, said in a market update.