The cost of freight transportation will continue to rise in the air cargo sector in 2021. This is owing to the limited space and holidays observed at the start of the year 2021 in Asia, particularly in the route from Asia to the Americas commencing at the end of 2020. The average cost of air freight from Asia to North America has climbed by 25% to 30% and may now exceed $8.37 USD per kilogram. However, tariffs from Asia to Europe have soared by an average of about 43.1% and may now surpass $5.38 USD per kilogram.
This shouldn’t be shocking considering how much higher costs are during the hot season. However, prices today are far higher than they were in 2019. A significant element that must be considered is the shortage of air transportation capacity brought on by the COVID19 crisis. Numerous passenger flights have been canceled because of this circumstance, which has made it more difficult for international air cargo transport to find space.
The US retail associations have said that consumer spending has been steady and is expanding quickly throughout a retail business replenishment cycle, which may explain the US rise’s specific strength. Although US trade in the first week of December showed a small decline in pricing. Because there is a limited amount of space for aviation freight, the adoption of immunization programs will undoubtedly increase the strain on airlines.
Paul Molinaro, the World Health Organization’s chief of operations and logistics support, told Reuters in an interview that air freight rates were outrageous and that the cost estimated for a dry ice cargo for a pharmaceutical consignment was almost 20 times more than customary. Separately, IATA stated that it anticipated that freight costs would decline in January following the peak season, which should be accompanied by an increase in vaccine shipments, but this has not yet occurred at the start of the year in 2021.
Airlines have been working hard to expand capacity; according to the most recent data from Accenture’s Seabury Consulting, capacity was down by about 57 percent over the course of the year at the end of November 2019 and again in April 2021. decreased by more than 80%. Compared to a year ago, freighter capacity climbed by more than 12%, while tube freighter capacity increased by more than 20%.
According to Freightos’ data, the price to ship from China to the U.S. west coast is just around $20,000, while the price to ship from China to Europe is currently close to $14,000. Globalization has impacted logistics. In other words, a backlog of ships off the Californian coast results in fewer empty containers returning to Asia, which reduces the number of ships and containers available for exports and raises the price of shipping a container from Asia to Europe by 400% in November and December 2020. Record-breaking delays are also a result of that same backlog.
In conclusion, the trend toward high rates is anticipated to continue in 2021, and rates will return to normal as other factors do as well. According to freight-tracking company Freightos, by August 2021 the spot price per container on the China-U.S. East coast route, one of the busiest container lanes in the world, has increased by more than 500% from a year ago to $20,804 this week. On July 27, it was just under $11,000.
