Air Freight Bottlenecks in Asia Pose Challenges as Peak Season Nears
As the peak air freight season approaches, Asian gateways are gearing up for an influx of shipments. While many gateways are currently operating smoothly, some bottlenecks have started to emerge in South-east Asia and the Philippines, causing concerns for exporters and logistics providers.
Challenges for Exporters Using Container Lines
In addition to the air freight bottlenecks, exporters using container lines are also facing obstacles. The latest Dimerco Asia Pacific Freight Report highlights a sharp rise in blank sailings, despite sinking volumes in the industry. This trend has been particularly challenging for exporters as they struggle to secure adequate capacity for their shipments.
Anticipated Surge in Airfreight Traffic
After a relatively calm September, characterized by underperformance in sectors like ecommerce and electronics, Dimerco Express Group predicts a surge in airfreight traffic leading up to mid-October. This uptick in demand is expected to put further pressure on already constrained capacity, especially with China’s upcoming Golden Week holiday causing factories to close temporarily.
Capacity Constraints and Strain on Intra-Asia Routes
The strain on capacity is expected to be most significant on intra-Asia routes, with the potential for longhaul capacity to be diverted to meet peak demand. Hong Kong-based logistics firm Dimerco advised exporters to plan ahead and arrange lift in advance to avoid disruptions in their supply chains.
Tight Airfreight Capacity to Europe and the US
While some Asian gateways have adequate airfreight capacity for shipments to the US, the situation is different for routes to Europe. Most Asia Pacific gateways are already experiencing tight capacity, requiring exporters to secure space well in advance. Singapore’s Changi Airport stands out as one of the tightest gateways, with backlogs of 1-2 days causing delays for cargo shipments.
Critical Situation in the Philippines
The Philippines is facing a critical situation in terms of airfreight capacity, with bookings being rejected and alternative routings becoming necessary. Shippers are advised to book express products for urgent shipments out of Manila, as lift is not only tight in the Philippines but also at connecting hubs. This challenge is further exacerbated for shippers moving cargo out of less developed origins like Vietnam, where delays are being experienced due to high volumes at connecting hubs.
Impact on Traffic from Thailand, Indonesia, and Korea
Thailand and Indonesia are also grappling with limited capacity for airfreight shipments to Europe and the US. Exporters in these regions are advised to plan ahead and secure space for their shipments to avoid disruptions during the peak season. Additionally, lift from Korea to Europe and the US is tight, with semiconductor equipment shipments requiring bookings at least two weeks in advance at updated rates.
Blank Sailings and Cancellations in the Container Shipping Industry
The end of the peak container shipping season has seen a significant number of blanked sailings and cancellations in the industry. Box lines have scaled back their capacity deployment, with 53 more cancellations reported for weeks 38 to 42. The transpacific eastbound routes have been affected the most, followed by routes from Asia to Europe/Mediterranean and the transatlantic.
Rate Declines and Special Pricing in the Ocean Freight Market
Rates to Europe and the US have continued to drop in the ocean freight market, with the largest declines seen on routes to the US east coast. Some ocean carriers have even offered special pricing to the US as their vacancy rate hit 50%. Despite full capacity to the US west coast, rates have still decreased, reflecting the competitive nature of the market.
Challenges in Intra-Asia Sectors and Port Congestion
Intra-Asia sectors are also facing challenges, with backlogs of 1-2 days reported out of Taiwan. Vessel capacity remains tight from South-east Asia to the region’s north-east, with congestion at ports like Port Klang causing delays. While improvements have been seen in some areas, blanked sailings and port omissions continue to impact vessel schedules and transit times.
In Conclusion
As the peak air freight season approaches in Asia, exporters and logistics providers are bracing for challenges in securing adequate capacity for their shipments. With bottlenecks forming in key gateways and capacity constraints expected to tighten further, proactive planning and coordination will be crucial to ensuring smooth operations during this critical period. By staying informed of the latest developments and working closely with their logistics partners, shippers can navigate the complexities of the air freight market and meet the demands of the peak season effectively.
