Air Routes Also Hit by Supply Chain Disruptions... Air Cargo Freight Rates Reach Record High, Doubling in Three Months

[Photo by AP Yonhap News]

[Asia Economy Reporter Park Byung-hee] Air cargo freight rates have doubled over the past three months, soaring to an all-time high, according to major foreign media reports on the 13th (local time).

Supply chain disruptions at sea are spreading to the skies. With increased demand for cargo transportation ahead of Christmas and companies facing difficulties securing ships to transport products, attention has shifted to aircraft, causing air cargo freight rates to skyrocket.

Air cargo freight rates from Shanghai, China to North America were $8 per kilogram at the end of August but rose to $14 per kilogram last week. This surpassed the previous all-time high of around $12 per kilogram recorded during the early stages of the COVID-19 pandemic last year.

Air cargo freight rates from Frankfurt, Germany to North America also increased from $3.5 to $5.4 per kilogram after the U.S. government allowed entry to all foreigners who completed COVID-19 vaccination last month.

The recent spread of the Omicron variant is fueling the rise in air freight rates. Following the spread of Omicron, orders for COVID-19 tests and personal protective equipment surged in Europe.

The cargo handling volume at East Midlands Airport, a major hub for air cargo transportation in the UK, is expected to reach 470,000 tons in the current fiscal year, a 27% increase compared to 370,000 tons before COVID-19.

Although demand for cargo transportation has increased, securing aircraft remains difficult. About half of air cargo is transported on passenger planes rather than dedicated cargo planes. Recently, travel passengers have decreased again due to the spread of the Omicron variant and renewed lockdown measures, making it difficult to secure aircraft.

Marco Blomen, an advisor at Seabury Consulting, an aviation industry consulting firm, explained that the COVID-19 pandemic has worsened the imbalance in air cargo supply and demand. He stated that air cargo transport capacity in the aviation sector has decreased by 13% compared to 2019 before COVID-19, while air cargo demand has increased by 6%.

This content was produced with the assistance of AI translation services.