Home » Dimerco Launches Air Cargo Charter Service for Peak Season Capacity Crunch

Dimerco Launches Air Cargo Charter Service for Peak Season Capacity Crunch

by | Jul 10, 2024 | Blog Post

In anticipation of freight capacity constraints this peak season, Dimerco Express Group is partnering with Cathay Pacific to offer a 1x per week air cargo charter service from Shanghai (PVG) to Chicago (ORD) from September to December.  The service is in response to clear market signals that capacity constraints this peak season – both air and ocean freight – could have shippers scrambling for high-priced cargo space, much like 2021.


2024 Peak Season Showing Signs Not Seen Since 2021

Dimerco discussions with a range of sources point to a busy peak season in 2024, where finding capacity to ship China-to-USA cargo is no guarantee.

Carriers are gearing up for a demand spike.

A large independent air cargo handler in Hong Kong is planning to hire 300+ more workers to handle peak season demands.

china usa air cargoMany shippers, particularly consumer electronics companies, are launching new products this holiday season and are anticipating big demand.

Should higher-than-expected cargo volume materialize, our carrier contacts tell us that the capacity available to handle that volume may not be sufficient. Typically, about 30%–40% of carrier space is pre-allocated under contracts with forwarders, with the balance available to the rest of the market. But this year that pre-allocated percentage is much higher, limiting sellable space.

One reason for this is that Temu, Shein and other e-commerce companies in China are demanding freight forwarding partners have at least one Block Service Agreement, or BSA (space under contract) in place with a carrier. As a result, many small and medium-sized forwarders have signed minimum volume agreements with carriers (e.g., 25–50 tons per month). So, you have more pre-committed space and limited extra space to sell ad hoc in the open market.

According to Dimerco’s VP of Global Sales and Marketing, Kathy Liu, “The signals are eerily similar to the 2021 peak season, with the container shortages, port congestion, and sky high rates.”


The Shipper’s Perspective

Shippers are in two camps relative to the upcoming peak season. There’s the “wait and see” group, who are hoping the Red Sea crisis improves, as well as the current container capacity challenges and rate increases on the Trans-Pacific Eastbound route.

Then there’s the “don’t risk it” group that is planning now to lock in extra capacity for Q4 – particularly for China-to-USA air freight and ocean freight.

Given the signals we’re seeing, we believe locking in capacity is wise. That’s why Dimerco is bringing extra capacity to the China-to-USA shipping lane for Q4.

For a deeper dive into the current state of the Trans-Pacific air cargo market and the factors impacting peak season, watch the following panel discussion.



China-to-USA Charter as a Solution for Q4 Capacity Crunch

Dimerco’s 1x per week air cargo freighter service from Shanghai to Chicago runs from September 12 to December 5. The  B747-800F airplane from Cathay Pacific leaves PVG each Thursday morning local time, stops in Hong Kong and arrives in ORD at 1:40 pm Friday local time.

Dimerco’s Kathy Liu expects broad interest in the service.

“Traditional air freight shippers will be searching for added capacity,” says Liu, “particularly brands launching new products for the holiday season, since they can’t afford inventory delays that would jeopardize a major selling day, like Black Friday.”

But she also believes there will be keen interest from ocean shippers who see the China-to-USA air cargo charter service as an alternative to sea freight service that could become unreliable and very costly as peak season approaches, as we saw in 2021.

“Air freight is typically 12–16X more expensive per kilo than container shipping,” says Liu. “But right now that gap is just 6–8X and shrinking.  Couple that with a China-to-USA, door-to-door transit time for container freight of up to 40 days and brands will be open to alternative modes.”

Dimerco’s China-to-USA charter solution can be either port to port or door to door. Dimerco will work with its truck carrier network for final-mile delivery from Chicago.


Air Charter PROs and CONs

There’s an upside and a downside to air charter cargo service. The primary advantage: it’s guaranteed access to the capacity you need.

Among the disadvantages is that you’ll pay more for that capacity vs. commercial space. But, as discussed, the more that current air cargo and ocean freight rates continue to rise for the Trans-Pacific lane, the tighter the gap becomes between these rates and air charter.

One way to mitigate the higher cost of air charter is to secure a partial air charter, which is essentially what Dimerco’s new service is offering. Similar to an air freight consolidation option, partial air charters allow you to pay for only the space you use on the freighter.

Securing a charter can be difficult. In Dimerco’s case, we leveraged our long-term strategic partnership with Cathay Pacific to secure the capacity, enabling us to offer the partial charter option.


Consider Air Charter Service for Your China-to-USA Shipping During Peak Season

For China-to-USA shipping, market signals indicate tight capacity for the 2024 peak shipping season. It’s wise to start planning now to manage your risk.

With heavy competition from China e-commerce companies for air freight space and steadily rising rates for container space, now might be the time to consider an air cargo charter service. Contact Dimerco to start a conversation.


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