Dimerco Express Group is closely monitoring the air freight market as the holiday season approaches. Rising demand, limited capacity, and the looming threat of a U.S. East Coast dockworker strike are all contributing to a surge in prices.
On a recent episode of the Freight Buyers’ Club podcast, sponsored by Dimerco Express, industry experts discussed these challenges and the potential dockworker strike impact on global supply chains. Here’s an excerpt from the show:
Rising Rates and Capacity Constraints
Air cargo markets are expected to overheat during the upcoming fourth-quarter peak season, with rising prices and limited capacity now almost inevitable.
Even before the holiday shipping rush begins, air freight rates on major lanes are already spiking. Peyton Burnett, Managing Director of TAC Index, the air cargo pricing agent for the Baltic Airfreight Index, noted significant increases. Spot pricing from China to the U.S. and Europe in the second week of September was “up around 25-30%” year-on-year, he said.
Burnett also highlighted a dramatic surge in freight prices from India, stating, “India outbound to the United States is up 150% year-on-year, and India outbound to Europe is up about 125% year-on-year.” Additionally, rates from Vietnam, another key supplier of retail goods, have increased by over 100% compared to the previous year.
With demand intensifying and capacity tightening, Glyn Hughes, Director General of The International Air Cargo Association (TIACA), confirmed that airlines were redeploying available capacity to the most lucrative routes. “We’re seeing some withdrawn capacity from markets like Europe-Latin America, where rates are not as high. More capacity is moving to the Asia-Europe and Transpacific trade lanes,” he explained.
Two key factors are driving this spike in demand: extended transit times and rising shipping costs due to the Red Sea crisis, and strong e-commerce growth.
Increased Demand for Air Freight
Kathy Liu, Vice President of Global Sales & Marketing at Dimerco Express Group, noted that many shippers have already turned to air freight due to unreliable shipping options and high ocean freight rates. “Demand is still very strong,” she stated, adding that it will continue to pick up from late September through December.
Securing Capacity for Direct Customers
To ensure our customers have uninterrupted access to air freight solutions, Dimerco Express Group has proactively secured dedicated capacity through freighter charters. This strategic move allows us to prioritize shipments for direct customers, mitigating the potential disruptions caused by e-commerce cargo and ensuring a more reliable and efficient service.
The Dockworker Strike Impact
An additional complication for U.S. markets is the unresolved labor dispute between the United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA), which represents over 14,000 dockworkers at Gulf and East Coast ports. The ILA has reiterated its intent to strike in early October if no agreement is reached, creating further uncertainty for shippers.
A Challenging Outlook
Industry experts are closely monitoring the situation and its potential dockworker strike impact on global supply chains. Given the confluence of rising demand, limited capacity, and the looming threat of a dockworker strike, shippers should be prepared for continued challenges in the air freight market.
Do you need help navigating the complexities of air freight during this challenging time? Reach out to Dimerco for expert guidance and solutions.