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Air Freight rates skyrocket in response to aid needs during the Coronavirus epidemic

Airfreight rates are rising sharply on major East-West routes due to emergency shipments to China filled with medical supplies and aid after the suspension of most passenger flights. amid an outbreak of Coronavirus (COVID-19).

Airfreight rates are rising sharply on major East-West routes due to emergency shipments to China filled with medical supplies and aid after the suspension of most passenger flights. amid an outbreak of Coronavirus (COVID-19).

Rent for a transpacific freighter is usually around $ 400,000, but last week it increased to $ 800,000 for a one-way flight. At the same time, the rental price of freight airplanes traveling from Europe to China has also increased by nearly 200% from a week ago, according to Freight Investor Services (FIS).

A large amount of air freight capacity has been reduced in the market due to the suspension of passenger flights to China from around the world, which is believed to affect more than 70 airlines. That has rapidly increased the demand for aircraft rental that carries mostly relief goods and medical supplies.

FIS emphasized in its weekly newsletter on Monday that the Frankfurt-Shanghai rates amounted to $ 2.78 / kg, up 193% from a week ago. The skyrocketing demand for all-in-one flights is reflected in the boom in charter flights from Europe to China.

"We can assume that a large portion of this freight will be bailout shipments, and shipping costs will be charged to shippers with a certain party," added FIS. "Meanwhile, the full rental price of the trans-Pacific route is fluctuating from 500,000 to 800,000 USD for a one-way flight last week".

Reto Hunziker, freight director at flight charter company Chapman Freeborn, confirmed that the demand for air transport from Europe to China has increased and will continue to rise sharply in some time.

We think this will last until April, or even mid-year, Hunziker told JOC.com. Then, once China starts up again - factories, infrastructure, and so on. - We believe that the demand for transport from China to both the European Union and the US will increase.

Ronald Lam, customer and commerce manager at Cathay Pacific Group, said January cargo volumes fell nearly 9 percent from the previous year, according to what he describes as the "grim Lunar New Year period. the most fall we have experienced ".

Lam said it saw very good shipping demand on the routes during the first three weeks of January, with sales in China posting strong year-on-year growth.

"However, in the last week of January, demand fell sharply as manufacturing stalled in mainland China during the Chinese New Year holiday," Lam said in a report on January's operations. Cathay Pacific. "The delay in production recovery after the Tet holiday across mainland China has significantly affected both our Hong Kong and mainland China markets."

Airfreight capacity remains

While air passenger capacity has been cut by 40%, freight capacity has remained flat, and Lam said demand for freight traffic across regions of routes outside of China remains very stable, especially on routes that have reduced passenger capacity.

The air freight industry has yet to give estimates of the severity of the Coronavirus. While shipping, Alphaliner expects global container throughput this year to drop by nearly 1% and China's first-quarter output will drop by 6 million TEUs. However, the International Air Transport Association (IATA) has warned that airlines will actually feel the impact this year.

“With all the restrictions put in place, it will inevitably be a drag on economic growth. And certainly, 2020 will be a challenging year for the air transport industry, ”said Alexandre de Juniac, IATA's general manager and CEO, in a statement earlier this month when assessing performance. the year 2019 of airlines. It is too early to predict the long-term effects of measures aimed at stopping the outbreak of the Coronavirus, he added.

Global air transport demand last year fell 3.3% from 2018, while capacity increased 2.1%, according to IATA data. It was the first year cargo volumes fell since 2012 and was the weakest operating result since the global financial crisis in 2009 when the air freight market contracted by 9.7%.