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Home » Expect continued volatility in airfreight market

Expect continued volatility in airfreight market

Demand for air freight to increase, and short-term volatility remains as tight capacity and high demand translate to higher prices, longer transit times.

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January 12, 2022
Victoria Kickham
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Demand for air freight will grow in 2022 amid a congested ocean market, but capacity will remain tight, and volatile conditions are expected for at least the short term, according to analysis from freight forwarding and customs brokerage firm Flexport.

More ocean to air conversions, maintenance breaks for freighters, and the effects of the Covid-19 Omicron variant’s peak on airline staffing are contributing to overall market congestion, and that will lead to higher prices and longer transit times, according Neel Jones Shah, Flexport’s executive vice president and global head of airfreight.

Shah delivered an online update on how the Omicron surge is affecting the airfreight market Wednesday. He said that although Flexport expects demand to rise this year, overall capacity still has not recovered from pre-pandemic levels, contributing to the higher prices and longer transit times anticipated. Airfreight capacity is down 7% compared to 2019, he said, due mainly to a slowdown in international air travel that has reduced available cargo space in the bellies of passenger planes.

Omicron has only made the situation worse, and the effects are being felt especially hard on routes between Asia and the West. Increased quarantine restriction for air crews in Hong Kong is creating big problems for Cathay Pacific Airways, for example, Shah said. Eighty-percent of the airline’s Trans-Pacific Eastbound freighter schedule and 100% of its Far-East Westbound schedule were canceled for the first quarter due the change, which increases quarantine duration for crew members from three days to seven days.

Omicron’s effect on airline staffing worldwide is also a problem. Just this week, passenger and cargo airline Finnair said it will reduce February traffic by 20% because of worker sick leave due to the Omicron variant and the seasonal flu. The majority of canceled flights are on routes within Europe where Finnair operates multiple flights, but the airline is also curtailing flights to and from Asia. Officials said the airline will delay the start of flights to Nagoya, Japan, as well as added frequencies to Osaka, until the summer, and that it will reduce weekly frequencies to Singapore to twice a week and Hong Kong to three.

Shah said the cancellation trends will continue until the spread of Omicron peaks–which is expected to be sometime in the next few weeks, leading to more normal conditions in February.

Gaps in trade and capacity growth are compounding the problem, as well. Trade between Asia and the U.S. was up 32% between 2019 and 2021, while capacity growth between the two regions was only up 7%, according to Flexport. The situation is similar in Europe, where trade was up 25% and capacity was up 15% during the same timeframe.
Air Air Cargo
KEYWORDS Cathay Pacific Airways Finnair Flexport
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    Victoria kickham headshot
    Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.

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