#INTHEAIREVERYWHERE

It appears that the period from around Feb. 15 to Mar. 12 will be very interesting for air and ocean cargo, based on recent comments from people around the world who spoke on and off the record.
Transportation sources are expecting and hoping that trade will be brisk and rates will remain high.
For ocean, this will be the result of reduced capacity and higher demand. The air picture is a bit different, but there are plenty of signs—despite newly elected President Donald Trump’s anti-trade pronouncements—that 2017 could be quite positive.
Here, SkyKing lands some comments just as Chinese New Year (CNY) approaches this weekend.

      Air and ocean rates were buoyant on healthy demand ahead of the Chinese New Year (CNY) festivities, which officially start on January 28.
      Reports from China suggest that some factory production lines have already closed down, while analysts are now suggesting that rising demand for both ocean and air services ahead of CNY might continue at above average levels, when shipments hit full swing again in late February. Could the rate increases of late December at sea and in the skies continue through Q1? It depends who you ask.

Chinese Ports Build Up

      What is clear is that there has been a major build up of cargo at Chinese ports ahead of CNY, which could keep rates higher than usual in February as backlogs are cleared. And, while finding capacity is not an issue ex-China for air freight shippers, most forwarders contacted by FlyingTypers report healthy volumes and steady pricing in line with the gains made in Q4.

Rates Are Up

      Lucas Kuehner, Global Head of Air Freight at Panalpina, predicted air freight volumes would remain strong up to the start of Lunar New Year. “Carrier rates are still higher than usual and last year,” he added. “After Lunar New Year, we expect volumes and rates to drop, but expect a rather strong end to the quarter in March for Asia-outbound shipments.”
      Karsten Michaelis, Head of Ocean Freight at DHL Global Forwarding Asia Pacific, said shipping markets had picked up after Golden Week last October and DHL had seen strong volume developments in the weeks prior to the Chinese New Year across all shipping trades.
      “Like every year, the demand will drop after Chinese New Year as factories need several weeks to restart production as their staff are returning from the long holiday,” he said. “Shipping lines have adjusted capacity with blank sailings for every trade to manage this period. The crucial question is how fast it takes for the demand to pick-up again?”

Post CNY Build Up

      Daryl Ridgway, Global Head of Ocean Freight at Panalpina, said ocean demand was currently “extremely strong.”
      He added: “We expect a significant number of shipments to be rolled into February, post-Chinese New Year, due to the current overbooking situation. Freight rates are high and whoever pays most secures space from the carriers right now. The carriers allocate space very strictly based on previous shipments. After Chinese New Year, demand will weaken and rates are expected to start to soften. Some carriers have already announced blank sailing programs for this period to keep pressure high. Further disruptions are likely in March because carriers will realign their vessels before new alliances commence operations.”

Other Voices

      However, Paul Tsui’s take on CNY was very different to many of his peers. The managing director of forwarding and logistics operator Janel Group and the immediate past chairman of the Hong Kong Association of Freight Forwarding and Logistics and the Federation of Asia Pacific Aircargo Associations, he said many factories in China had already closed down production lines this week, resulting in “quiet” demand.
      He said air freight demand out of Asia had been “moderate” in recent weeks and space plentiful.
      “For ocean demand before CNY, space is very tight, but I expect some space will be released by some shippers next week due to overbooking of space,” he added. “We expect it to be very quiet until the second week of February, and demand will be limited until March,” Mr. Tsui said.
Sky King