Freight forwarders are warning of a potential air cargo capacity crunch out of Asia during the upcoming peak season. The significant growth of Chinese e-commerce giants Temu and Shein is putting pressure on available aircraft space, leading to concerns about tight capacity and higher rates. Shein and Temu have expanded rapidly, selling to over 150 and 40 countries respectively.
Their on-demand business model requires frequent and fast shipments, intensifying competition for cargo space, particularly in southern China. In June, air cargo prices from the region surged by 40% compared to the previous year. The demand from these e-commerce firms has led to even low-cost items like clothing and household goods being shipped by air.
Hong Kong International Airport recorded double-digit export growth for the first five months of 2024, with a 30% year-over-year increase in May alone.
Air cargo capacity faces pressure
Freight forwarders advise manufacturers and retailers to secure higher rates now in anticipation of the October peak.
They warn that extra capacity will be at a premium, if not entirely unavailable, during the fourth-quarter rush. The global air cargo industry has seen a broad upturn this year, with the International Air Transport Association reporting a 12.7% increase in worldwide airfreight demand over the first four months. The Asia-Pacific region experienced a 14% rise in April.
Other factors contributing to the heightened air cargo activity include ocean shipping bottlenecks caused by disruptions in the Red Sea, vessel capacity shortages, and port congestion in several key markets. As the peak season approaches, freight forwarders emphasize the need for careful planning and early booking to mitigate potential disruptions in the supply chain. The combination of high demand from e-commerce, capacity constraints, and external factors is expected to create a challenging environment for air cargo in the coming months.
