Falling PPE demand sees air freight rates decline – with passenger seats still used for cargo

Wed 17 Jun 2020
Posted by: William Barns-Graham
Trade News

air freight

Air freight rates have fallen sharply over the last week, continuing a recent slide caused by the reducing demand for PPE as countries get on top of the coronavirus pandemic.

Overall airfreight capacity is at its highest level since the start of May, according to latest figures from TAC Index, a Hong Kong-based intelligence firm providing price information for air cargo around the world.

The figures show:

  • Rates from Shanghai to North America declined by 12.8% week-on-week to $5.06 per kg
  • Hong Kong to North America dropped 12.3% to $5.33 per kg
  • Shanghai to Europe declined 12.8% to $3.11 per kg
  • Hong Kong to Europe decline 9.8% to $4.16 per kg

Prices are still above where they were a year ago, when Shanghai-to-Europe stood at $2.52 per kg and Hong Kong-to-Europe was $2.69 per keg.

PPE demand drops

Carriers are now reducing the number of passenger flights being used to carry cargo, with PPE demand starting to decline.

Air cargo is usually transported in the bellyholds of passenger jets but surging demand for PPE in March and April coincided with the rapid decline in passenger flights due to lockdown restrictions.

This resulted in cargo containing PPE being transported on passenger seats to make up for the lost bellyhold space.

Passenger travel remains low, explaining why prices are still up on a year ago, but declining PPE demand means there is now more capacity, which is why rates are now cheaper than they were in the spring.

Unclear guidelines

New guidelines from the EU Aviation Safety Agency (EASA) guidelines say people and cargo cannot share cabin space but that an “exemption” has been made for an eight-month period to deal with the pandemic.

Simple Flying report that while passengers are not allowed to travel in the same cabin as cargo, a limited number of crew members is required to survey the cabin in flight.

However, the number of crew permitted and the qualifications required to monitor the cabin have been criticised for being ‘vague’.

Cargo on seats for now

The easing of lockdown restrictions and the possibility of ‘air bridges’ between countries with similar infection rates could see the start of a recovery for passenger flights in the coming weeks and months.

However, an airline told Loadstar yesterday that it will continue operating passenger aircraft for cargo as footfall will remain low for some time yet.