Airfreight rates are expected to remain above normal in 2021 as the demand outlook remains uncertain and belly capacity is slowly re-introduced into the market.
Writing in a Baltic Exchange market update, Bruce Chan, vice president – global logistics at investment bank Stifel, said that airfreight rates are likely to remain elevated and volatile for some time, and those looking for reprieve in 2021 may have to be patient.
Chan said that a lack of belly-hold capacity would drive the high rates as passenger airlines will only slowly re-introduce international widebody services.
“By the second half of 2021, we do anticipate passenger flights to resume, especially as vaccinations pick up,” he said. “But we caution against over-exuberance, as the first flights to come back are likely to be short-haul, domestic, and leisure, which align less favorably with cargo.
“Core long-haul international travel and the belly capacity that comes along with it will be slower to return, in our view, so capacity relief for cargo should lag the recovery in airline passenger activity.”
Chan said that extra freighter and PAX-freighter flights would help alleviate some of the capacity pressure, but there were limits.
On the demand front, Chan said that a faster than expected rise in e-commerce demand, Covid-19 vaccine supply chains and PPE demand would all drive the airfreight market over the coming year.
However, he added: “The full impact of vaccine distribution on air freight capacity may not be as severe as some anticipate, due to the disbursed nature of production and, quite simply, the form factor of the doses—we believe the bottlenecks are more likely to come from container availability, storage, handling, and road distribution.”
