The unexpected drop in ecommerce traffic has exposed the airfreight market’s “dependency ” on this single vertical.
Forwarders said that since the pandemic, the sector had been “geared around ecommerce, with other shippers’ volumes having been down massively for ages; so when ecommerce drops, it has a huge impact”.
One said “ecommerce volumes had fallen off a cliff” since the start of the year, after previously supporting rates out of China.
They added: “This has led to rates plummeting some 40% since last month, with an average of $2.50 per kg being quoted, compared with the $5 quotes we were being offered in December.”
The forwarder explained that, against expectations, there had been “a massive reduction in activity – it’s nowhere near as busy as people expected”.
However, others suggest retailers now have largely full inventories, while another was still seeing front-loading into the US ahead of Donald Trump’s inauguration as president and his threat of tariffs.
“Rates to the US are strong and holding firm, which appears to be the ‘Trump factor’, the forwarder said, adding “space was extremely tight in the last quarter and this trend is continuing.” However, they warned that, “with or without new tariffs this might lead to a potential flatlining in the second quarter”.
Homing in on China-Europe, a third forwarder said European carriers faced pressure from new Chinese entrants on the trade cutting Far East rates to capture volumes.
This, they noted, was “the same story last year”, with airlines flying full on routes into Europe, but suffering from a shortfall on the reverse leg, a situation they expected to result in rates “holding for the summer months”.
And, as a UK-based operator, they were contending with something of “a unique issue”, explaining: “We also have the currency exchange rate in the UK not doing us any favours and which does increase airfreight rates for us, but due to the weaker traffic to China, we expect prices to hold.”
Another UK-based forwarder said that with UK export rates “pretty stable, the pressure on the pound is going to hopefully keep UK exports in demand”.
Nonetheless, the import side was “a bit of a moveable feast at present”, the forwarder noting that “a lot is going to come down to consumer and business confidence, which currently appears fragile, at best”.
