Fears of air travel crisis in Asia

Freight forwarders are warning of a potential air cargo capacity crunch in Asia during the upcoming peak season. The significant growth of Chinese e-commerce giants Temu and Shein is putting pressure on available space on planes, leading to concerns about tighter capacity and higher rates. Shein and Temu have expanded rapidly, selling to more than 150 and 40 countries, respectively.

Their on-demand business model requires frequent and fast deliveries, which intensifies competition for cargo space, especially in southern China. In June, air freight prices from the region jumped 40% from a year earlier. Demand from these e-commerce companies 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 in the first five months of 2024, with May alone seeing a 30% year-on-year increase.

Air freight capacity is under pressure

Shippers are advising manufacturers and retailers to secure higher rates in anticipation of the October peak.

They warn that additional capacity will be at a premium, if not completely unavailable, during the fourth-quarter rush. The global air cargo industry has seen broad growth this year, with the International Air Transport Association reporting a 12.7% increase in global air freight demand in the first four months. The Asia-Pacific region saw a 14% increase in April.

Other factors contributing to the increased air cargo activity include shipping bottlenecks caused by disruptions in the Red Sea, vessel capacity shortages and port congestion in several key markets. As the peak season approaches, shippers are emphasizing the need for careful planning and early bookings to mitigate potential supply chain disruptions. The combination of strong e-commerce demand, capacity constraints and external factors is expected to create a challenging environment for air cargo in the coming months.