Air freight boom out of China

Workers taking extended holiday means factories cannot produce goods in time to go by sea
Strong air freight volumes out of China are expected to continue as depleted inventories, due to factory closures, and a shortage of available sea freight containers impact on the manufacturing industry. China’s inland economic stimulus packages may also have inadvertently contributed to the boom, with reports that skilled workers have not returned to factories following China’s new year holiday.

“One major customer in the clothing industry told us that many of the staff at its suppliers have taken extended new year holidays,” said the UK manager of a Hong Kong freight forwarder. “Manufacturers are facing a shortage of fabric, and one shipper admitted she was having a lot of problems sourcing material. As a result, they are air freighting everything as soon as it is made.” Dan Lister, regional development manager for Asia at Belville Rodair International, agreed.

“Every year a percentage of Chinese workforce from the eastern manufacturing cities fail to return after Chinese new year. Those that find work in inland areas leave the coastal cities.
“There is a general shortage of skilled labour in areas such as Shanghai, Jiangsu, south Pearl River Delta and Zhongshan, where there have been factory closures.” But he claimed the current boom continued to relate to normal holiday closures, rather than an extended pause in manufacturing. “It’s true that air freight volumes have risen a little, but that is down to the influx of shipments post-new year, when factories were closed for two weeks.”

But there are indications that the demand for air freight out of China could continue through the year. Volumes may be boosted during the summer peak season by a chronic shortage of new containers in the shipping industry. Container manufacturing was curtailed in 2008, resulting in high demand for boxes from shipping lines – a problem exacerbated by slow-steaming. In addition, last year’s pre-Christmas air freight capacity crunch led to early bookings. “Some forwarders are already trying to secure some capacity for the final quarter to avoid a capacity rush like last year,” said Roberto Gilardoni, commercial director of Cargoitalia. The Italian all-cargo carrier, which started its third frequency out of Hong Kong after the new year, has seen “excellent” load factors.

“Demand is building up quite strongly,” he said. “We have also seen a few charter requests from Hong Kong to Europe, meaning that demand is in excess of capacity. “We expect this to continue in 2010.” Kuehne + Nagel is less optimistic, but agrees volumes have been good. “While January was a bit slow, the rush pre-Chinese new year has continued, resulting in backlogs to all geographical areas,” said Thomas Lehmann, KN’s senior VP of air freight for Asia Pacific. “We project this situation will continue into Easter. (source IFW)

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