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            november 18, 2019

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Air capacity shortage strands 10,000 tonnes


Since this year's air cargo winter peak season started, cargo has been stranded in Hong Kong because a lack of air capacity with 10,000 tonnes being held in warehouses, needing 100 Boeing 747s to take it all away, reports Logistics Week.
An industry insider said all bellyhold and freighter capacity had been fully booked. Utilisation has surged to 100 per cent. Carriers who are able to increase frequency with their existing capacity or by deploying more freighters are arranging additional capacity as VIP service that offers spot rate.
Some forwarders say carriers are offering spot prices that are highly volatile and has doubled the rate in the third quarter. The rate adjustment is now as fast as weekly. The per kilogramme rate has increased to US$6 on the US flights and $5 on the European routes and is still climbing as Christmas approaches.
The latest price for charter service of a Boeing 747-400 has risen to $650,000, the same level as when US west coast dockers went on strike in 2002 and cargo was forced to fly, according to Song Yongxian, Asia region manager of the US-based cargo airline Kalitta.
Mr Song said the phenomenon is unusual. Many forwarders are calling to ask for freighter charter service with negotiating price even the rate is rocketing. This has reflected how serious the capacity shortage problem has become.
The same problem is also being reported from mainland China and other south east Asian countries like Singapore, Indonesia, Vietnam and Thailand.
Mr Song said the situation is the result of the economic turmoil. The downturn has cast a shadow on the hard-hit air industry, leading to the industry's underestimation of the transport demand in this winter peak season. Most of the aircraft were removed and are mothballed in the Nevada desert.
Another reason, according to Mr Song, is mainland China's decision to launch direct flights to Taiwan, causing the two largest carriers in Taiwan - China Airlines and Eva Air, to transfer part of its capacity on the Hong Kong line to service central and north China.

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