The China-U.S. air freight market in Week 43 is marked by chaos and significant price hikes. This is due to a combination of factors: 1) expectations of higher tariffs in November, 2) disruptions in sea freight, and 3) a surge in high-density shipments to the JFK and ORD areas. As a result, air freight rates have already risen to over $7.50/kg, with shippers aggressively competing for space ahead of November. We expect this intense competition to peak around October 29.

To be more specific,

The expectation of additional tariffs in November has been a major factor driving rate increases. Since the announcement, shippers have been rushing to move as much volume as possible before they take effect. Companies like Apple and Tesla have been the main contributors to this surge.

Disruptions in sea freight have pushed some cargo to air. Widespread blank sailings by carriers in October, along with new port surcharges on certain Chinese vessels, have significantly reduced the reliability and increased the transit times for sea freight. Consequently, some high-density shipments originally planned for sea (such as aluminum coils and cabinets) have shifted to air, further tightening the already constrained air cargo space to the US.

The serious fire at the Novelis plant in New York on September 16th created an urgent need for market restocking. The commodities being shipped out, primarily high-density items like aluminum coils and automotive parts, are challenging to load and require more space. This has led to a significantly tighter capacity for flights into the ORD and JFK areas.

Here below will be a breakdown of the market analysis

JFK & ORD: Space to these destinations is particularly tight due to a surge in high-density shipments. As of now, capacity from South China to JFK and ORD is nearly full through the end of this week and into early next week. Consequently, FAK rates have climbed to a range of $6.50/kg to $7.50/kg. Rates from the PVG area to JFK/ORD are currently lower, at approximately $6.50/kg.

LAX: While increased demand has also driven rates higher for LAX, capacity is not as constrained as it is for JFK/ORD, thanks to added airline capacity. Despite this, a significant rate disparity exists between origins, with South China to LAX FAK rates exceeding $7.00/kg, while rates from the PVG area to LAX are approximately $0.50-$1.00/kg lower.

The direction of rates in November will depend heavily on the scope of tariffs implemented.