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Shippers’ costs triple on some Asia-Europe movements

Some shippers have been forced to pay up to three times their usual air freight rates during the last week, to get goods from Asia to Europe, according to some reports. 

US transport and logistics analyst, Wolfe Trahan, said: "We spoke with a large technology shipper about the impact from the volcano ash cloud in Europe. 

"Our contact typically ships his European bound air freight from Asia for roughly $5-$7/kilo including fuel. Because of the precarious situation in Europe, this shipper has found it challenging to secure capacity. 

"He has been able to leverage his current relationships with DHL Global Forwarding, Ceva and Kuehne + Nagel, but air freight rates have more than doubled over the past week. 

"Moreover, this shipper has only been able to fly into southern Europe and then must negotiate a truck or rail move to northern or central Europe. As a result, this shipper has recently paid over $20/kilo all-in to move his freight." 

AFP also reported that in some cases, freight rates from Hong Kong to Europe have jumped to about HK$100/kg (US$13), from less than 30 dollars before the closure of airports in Europe, according to the Hong Kong Shippers’ Council. 

The Wolfe Trahan shipper said many of the international freight forwarders had been "scooping up" air charter capacity and were currently trying to book him on chartered flights scheduled as far out as mid-May. 

Paul Furlonger, sales director of Ruslan International, confirmed that freighter operators were still encountering significant service disruption that is putting additional pressure on freight rates.

"Not all airports in Europe are open," he told IFW last night. "The volcano is continuing to erupt so the situation will continue to change on a daily basis.

"My opinion is that it will take at least a fortnight for things to settle down and return to something like ‘normal’."

Furlong said that Ruslan, which manages the AN124 fleets of Antonov Airlines and Volga-Dnepr Airlines, had not increased its own rates because its fleet had already been at maximum capacity before the European disruptions and fully booked to the end of the May.

"However," he added, "there is no question that rates generally are hardening because demand is outstripping supply by a big margin.

"One has to expect that trend to continue in the short term, not only because of the supply-demand equation, but because all the important players in the logistics chain, especially the airlines, have been losing large sums of money as a result of the disruption.

"On the heels of the recession, the industry simply cannot afford to do anything other than push the rates up."

While airport openings remain fluid, this shipper does not envision air freight rates moderating in the near future, as the current backlog could take weeks to unwind even once carriers are fully cleared to fly.

Wolfe Trahan said it view tight air freight capacity and increased charter demand as a strong positive for cargo charter and wet-lease airlines such as Atlas Air World Holdings. 

On the parcel side, the shipper said he had found both UPS and FDX "relatively unhelpful and unwilling to guarantee his regularly scheduled moves". 

Wolfe Trahan added: "It appears both carriers are more concerned with unwinding current backlogged volumes rather than exploiting shippers through increased rates." -IFW

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