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  • The BOC Blast 354 – Transatlantic Air Freight Rates Soar as US Imposes Europe Travel Ban

The BOC Blast 354 – Transatlantic Air Freight Rates Soar as US Imposes Europe Travel Ban

Thursday, 12 March 2020 / Published in The BOC Blast

The BOC Blast 354 – Transatlantic Air Freight Rates Soar as US Imposes Europe Travel Ban

Transatlantic Air Freight Rates Soar as US Imposes Europe Travel Ban

Theloadstar.com March 12, 2020

Transatlantic air freight rates are expected to soar, possibly overnight, following the US travel ban on mainland Europe, excluding – for now – the UK and Ireland.

Up to 80% of air freight capacity on the transatlantic could be cut as airlines ground passenger flights, with bellies normally taking the lion’s share of the capacity on the route.

“IAG, Air Canada, Virgin and Aer Lingus are all going to be very busy,” said one senior air freight analyst. “There is a tremendous amount of trade between the two continents, and the vast majority is in bellies. If that capacity plunges, you can only imagine the reduction in trade on the Atlantic. There is going to be tremendous pressure on capacity.”

One European forwarder told The Loadstar: “This is going to be another case of ‘pay to play’. Where prices are going to go is anyone’s guess.” Current dynamic load factors on the transatlantic are 78% westbound, and 60% eastbound, according to Clive Data Services. Even with a modest assumption of 60% of the capacity removed, demand is easily going to outstrip supply.

“There are so few airlines with freighters left,” said the analyst. “The US majors have none, it’s really only Lufthansa and AF-KLM, and they have cut their freighter fleets. This is a big gift for IAG.”

Forwarders said that any BSAs on non-cut capacity would be unlikely to be honored by the airlines, and in any event, most contracts would only last until the end of the month.

“The US market tends to work on spot rates anyway.”

Airlines throughout Europe are said to be in meetings to determine how to manage their capacity, with more information expected this afternoon. Some are already talking about using passenger aircraft just to move freight on the transatlantic – and are looking to command a high price for it.

Trucking is also expected to be key, with mainland European carriers looking to fly goods into Canada and Mexico on passenger aircraft and trucked over the borders into the US. In Europe, forwarders are looking to truck freight into the UK for Virgin and IAG flights into the US.

“Cargo is going to be redirected and trucked,” said one forwarder. “The multinational forwarders will already be diverting it to the UK.”

However, belly capacity from the UK has already been cut. BA announced on 2 March it was cutting back transatlantic flights as passenger demand fell. Norwegian cancelled 22 long-haul flights between Europe and the US from 28 March to 5 May.

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