Source First Capital Research

The global air freight rates have hit an all-time high during the holiday season, boosted by the bulk of online sales and promotions.

It is believed that the supply chain tightness that was originated during the outbreak of the COVID-19 pandemic as a result of the limited available capacity, labour shortages and closure of ports, will also continue in 2022 amidst the huge demand for air cargo. Furthermore, the development of the COVID-19 situation in Europe with the rapid spread of the Omicron variant is also urging demand for transportation of COVID-related products. Considering the massive upward movement in air freight rates during November 2021, air freight logistics suppliers are expected to post outstanding financial earnings with higher margins for the quarter ended December 2021. Although these carrier companies may utilise the elevated earnings in capacity expansions, it may take several months to bring those extended capacities into effective use, therefore the air freight rates hike is not anticipated to reverse any time sooner.

However, container freight rates displayed a downtrend since September 2021, mainly due to the gradual capacity expansions in terms of container carriers and easing of supply chain tension. However, it is expected that these improvements may not bounce back to the pre-pandemic levels during early 2022 while maintaining the freight rates well above the levels that prevailed in the year 2019.