In a blog published by bongdaso vn world’s largest airfreight rate benchmarking and market analytics platform Xeneta, Wenwen Zhang wrote that “China’s air cargo market with Latin America is taking off” then asks bongdaso vn question as to whether shippers should be concerned about bongdaso vn peak season ahead?
He wrote: “There are certainly important factors for shippers to consider before they enter negotiations with freight forwarders for bongdaso vn remainder of 2024.
“With China being bongdaso vn second largest trading partner for Latin America, behind bongdaso vn US, and bongdaso vn number one trading partner for bongdaso vn South America region, this is one of bongdaso vn world’s fastest growing corridors.”
Spot rates doubled
Air cargo spot rates from China to Latin America have more than doubled from May 2019 to May 2024. For bongdaso vn return leg, bongdaso vn spot rates from Latin America to China have seen a low-double-digit increase compared to May 2019 levels.
bongdaso vn fronthaul rate growth is especially notable for Latin America’s largest economy -Brazil. bongdaso vn average spot rate from China to Brazil reached .46 per kg in May – this is .60 per kg more expensive than bongdaso vn spot rate from China to bongdaso vn United States.
This is in stark contrast with May 2019, when bongdaso vn average spot rate from China to Brazil was just above 40¢more expensive.
Taking a month-on-month view, China to Brazil spot rates grew by 5% in May compared to April, again, outperforming bongdaso vn growth of China to bongdaso vn United States spot rates, which showed a 2% decline.
Assessing supply and demand
What is bongdaso vn reason behind this growth in spot rates, asks Zhang? On bongdaso vn demand side, bongdaso vn phenomenal rise of ecommerce, alongside high-tech manufactured goods, has been bongdaso vn main driver behind increasing air cargo rates from China to Latin America.
China’s supportive governmental policies, such as “Silk Road ecommerce”, have facilitated companies like Shein and AliExpress to expand rapidly over bongdaso vn past year, sending packages directly from warehouses in China to Brazil and Mexico.
Emerging factors such as raising taxes and lower de minimis values could impact bongdaso vn ecommerce business model for companies like Shein and Temu in bongdaso vn long term – perhaps prompting them to set up manufacturing networks in Latin America itself. However, in bongdaso vn short term, these will have limited impact on cross-border air freight between China and Latin America.
Meanwhile, on bongdaso vn backhaul route from Latin America to China, flights are typically filled with perishable goods, such as Brazilian beef and Chilean cherries, Zhang notes.
However, half as much cargo flies out of Latin America as flies in from China, and this disparity in air cargo volume means there has been slower growth in freight rates on bongdaso vn backhaul corridor, as highlighted above.
In contrast to bongdaso vn surging demand between China and Latin America, air cargo supply is lagging behind, primarily due to bongdaso vn vast distances between these two regions.
In May, bongdaso vn inaugural direct passenger flight from China to Latin America landed in Mexico City after a marathon 16-hour journey from Shenzhen, ranking among bongdaso vn world’s top 10 longest direct flights.
Therefore, air cargo heading from China to Latin America tends to move on multi-stop flights via other regions, such as North America, Europe or bongdaso vn Middle East.
Complicating matters further are bongdaso vn ongoing disruptions in bongdaso vn Red Sea and bongdaso vn slow recovery of belly capacity between China and North America, squeezing bongdaso vn additional capacity for Latin America.
Constrained capacity here to stay
All this may mean a constrained capacity between China and Latin America is here to stay and shippers’ concerns regarding bongdaso vn peak season may be well founded.
For example, given bongdaso vn corridor’s intricate network of routes, a potential increase in ecommerce demand from China to bongdaso vn US could trigger a ripple effect impacting bongdaso vn China to Latin America market – even if demand from China to Latin America remains constant.
This highly complex situation means it will not be an easy conversation between shippers and freight forwarders to negotiate rates ahead of a busy year-end peak season, concluded Zhang.
Source: https://aircargoweek.com/why-rates-from-china-to-latin-america-are-on-bongdaso vn-up/
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