Air transport rates to Asian countries are increasing

COVID-19: AIR FREIGHT RATES TO ASIAN COUNTRIES INCREASE

Following the COVID-19 outbreak, the air freight rates to Asian countries have skyrocketed by over 100% since January, says Penang Freight Forwarders Association (PFFA). In January 2020, the rates to ship cargoes to China, Japan, and South Korea were RM3 per kg and now the rates are more than RM18 per kg. The rates to these countries are at a historical all-time high and it is to be said are influenced largely by the Covid-19 pandemic, said the PFFA honorary secretary-general, Ali Ahmad. Conversely, the rates to the US and Europe remain unchanged at approximately RM10 per kg. In fact, the drop in oil prices to about USD 36 per barrel have not helped to lower air freight rates. With that being said, the rates will continue to shoot up due to the cancellation of flights and the constraint of space to and from Malaysia, resulting in the reduction in belly capacity for cargo.

Regarding this issue, at Epost we are highly committed in finding more solutions for cross border delivery and keeping costs low at the same time. This is important to ensure that everyone can still enjoy affordable rates while receiving their parcels in good conditions regardless of how the outbreak of Covid-19 affects the current situation. Recently, Epost launched an express special lane only for mask and medicinal supplies originating from China to Southeast Asian countries including Malaysia. With better quality and cheaper price, Malaysians can get their masks from Epost. Consequently, Epost managed to help in ensuring that the public has a sufficient supply of masks and at the same time contributing to contain the spread of Covid-19.

The PFFA honorary secretary-general, Ali Ahmad also added that due to the cancellation of freighters and passenger flights to Malaysia since January, there were over 100,000 tonnes of cargo stuck in China, South Korea, Japan and other parts of South-East Asia that are waiting to come in. The cargo consists mainly of solar panels, integrated circuits, electronic components and parts of equipment. Since there is no shipment of raw materials arriving, there is also less cargo of finished products being shipped out, hence creating a shortage of air freight space, spiking air freight rates.

Moreover, there is a slight 3% growth this year for the volume of export cargo handled at Penang International Airport due to the Covid-19 virus outbreak. Ali said that the association members have experienced a single-digit percentage drop in their business since January. Though the second quarter is still uncertain, PFFA is ready to face a prolonged crisis. With the upcoming passenger flights from Emirates to Penang in April, raw materials can be brought to the local electronic industry.

According to Ali, without the essential raw materials, the factories here cannot manufacture finished products and the volume of outbound cargo will drop, impacting the entire manufacturing sector and the freight forwarding industries. He added, this is the worst crisis ever to hit the freight forwarding business, and is much worse than the SARS outbreak in 2003.

Cases of COVID-19 first emerged in December 2019, when a mysterious illness was reported in Wuhan, China. To date, the virus has infected 184,976 people and killed just over 7,500 globally. According to a new analysis by the Asian Development Bank (ADB), this outbreak will have a significant impact on developing Asian economies through numerous channels including sharp declines in domestic demand, lower tourism and business travel, trade and production linkages and supply disruptions.

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