Dimerco Express Group is launching a weekly air freight charter service from Shanghai to Chicago as the freight forwarder anticipates a tighter than usual peak season, according to a July 10 blog post.
The charter service will be operated by Cathay Pacific and run from Sept. 12 to Dec. 5 using a Boeing 747-800F. The flight leaves PVG in Shanghai each Thursday morning before stopping in Hong Kong on its way to ORD in Chicago. Dimerco will then leverage its truck carrier network for final-mile delivery from Chicago.
The charter service is a response to expected freight capacity constraints on both air and ocean lanes during peak season from China to the U.S. While charter services are common in the industry, added peak season services provide regularly scheduled additional space during times when capacity is strapped.
Dimerco has launched charter services in the past — during the pandemic and another during peak season 2023, Kathy Liu, VP of global sales and marketing, Central Service Center of Dimerco Express Group, told Supply Chain Dive in an email.
Like during the pandemic, shippers this year are "scrambling for high-priced cargo space," Dimerco said in the blog post. But unlike in 2021, market constraints today are due more to high-volumes from ultra-fast fashion brands like Shein and Temu, and its ripple effects on capacity.
Typically, 30% to 40% of carrier capacity is pre-allocated under forwarder contracts, with the remaining space available to the rest of the market, according to Dimerco. However, this year, that pre-allocated percentage is much higher as e-commerce companies in China are asking forwarding partners to have at least one Block Service Agreement with a carrier.
In turn, several small- and medium-sized forwarders signed minimum volume contracts with carriers of around 25 to 50 tons per month, leaving very little available capacity to the open market, per the blog post.
The limited open market led Dimerco to secure its own capacity through a charter deal with Cathay Pacific. The service adds roughly 149 tons of weekly capacity to the market, according to a Cathay Cargo aircraft fact sheet.
“Traditional air freight shippers will be searching for added capacity, particularly brands launching new products for the holiday season, since they can’t afford inventory delays that would jeopardize a major selling day, like Black Friday,” Liu said in the blog post.
A turbulent ocean market is also contributing to air freight capacity constraints. Shippers are facing longer transit times and significantly higher rates as a result of the Red Sea crisis. The combination of factors is making some consider shipping goods by air instead.
“Air freight is typically 12–16X more expensive per kilo than container shipping,” Liu explained. “But right now that gap is just 6–8X and shrinking. Couple that with a China-to-USA, door-to-door transit time for container freight of up to 40 days and brands will be open to alternative modes.”
Dimerco is also considering adding a charter service from PVG to AMS in Amsterdam, due to the Red Sea crisis, Liu told Supply Chain Dive.
Industry experts are prompting shippers to start peak season planning now to avoid capacity concerns. In a July 5 report from Xeneta, Chief Airfreight Officer Niall van de Wouw said that there is a “consensus it will be a hot Q4 for air cargo in many Asian markets.”
According to the report, shippers and forwarders who are not preparing for peak season will be at “the mercy of the market,” with June spot rates on the Southeast Asia to the U.S. trade lane seeing the largest spot rate jump of any other corridor.
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