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Global Supply Chain News: Now Air Cargo Congestion also Creating Huge Delays

 


Two Week Delays to Get Cargo at JFK and LAX

 

 

Nov. 17, 2021
SCDigest Editorial Staff

Shippers and importers hoping expensive air freight will serve as an alternative to the long delays for ocean container shipping are instead finding major congestion and delays at leading US airports as well.

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So air rates compared to container rates are a relative bargain – now just three to five times more expensive than ocean versus a 13-15 multiple in more normal times.

 
 

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It’s much worse at some airports. For example, severe congestion at New York’s JFK and LAX in Los Angeles is causing delays of up to two weeks for importers to receive cargo after it is unloaded from the plane.

“I have worked for a major freight forwarder for 28 years, and have never seen it as bad as at JFK,” one logistics executive told theLoadStar.com website.

Some forwarders are reacting by moving freight to arrive at other less congested airports, but that will involve extra charges to the importer for the longer move.

The Loadstar says records it has seen from forwarder at JFK across several cargo “handlers” indicate severe delays, especially in buildings shared with airlines.

China Airlines and China Cargo Airlines, handled by a firm called WFS, currently have delays of nine to 10 days for cargo recovery, while some 200 to 300 cargo containers have been left on the tarmac. Labor shortages appear to be the main factor behind the congestion.

Some forwarders are also reporting air cargo is being lost and they have to go to the airport to try and find it.


Air Cargo News reported that LAX/ORD/JFK ground handlers continue to face backlogs and are using off-airport facilities to manage the flood of inbound cargo, which then has a trickle-down effect on the export side.

 

Airports have shortened their free time for storage, and have implemented new, earlier close outs for exports to accommodate longer throughput times and screening requirements.


 

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Meanwhile, at LAX, WFS’s operation is also under pressure, with cargo carried by China Eastern facing pick-up delays of up to 15 days.

One bright spot: after operating troubles through much of 2021, Chicago’s O’Hare airport performing well now, due in part to the fact there is a lot of warehouse availability. By contrast, JFK has zero warehouse availability.

Scott Case of freight forwarder Position Global told The Loadstar that “ORD sorted itself out primarily by getting more buildings for the busiest ground handlers. It took multiple buildings and divided up the work across them to provide sufficient real estate to break down the influx of cargo.”

He added that “New York hasn’t made an investment in air cargo in a while.”

LAX is also said to be suffering from a lack of warehouse space.

All this is putting upward pressure on air cargo rates, which in October on average globally were 37% above 2020 levels, according to Clive Data Services. The air rate from China to the US West Coast during the first week of November was about $14 per kilogram, double what it was a year ago, according to the Freightos Air Index. Shipping by air to the East Coast cost about $13, also twice as much as in 2020.

But ocean shipping rates have soared even more. Recent spot rates were near to $20,000 for a forty-foot container from China to the West Coast when all premiums and surcharges are included. That’s is about 10 times greater than rates pre-pandemic levels, and that price of course doesn’t include domestic transportation to move the inventory across the country from port.

So air rates compared to container rates are a relative bargain – now just three to five times more expensive than ocean versus a 13-15 multiple in more normal times.

Are you seeing air cargo delays? Let us know your thoughts at the Feedback section below


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