Episode Transcript
[00:00:00] Speaker A: E commerce is 35% of all air cargo. So when that takes a hit, your numbers are going to be down.
[00:00:05] Speaker B: The hostilities in the Middle east go on. Rates are not going to stay low indefinitely, but for the moment we're not seeing them feed through.
[00:00:11] Speaker C: What stands out is Shanghai to Mexico, up 295 rotations this year. You know, almost 500% growth.
[00:00:18] Speaker A: If everybody did get all of their capacity tomorrow, what do you think is going to happen to rates?
[00:00:23] Speaker C: We're optimistic about their peak season and the remainder of the year.
[00:00:27] Speaker A: I think that peak season is going to be decent. I don't think it's going to be a blockbuster, but I think we are going to have a peak season.
[00:00:41] Speaker D: Hello and welcome to Air Cargo Unpacked, a Freight Buyers Club production brought to you by Demeco Express Group, which has been connecting Asia with the world since 1971. I'm Mike King and with me as always is Neil Jones Shaw.
[00:00:57] Speaker A: Thanks, Mike. Coming up this month, volumes on Asia to Europe falling away since the EU scrapped its de minimis exemption. A very different picture on the Trans Pacific. And we'll have Sean Dolan of northlink Aviation on why Anchorage keeps growing. And as always, we have the latest rate movements from Neil Wilson Attack Index
[00:01:18] Speaker D: plus what shippers across the Asia Pacific told one major survey about the second half of the year. And we've got change at the top of the of Tiaka and obviously Neil knows all the people involved so we're going to get his thoughts on that. We're also going to be looking at in detail at the Asia to Europe and the Trans Pacific trades in a moment. But we've got more disruptions to supply chains as we're getting towards the end of July. Neil, two things came into sharp focus in the second half of the month and both I think change the air cargo picture. The first is the Middle East. The Strait of Hormuz has been effectively closed since Iran shut it earlier this year. And on 20 July, the Houthis declared a full naval blockade on Saudi Arabia and began attacking ships in the Red Sea. Now that puts Bab Al Mandeb at risk. And Bab El Mandeb, which is the access to the Red Sea in the Suez Canal, has been the relief valve, really. Brent went back above $100 a barrel on the 23rd, its highest since May after two Saudi tankers were hit. We'll come to what that does to jet fuel with Neil Wilson later. Now the second big change that we've had last week is tariffs. The 10% global surcharge the US has charged since February expired on 24th of July.
That's now being replaced by a forced labor tariff of 10 to 12.5% across six countries as of last week. It's all changing very quick. Postal shipments also lose their simplified treatment. I move on to full standard duties. And from the 19th of August, Canada faces an extra 50% tariff on around $20 billion of goods with no relief for USMCA originating product.
So war threatening to choke point in the US rewriting its tariff regime again.
Well, all that happened in the same week as ever in 2026, Neil. Lots of change for air cargo supply chains and stakeholders.
[00:03:16] Speaker A: Oh, my goodness, Mike, you know, what a, what a difference two weeks makes, right? I mean, it's sort of nuts, but let me just comment on both of these things, but let me take them separately because they're separate and they are, you know, very much unrelated. I think with the, with the first, with the crisis in the Middle east, look, I mean, just when you thought we were getting some stability, when you thought, okay, maybe there was a chance at peace, you know, things, you know, went haywire. I guess we shouldn't be surprised, right? I mean, when you're dealing with, with this particular administration, when you're dealing with the government in Iran, which is clearly fractured, who knows who's really in charge? I think they, the, the prospect of lasting peace, I think is, is still quite a few months ahead of us. And I think, you know, some of these cycles have to work themselves out. I think what's new about this, And I, and I believe that most airlines and forwarders and shippers didn't think that this conflict was over, you know, particularly when it came to the Straits of Hormuz. Now, the new aspect of what just happened is what you mentioned, and that is the Red Sea has been brought into this.
Now that's a whole new front. It's a whole new dynamic because like you said, it was a relief valve. The Saudis had found a way to ship millions of barrels a day to their Red Sea port and were successfully getting that oil to market.
And so now we have to see, you know, the Houthis possess very different capabilities than the Iranians, of course. And so let's see how the US And Saudi Arabia and others sort of react to this new threat. But it is a new front and something that we need to watch out for. Now, if we look at crude in the past two weeks, it's up $21 a barrel.
That's, I mean, That's a jump.
[00:05:10] Speaker B: Okay.
[00:05:10] Speaker A: I mean, that, that is. It had gotten down to 70. It was over 91, almost 92 WTI yesterday. It's pulled back a little bit today. That's pretty natural after a run up like this. There's, there's a little bit of profit taking. But look, you know, it's a major shift that will start permeating its way through this industry, you know, very, very quickly. And so more to come on this. But, but I do not see an off ramp in the coming weeks. I think this is going to play out for a little bit longer than that. Now, when it comes to the tariffs, the ones that were in place expired.
You knew they were searching through the books to find something where they could reimpose a similar level of tariff. Forced labor. That is an interesting one.
We know there's forced labor in some parts of the world. I'm not discounting that at all because it exists. But you know, using this statute to impose tariffs on such a wide swath of countries seems, just, doesn't seem realistic.
[00:06:17] Speaker D: You're trying to stop forced labor, Neal. I mean, why wouldn't you just. People give people the data about where this forced labor products are coming from rather than try and find people for when they come in on a, on a, almost on a generic level.
[00:06:31] Speaker A: Yeah, well, because they don't have the data. Right. And so, you know, you have to use whatever statute you can and try and then amend it to whatever case you want to make.
And we knew even with the previous tariffs. Right. The Supreme Court struck those down. So I suspect the same thing will happen here. It's just going to take a long time for it to move through the system. And in the meantime, they can reimpose these because they're unlikely to face an injunction against doing that. So again, this is the situation we're in. It's more of the same. I don't think anybody should be super surprised that any of this happened, but it is disappointing because you thought you were sort of getting to the other side of this thing. And I don't think that we're there yet. And I think 26 is going to continue to face, we're going to continue to face these headwinds well, and we'll
[00:07:24] Speaker D: keep trying to explain them to everyone.
So let's dive into some of these key trades. Air cargo volumes from Asia Pacific to Europe have dropped sharply. World ACD data is showing big falls from Hong Kong, China and Taiwan. As you can see on screen on Spotify and YouTube, China and Hong Kong to Europe volumes by chargeable weight dropped 11% year on year in the four weeks ending 19th of July out of Hong Kong alone that was a 16% drop. All countries except Hong Kong and China to Europe saw volume growth of 5% over the same period.
Neil, I've been speaking to a lot of people not leased at Air Cargo China earlier this month and there certainly seems to have been some front loading ahead of the ending of EU's de minimis exemption on 1 July. A temporary €3 customers duty now applies to low value parcels imported from outside eu.
Is this just a front loading story into Europe and any thoughts on what happens next to these e tailer trades?
[00:08:24] Speaker A: Yeah, it's a great question Mike. I mean I don't think, I mean you can front load air cargo right? Because you know you're a shipper and you're bringing in product, you know, before a tariff gets imposed and you can front load it because you know where this product is eventually going and where your customer a little bit harder to do that on the E commerce side. Right. Because you don't exactly know who's going to order what. I mean a lot of these are international fulfillment chains so these are individuals placing orders and then they get fulfilled out of South China and then shipped out of Hong Kong. So I, it's, it's hard to front load a lot of E commerce. You can do it with certain SKUs and things like that, you know the most popular things. But overall I don't think there was a ton of front loading going on. There was some of it. I think, you know, this is following the playbook of what happened in the US when de minimis ended in May of I believe that's 2025 right now we saw volumes drop. Absolutely. I mean for some E tailors it went to zero.
Right. For others they dropped 50%. I mean but, but overall I think volumes were down 50, 60% in the months after the announcement. And then what happened is that you know, they started to recover and then that recovery accelerated and then by December we were down sort of mid single digits from where we were, you know, the year before.
And I think now I haven't seen the latest figures Mike, I'm sure we can find them somewhere but I think you know, volumes have effectively recovered from where they were and, and this is just because it finds a way things get repriced. They do do some front loading of certain products. They use ocean and air combination to try and alleviate some of the pressure. And honestly people get Used to slightly revised in new pricing. It just takes a while, the initial shock and then people get used to what the situation is and then they're right back at it. I mean, this also proves the resiliency of the consumer. You know, the consumer seems to persevere no matter what gets thrown their way. It just takes them a while to get used to the new normal. So I suspect that volumes on Asia Europe will start recovering as we head into late summer, early fall. I don't think it's a doomsday scenario by any means. And things will get figured out.
[00:10:40] Speaker D: While Asia to Europe is being hollowed out, the Trans Pacific is telling a very different story. Volumes, carrier strategy and routings are all moving and not all in the same direction.
The clearest view of that is at Ted Stevens Anchorage International airport, the world's third busiest cargo hub. In 2025, it handled 3.85 million cargo movements behind Hong Kong and Shanghai, ahead of Louisville and Miami. That basically makes it the bellwether for what is happening between Asia and the Americas. In June, cargo landings at Anchorage were up 6% at 2521, the third consecutive monthly increase on the same month last year. I asked Sean Dolan, CEO of NorthLink Aviation, which is developing a major terminal at the hub, to explain what is behind these numbers. Over to Sean.
[00:11:36] Speaker C: Mike, what's driving growth is two big drivers. E Commerce out of China and AI related shipments out of Taiwan and Korea.
What we're seeing in Anchorage is the China to US trade lane growing approximately 25% this year. Relatedly on E Commerce, China to Mexico up 45% and then, you know, volumes out of Taiwan up 18%.
Some carriers are up and down for a variety of different reasons. You know, I think with regard to Atlas, the biggest carrier in Anchorage, the reason for them being slightly down is that they had moved earlier this spring some of their triple seven operations to Fairbanks to accommodate a significant maintenance program that's underway in Anchorage. But then we also see, you know, Coletta up significantly. And I think that related to my point about volume growth out of China, China Southern, you know, up 91% this year. So we're, we're really excited about that. You know, I think in terms of, to Coletta, Coletta is continued to grow. They had a record year last year and they're up significantly this year. And I think it's driven by a number of different factors, but not limited to the fact that they now have the 777 conversions entering the fleet.
If you break the root picture down what you'll see is that again, kind of building on the theme of China to US Growth, Shanghai to Chicago up significantly and driving the most number of flight growth.
But then Again, on the AI topic, Taipei to Chicago, up 18% this year. But as you go down this page and look at the top 10, what stands out is Shanghai to Mexico up 295 rotations this year, almost 500% growth.
I think we're optimistic about their peak season and the remainder of the year. And the basis for that optimism is that we've seen three consistent months of growth in Anchorage and we see nothing that indicates that that growth is going to stop. July performance has been again up over last year. So we're very optimistic about flight volumes through Anchorage.
[00:13:53] Speaker D: So, Neil, Anchorage, it's performing rather well. What does that tell us about the Trans Pacific at the same time when we're seeing Asia to Europe falling away?
[00:14:03] Speaker A: Well, Mike, there are a couple of dynamics going on here. And you're right, Anchorage has seen a real sort of BO in movements over this past year. And it's a testament to how important that hub is to the transpacific trade and in particular, you know, the growing trade between China and let's say even Mexico. Right. You know, Anchorage is obviously the place where all of these aircraft need to tech stop and fuel and recrew and things like that. And those volumes are really growing quite nicely, I think. We obviously have talked about what's going on in Europe and the E Commerce hit, hit. E commerce is 35% of all air cargo. So when that takes a hit, your numbers are going to be down. There's no way to overcome that, given how important it is.
Europe will recover. E Commerce volumes will recover. I think what you're seeing in the Transpac is that E Commerce continues to be strong, whether it's volumes coming to North America or we just talked about volumes going to Latin America. Right. The, the trade between Asia and Latin America when it comes to E commerce is absolutely booming and nothing is slowing that down anytime soon. And all of it, all of it, but a vast majority of it is flowing through North America with, with the stop in Anchorage, of course, before it ends up in LA or Miami or Mexico for that matter. But the other component here is, is AI Right. And so you saw the numbers that have been presented, right? Unbelievable growth out of Taiwan, out of South Korea. I mean, these are numbers from mature countries, you know, that you would never have im could be possible, you know, these high double digits. So I think that we're going to continue to see this AI driven boom for the foreseeable future. Now, I mean, let's be clear, you know, all these companies that are building these data centers are taking hundreds of billions of dollars of debt onto their balance sheet. They're spending a lot of their free cash flow on this build out how sustainable that is for the next several years. I don't think I'm in a position to even have a clue.
But I'll tell you that the numbers are quite scary when you think about the amount of debt that's being piled on. But that's what's fueling a lot of the Trans Pacific growth right now.
[00:16:29] Speaker D: I had an interesting chat with Torsten Hartman, Hapag Lloyd and John Gold at the National Retailers Federation. They were talking about the ocean market. Actually they've seen a very early peak season for various reasons on the Trans Pacific, which you can check out in the notes if you want to catch that podcast. But Sean earlier there, Neil, he sounds really confident about a traditional Q4 trans Pacific peak season for air cargo. Are you as optimistic?
[00:16:58] Speaker A: You know, I am optimistic, but look, I'm a bullish air cargo guy.
I always see the glasses as half full, particularly when it comes to air cargo, because I've been really impressed with the resiliency of this industry, the innovation, particularly in the past few years and things like that. So I'm bullish on the industry overall. And I do think the peak season is going to be okay. I think, look, notwithstanding the war, the reimposition of some of these tariffs, I think we've gotten used to some of this stuff, so it doesn't faze us as much as you think it would.
The consumer is overall relatively strong. Stock markets are doing well, so people feel maybe a little wealthier than they actually are. And so they continue to spend money. And I think as long as that continues to be the case, I think the peak season and of course the AI as we just talked about continues to move. So I think that peak season is going to be decent. I don't think it's going to be a blockbuster, you know, but I think we are going to have a peak season. I think it'll be decent and I think the carriers should be pretty pleased with how they're able to end the year.
[00:18:06] Speaker D: Okay, thanks, Neil. Let's have a look at pricing. I caught up with Neil Wilson, editor of Tacindex, calculating agent for the Baltic air freight indices, to look at how these different demand indicators on Asia, Europe and the transpac trades were being reflected. I asked him what we're seeing in those rates markets over the last few weeks.
[00:18:27] Speaker B: Hi Mike, great to be with you again. And yeah, it's been an up and down year, shall we say. It's been pretty exciting, obviously, since March, particularly with that big run up and then the fallback, as we noted last month, beginning to happen.
Let's look at the Baihr, which is our kind of global composite of outbound, which will show you that it's been going down now for four successive weeks. As we talk now, getting into late July though, it's still up 17% year on year to July 20th. And that's despite what we've seen is a re escalation of hostilities in the Persian Gulf with the impact on traffic with carriers like Cat Cafe Cargo, for instance, suspending flights to the Gulf for a period and a renewed surge in jet fuel prices, which I think we'll come onto later in a bit more detail.
But one question I suppose is why the rise in jet fuel prices which we have seen has not been feeding through so quickly to air freight rates, which is something we did see in March, it really jumped quite quickly when the US and Israel first launched their attacks on Iran and Iran responded. Now, there may be delay in it being felt or it may not happen at all. I suppose if there's a ceasefire which is restored quickly as of today, it doesn't look very likely, but it doesn't
[00:19:41] Speaker D: look very likely at all, Neil.
[00:19:43] Speaker B: No, indeed, indeed.
We're also now in the summer season, which is a bit different, I suppose, where there's normally a lull in prices a little bit because there's some extra belly hold capacity that comes on when the passenger traffic increases due to the summer holidays. That tends to obviously increase the demand for jet fuel, but it also increases the capacity for cargo, which helps to keep rates a bit lower, particularly on lanes like Transatlantic, which has a lot of passenger traffic. And then the other thing, I think the bigger thing I think we maybe come on to in more detail later, is the carriers safer now? Jet fuel is not so much of an issue yet in terms of securing it, even if the prices are rising as they were more prepared this time.
I think many carriers were taken by surprise by what happened in March and they weren't ready. Whereas now I think there's been a tendency, maybe you find it more anecdotally talking to people in the market, for carriers to have secured supplies and hedged forward a bit more and be prepared for further shocks like we're seeing now. So to look in slightly more detail, at a couple of the bigger lanes, China Europe and China US these are two of the biggest by volume.
What we've seen with China Europe is that the rates have been coming off partly, I think perhaps because there's been the end of that de minimis regime. There was a rush before the beginning of July and there's also this summer lull going on. I think what's also happening perhaps is that there's been some drop off in capacity on those lanes because of the annual maintenance and things like that being done. Some of the cargo carriers.
So Europe has maybe not. China Europe has maybe not come off as much as you might have expected, but it has. Whereas China US I think the volumes are still very strong and the rates have been coming off like elsewhere, but from a higher level. And you can see that by comparing
[00:21:37] Speaker D: the two charts we heard earlier, Neil, about these key vessels such as tech and AI driving demand. How's this playing out out in some of those Asian markets that have been on fire most of this year?
[00:21:48] Speaker B: That's a really good question. I think we've touched on this just very briefly in the calls in recent months for the podcast. But the AI theme we can see I think pretty visibly in our numbers on certain lanes where the volumes are very related to it. And so one particularly is or two particularly Seoul, South Korea to the U.S. and Taiwan to the U.S. so first looking at Seoul, you can see that despite coming off a bit in recent weeks, it's still up about 100% year on year, which compares with that 17% global average. That's an awful lot more. It's very close to peak season levels for the last two years, even now. And that reflects, we think, at least in part, that massive semiconductor business related to the likes of Samsung and SK Hynix.
When you look at Taiwan US it's a very similar picture. You can see despite the drop in the latest week, it had been continuing to go up for quite a long time and remains comfortably above the last two peak season levels, reflecting again that booming semiconductor sales business by the likes of TSMC in the case of Taiwan. Okay, and then looking at our spot rates. So those indices reflect all business going through, some of which is contracts, some of which is spot. The spot purely which we've been segregating out using a panel approach without going into all the ones we do now. I can tell you that the Hong Kong outbound, the Shanghai outbound and the South Korea outbound have been trending down still, like the overall indices over the Last three or four, four weeks. But the one that's maybe bucking the trend is India.
India, which had that dramatic rise at the beginning of March with rates doubling or more into Europe out of India because of the disruption in the Gulf that had been trending down gently April, May, from May, June into July. But it's showing signs of firming up now, which I think reflects the re escalation of hostilities in the Gulf. So that was an early indicator last time of was going to happen. So if the rest of the market follows, it'll probably start trending up as well with a delay.
[00:23:56] Speaker D: You mentioned jet fuel before. Obviously rising oil prices, renewed hostilities right across the Middle East. It's looking worse than it has done for quite a few months actually. Jet fuel really for air cargo is the joker in the pack. It's impacting all of these markets in different ways. Where has the pricing gone?
[00:24:13] Speaker B: So this is an interesting question because obviously we'd followed the big surge that there was when the Iran conflict started and then the trending down that followed into June with the ceasefire deal, seeing the jet fuel prices drop quite sharply. What's happened since the tensions and then hostilities have increased again in the Gulf is that the jet fuel has reacted very sharply again. So there's been.
While air freight rates have been continued to go down, the IATA Jet Fuel Price Monitor, which reflects the Platts data on jet fuel, that's been going up again for three successive weeks into July 17, including a gain of 17.6% in that latest this week that they put numbers out for. And that leaves it up 65.9% year on year, obviously much more than the airfreight rates. Now, the two things are not totally correlated in the jet fuel is only perhaps about a third of the cost of running the business because there's the equipment, the personnel and so forth that you have to pay for as well. But that does increase the costs, as we said before.
Why has that not been feeding through yet into Earth rate rates? And I think there is this fact that you get more capacity into the summer, which might increase the demand for jet fuel, but you also get a lull in terms of the demand.
It's the low season for demand.
And then the other thing which I think I did mention before, which is the key thing, is perhaps that this time the carriers have been prepared, they've been much more prepared for it. They've bought ahead, they've secured supplies. It's not going to help them indefinitely if the stray formers is a problem. And The Red Sea is a problem and the hostilities in the Middle east go on. Rates are not going to stay low indefinitely, but for the moment we're not seeing them feed through.
[00:26:05] Speaker D: And what's TAQ index been up to last few weeks, Neil?
[00:26:10] Speaker B: Well, one thing we've been working on, which I think you've had a little sneak preview of, is the TAC terminal which has been designed a bit like we call an air cargo oracle.
So we're using the data together with other inputs like other sources on the characteristics of routes and what kind of things are moving on them and who the carriers are to give you something like we'd like to call like a Bloomberg terminal but for air cargo, which gives you lane by lane detail.
So that's a very interesting development which we're just trialing with certain people at the moment.
[00:26:45] Speaker D: And I'll tell you what, if you're a young journalist out there and you're new to this industry, you want to get try and you want to try and ask for a bit of access because I wish I had it when I started out. It makes it very, very easy to understand exactly what's going on in each lane. It basically does your research for you.
Neil Wilson, thanks for joining me today on cargo unpacked.
[00:27:05] Speaker B: Thank you, Mike.
[00:27:07] Speaker D: Neil, the Composite Baltic index down four weeks running but still up 17% on the year. Thoughts on that firstly and then we have this question mark over jet fuel prices. When will we start to see higher fuel prices passing through to shippers and air capacity buyers?
[00:27:24] Speaker A: Well, I mean, look, we talked about this a little earlier. The latest surge in crude oil which then obviously moved through to jet just happened over the last two weeks. So this is still very fresh. I mean two weeks ago we were at $70 a barrel for WTI. Yesterday we ended at $92.
So this, it takes a little while for this to work its way through the system, work its way through the refiners who already had $70 crude right lined up at their, at their refinery. So and many carriers even have, they have a two week, you know, notice period before they even implement additional fsc. So there is some notice period that's given to the, to the forwarders and shippers if they work directly with some of them. So I think you're going to start to see it now. We're two weeks in.
I think this has now flowed through the supply chain.
So I do think that over the next couple weeks you'll definitely start to see the implementation of higher surcharges and the Community should be well braced to start handling those extra expenses.
[00:28:28] Speaker D: Okay, thanks, Neil. Let's take a short break and then we'll be right back.
If your supply chain runs through Asia, why not work with a company that has been connecting Asia with the world since 1971? DiMerco Express Group, welcome back. So, Neil, I popped down to the Farnborough Air show last week.
First time ever.
It was rather good fun. And if you're watching on Spotify and YouTube, you can probably see that I was having quite a laugh while I was there. But I did do a bit of work.
Now, the big Farnborough story was MSC's order for five Boeing 777, 8.
In late June, China Southern Air Cargo became the first Chinese carrier to order the model as well, announcing a deal for five aircraft with options on three more. While I was there down at Farnborough, I also had a chat with DHL. They've got a new mammoth converted 777, 200 LRF due on stream before peak season. We had a little look around this.
Thank you, DHL.
DHL's head of aviation, Malcolm Abeth, said there had been a fair bit of clamor internally to get this freighter up and running, given the current market. I mean, that's. It's a big thing, though, Neil. We've talked about it before. Everyone wants their capacity out there now, don't they? But it's not coming on quickly enough. What's your take on the order situation?
[00:29:51] Speaker A: Oh, I mean, this is the, you know, the situation we've been in for years, right, is that the market's strong and people want to be able to take advantage of these market conditions as quickly as they can. And nobody has the patience to wait for 1, 2, 3, 5 years for this capacity, because things can change.
And we know this is the big conundrum when you order these big assets in a very, very overtapped supply chain where the OEMs are months, if not years, late with deliveries. And so. So, yeah, everybody wants a capacity now. I mean, the reality is nothing's changing on the OEM side. Nothing's changing with the conversion lines. They can only move at a certain speed. Parts, whether it's new engines for new freighters or it's parts to do the conversions and all of that. Those supply chains are not getting faster.
Not right now, maybe incrementally here and there, but. But we are where we are. And I don't think anything is going to change for the next five years. And so I think everybody just has to be patient. Now, what's important here, Mike, to remember is that if everybody did get all of their capacity tomorrow, what, what do you think's gonna happen to rates? Right? I mean, it's not like this market can absorb everything that's been ordered and think that, you know, the, the general conditions are gonna stay the same.
[00:31:18] Speaker D: No, the market's gonna chicken and egg, you know, of course.
[00:31:22] Speaker A: So, you know what, it's better to have these come in at very sort of defined intervals, slowly introduce them. We don't need capacity shocking the system, and let's keep things so all stakeholders are making adequate returns because that's what you need to have a healthy industry.
So I'm not even an advocate for these airplanes coming faster. Let them come when they come.
[00:31:46] Speaker D: Okay, sound advice then, Neil. Essentially just try not to do what the shipping lines do.
Looking ahead, Dime surveyed 57 Asia Pacific shippers on the second half rate. Volatility tops their air worries at 56%. Schedule reliability, 47%. Geopolitical disruption. 40.
Over to you, Neil, if you want to run through the rest of these, these challenges.
[00:32:08] Speaker A: I mean, you know, an interesting, interesting survey. I mean, just continuing to go, you know, capacity constraints, you know, 33%, customs clearance delays, you know, 31%.
So, you know, a couple of other interesting notes here is that when you look at, you know, what else came out of that survey and it comes to the ocean volatility's sort of impact on air freight.
I mean, 61% thought it had moderate impact, but 20, almost 23% a severe impact. So when you add those together, close to 84% of people, you know, feeling that, you know, ocean volatility had a, a moderate to severe impact on air is an interesting number. And I don't think we've seen that since COVID Right. I mean, you know, and we know the impact that the ocean volatility and the congestion at the ports had on air freight. I mean, it was the fuel that lit that air freight fire and pushed rates to, you know, whatever, 15 to 20, you know, dollars a kilo, we're obviously not going to get there this time, but. But it is interesting comments. It's not surprising. If we were to go back six, seven years and we were go back to 20, 17, 18, 19 rate volatility certainly wouldn't have been at the top of the page. You know, we were in a pretty stable sort of period. Rates didn't move, you know, that much here and there. But since COVID I think we were in a new norm Right now, rates have moved and jumped quite severely, both up and down, and I think it's just a new normal. So I think we take this survey a year from now. I think rate volatility would continue to be probably at the top of everyone's list.
[00:33:50] Speaker D: That ocean volatility point, Neil, very interesting. I mean, you can see that it goes back to what we discussed at the very top of the show. We were looking at a relative stability with the ceasefire. While that was holding sort of almost for a couple of months. I mean, it wasn't fully holding.
But what we'd seen on the shipping side is the start of a trickle of ships traversing the Bab El Mandeb, through the Red Sea and into the Suez Canal. Now, from a shipper's point of view, that gives you an option into Europe, that's a damn site, quicker than going around southern Africa. And it could be, if those ships, if that trickle had become a flood, that massively changes the pricing of ocean container shipping everywhere. But also the transit speeds, that's always going to be that factor that comes back into. To the pros and cons of using
[00:34:40] Speaker A: air freight, I think.
Exactly, Mike. And, you know, we do have these choke points around the world and depending on what's going on in them, can have dramatic impacts on just how much capacity is available on the ocean. Because you're right, traveling around the southern Horn of Africa, you know, a isn't an easy voyage, but also takes additional weeks. Right. And that's just, you know, that those are sailings that get taken out and that's effectively capacity loss. So. So we'll see how this latest crisis. And with the Red Sea now heating up again, let's see how ocean volatility filters through the air.
[00:35:18] Speaker D: Yeah, I mean, just for a little stat for everyone, that depends who you listen to. But when the container shipping fleet goes around the southern Horn of Africa, as opposed to the Suez Canal, that's taking up six and a half to 10% of global container shipping capacity.
So if you imagine that on an air cargo front, plus or minus six and a half to 10%, it's a game changer. So it's worth bearing in mind. Anyway. Last one, Neil. It's now official Glyn Hughes is leaving Tiaka. He's led the association since 2021. He said he'd stepped down back in March.
He's handing over to Maman Tharakan, who takes over in August. He's from the airport side. Three years at King Salmon International Airport Development Company in Riyadh had running airline, commercial cargo and logistics partnerships. Before that, nearly five years at Edmonton International as director of E commerce, cargo and aviation real estate several years. Also Air France, KLM across North America.
Neil, you've known Glyn for years. First thoughts on his career and what are you expecting from Mammond?
[00:36:24] Speaker A: I do have a few thoughts here. And for those of you who don't know Glenn, so I've been on the board of Tiaka for many years. I mean, longer, more than I can count and on two different stints. And during the first time I was on the board was during my time when I was a chief cargo officer at Delta. And you know, Tiaka was a hot mess back then.
Lots of issues.
Leadership wasn't there from an executive director standpoint and the shows were losing their vitality and were not delivering the sort of value that they needed to. And when we brought Glenn in and honestly, I didn't think we'd get Glenn. You know, Glenn was a superstar at iata. I know he was ready to leave that organization. But getting Glenn was a tremendous coup for Tiaka and I think the world of Glenn. He is such an energetic guy. He loves this industry. He's devoted to his career, to it. He's so energetic. And the executive director sets the tone. They set the mood, they the energy exudes from them. And he's done a great job. So I personally just want to thank Glenn because, you know, he along with Steve Pullmans, I give Steve a lot of credit as chair of Tiaka. The two of them were a great partnership. They really led the board. They revitalized the board.
And it was a pleasure to get back on the board, you know, several years ago to help this journey along. And I think Tiaka is in a nice place now. When you talk about this handover, I think picking Maman was a great choice. So I commend Glenn and Rus and everyone else who is more involved in this selection than I was. But I think picking Maman is a great choice. He's young. He also brings a really nice personality to the organization.
He's a very likable bloke. He's very easy to get along with. I think that we're really in good hands now, you know, with this handoff. I like the fact that we're going to have 90 days for Glenn really to show mom in the works and they'll be shadowing each other until he's ready to take off. And Glenn sort of rise into the sunset at the end of October after ACF in Miami, but. But it's a great choice and I'm really looking forward to working with Maman in his new role in this capacity.
[00:38:52] Speaker D: Yeah, there's no doubt Blin's brought a huge dynamism to Tiaka. He's also, from a journalist point of view, he's always been very good to all journalists. But I've always noticed, particularly for younger journalists who are new into the industry, not everyone's like this. He's very patient, he's very accommodating, very approachable.
So he's going to be much missed right across the industry. But I'm sure because I had a little chat to him in China, I'm sure he's not entirely going away. Anyway, we'll be having Glenn on for a chat at some point and hopefully Mammon to Tiaka's air cargo forums in Miami, 26th, 29th of October, and we'll be there.
[00:39:33] Speaker A: Well, that's it for this month. Thanks to Sean Dolan at Norclink Aviation and to Neil Wilson at Tacindex, the calculating agent for the Baltic freight indices.
[00:39:44] Speaker D: Thanks, as always to the America Express group for supporting the show. If you want, Neil Wilson's full rate analysis is available as a standalone episode. Subscribe, please, wherever you get your podcast and follow the Freight buyers club on LinkedIn and YouTube.
And, well, if you like this content, don't be shy, share it on social media. I'm Mike King.
[00:40:04] Speaker A: And I'm Neil Jones Sharp. We will see you next month.
