As the end of the year approaches,Cross-border e-commerceThe market has entered the boom season, but at the same time, sellers are also facing major challenges in air transport logistics.According to recent market feedback, after entering October, air transport prices have continued to rise, mainly due to the joint role of several key factors.

Reasons for Air Transport Prices Rise

1) Increased Demand

Due to the arrival of the Black Five, cross-border sellers have concentrated to supply goods to meet the shopping needs of overseas consumers. This growth in demand has caused the continued tension of transportation, which has led to an increase in air transportation prices. According to data provided by TAC Index, as of the week of November 20, the Baltic Air Freight Index rose by 4.6% over the previous seven days.

The imbalance of supply

Data from the International Air Transport Association show that global demand for air freight increased by 9.5 percent in 2023, while supply grew by only 5.7 percent, which is another major reason for the rise in air freight prices.

Third, shipment of brands

At the current stage, large brands such as iPhone and Huawei account for a considerable portion of the airline’s shipment capacity. For example, in the third quarter of 2023, China’s total smartphone shipment was 66.7 million units, with Huawei growing by 37 percent.

Competition of emerging e-commerce platforms

Unlike in the past, this year in addition to traditional e-commerce platforms such as Amazon, Walmart, eBay, emerging e-commerce platforms such as TEMU, SHEIN also joined the competition, further aggravating the tension in air traffic.

Effects of Extreme Weather

Especially in the United States, extreme weather conditions such as heavy rain, snowfall, etc. have affected air transportation. The U.S. Federal Aviation Administration (FAA) has issued early warnings that if bad weather continues, it could reduce some flights on the eastern coast.

Distribution of power and pricing

In current market conditions, approximately 70% of the capacity is used by e-commerce and factories, and the remaining capacity is used for e-commerce retail warehouses. Due to the limited capacity of the remaining warehouses, the market appears to be inadequate, thereby pushing the price of air transportation up. The airlines usually set the price for each flight based on the remaining location and the reservation warehouses data, resulting in the prices issued are usually higher.

Uncertainty about air transportation prices

The uncertainty of air transportation prices is mainly due to untimely factory deliveries and the sellers suspension of shipment plans, which can lead to empty warehouses. In this case, in order to reduce losses, Airbus agents will reduce the price of receipt before departure.