DHL Global Forwarding is adding air-cargo capacity from commercial carriers in its routes between North Asia and Europe throughout the first quarter of 2010. The company said the move was in response to a strong increase in demand for transportation space, which materialized in November and December 2009. The spike in demand contributed to backlogs of goods moving from China to Europe, resulting in "steep increases" in freight rates, according to DHL. It said space constraints are likely to continue due to the reluctance of airlines to increase their cargo uplift capacity, which they had previously cut in line with the global economic downturn. Airlines don't want to incur the high cost of reactivating their temporarily grounded planes, DHL said. Demand for air-cargo space traditionally decreases after the Christmas holiday, leading to a sharp drop in freight rates. However, the current outlook for cargo capacity and demand suggests a continuation of capacity constraints on the North Asia-to-Europe trade lanes, with services out of China, Hong Kong, Korea and Taiwan in particular demand. The next peak is expected to occur before the Chinese New Year in February, in advance of factory closures during the holidays, DHL said.
