John D. Boyd | Mar 17, 2011 4:21PM EDT
Air freight rates are rising for loads moving from Japan to the U.S. in the bellies of passenger planes, an industry official said, as planes haul more fuel into Japan and make additional stops even as shippers try to move more goods by air.
However, air freight forwarders are also bracing for what could soon become a sudden decline in some key types of cargo that move by air, as plant closings in Japan crimp the supply chain for electronics.
Brandon Fried, executive director of the Airforwarders Association in Washington, D.C., said "air cargo rates are starting to increase in response to limited capacity" in the wake of the disasters in Japan.
He said with some ocean ports closed and others damaged, and ship routes shifting to avoid radiation clouds from damaged nuclear reactors, some cargoes that would normally go by ocean are shifting to air.
However, airplane cargo space is also more limited than normal with reductions in passenger flights. And Fried said an official from a major U.S. airline told him that carrier's planes are carrying extra jet fuel into Narita International Airport at Tokyo to avoid tapping that facility's fuel supplies.
That means the planes can take on less cargo weight than normal heading to Japan, and because they do not refill fuel tanks at Narita the planes must then make an extra fuel stop on the return trip, either at Honolulu or Anchorage. That adds to the trip costs and time in transit, which help push freight rates higher.
Tokyo like much of Japan is going through power blackouts after the earthquake and tsunami knocked out some nuclear reactors that supply electricity, besides suffering shortages of some products.
Fried said if fuel concerns persist at a major airport like Narita "it's a very serious business" for the air freight industry, and forces participants to plan new shipment patterns.
He said forwarders tend to adjust quickly to changing business conditions to match cargoes with available airplane space. But Fried said association members are also worried about their own staff on the ground in Japan and customers with whom they have built relationships -- both their ability to shift business operations and their personal safety. "We're very concerned about our colleagues over there," he said.
A looming issue for the forwarding industry is whether the current tightness in air transport capacity could quickly turn into a lack of important cargoes out of Japan that normally ride in airplane bellies. Fried said computers and components, plus automobile parts that have electronics built in, all use air freight services and could abruptly decline if Japanese factories do not return soon to normal operations.
Some plants are off line for a few days at a time, depending on available materials and power, while some will reportedly stay shut for weeks or months. Fried said some plants whose products move by air were in northern Japan where the disasters struck and were heavily damaged.
-- Contact John D. Boyd at jboyd@joc.com.
