Dimerco, Cathay Pacific launch PVG-ORD peak season charter service

Dimerco Express Group partnered with Cathay Pacific to offer a one-per-week air cargo charter service from Shanghai (PVG) to Chicago (ORD) from September to December using a B747-800F aircraft in anticipation of freight capacity constraints this peak season.

“The service is in response to clear market signals that capacity constraints this peak season – both air and ocean freight – could have shippers scrambling for high-priced cargo space, much like 2021,” reads the Dimerco release.

Dimerco’s weekly air cargo freighter service from Shanghai to Chicago runs from September 12 to December 5. The B747-800F airplane from Cathay Pacific leaves PVG each Thursday morning local time, stops in Hong Kong and arrives in ORD at 1:40 pm Friday local time.

The charter solution can be either port to port or door to door. Dimerco will work with its truck carrier network for final-mile delivery from Chicago.

Dimerco reported that its discussions with a range of sources point to a busy peak season in 2024, where finding capacity to ship China-to-USA cargo is no guarantee. Carriers are gearing up for a demand spike.

It reads, “A large independent air cargo handler in Hong Kong is planning to hire 300+ more workers to handle peak season demands.”

Many shippers, particularly consumer electronics companies, are launching new products this holiday season and are anticipating big demand.

It reads, “Should higher-than-expected cargo volume materialize, our carrier contacts tell us that the capacity available to handle that volume may not be sufficient.”

Typically, about 30%–40% of carrier space is pre-allocated under contracts with forwarders, with the balance available to the rest of the market. But this year that pre-allocated percentage is much higher, limiting sellable space.

One reason for this is that Temu, Shein and other e-commerce companies in China are demanding freight forwarding partners have at least one Block Service Agreement, or BSA (space under contract) in place with a carrier. As a result, many small and medium-sized forwarders have signed minimum volume agreements with carriers (e.g., 25–50 tons per month).

“So,” it reports, “you have more pre-committed space and limited extra space to sell ad hoc in the open market.”

According to Dimerco’s VP of global sales and marketing, Kathy Liu, “The signals are eerily similar to the 2021 peak season, with the container shortages, port congestion, and sky high rates.”

Shippers are in two camps relative to the upcoming peak season, according to Dimerco.

There’s the “wait and see” group, who are hoping the Red Sea crisis improves, as well as the current container capacity challenges and rate increases on the Trans-Pacific Eastbound route. Then there’s the “don’t risk it” group that is planning now to lock in extra capacity for Q4 – particularly for China-to-USA air freight and ocean freight.

“Given the signals we’re seeing, we believe locking in capacity is wise. That’s why Dimerco is bringing extra capacity to the China-to-USA shipping lane for Q4,” it informs.

“Traditional air freight shippers will be searching for added capacity,” says Liu, “particularly brands launching new products for the holiday season, since they can’t afford inventory delays that would jeopardize a major selling day, like Black Friday.”

But she also believes there will be keen interest from ocean shippers who see the China-to-USA air cargo charter service as an alternative to sea freight service that could become unreliable and very costly as peak season approaches, as we saw in 2021.

“Air freight is typically 12–16X more expensive per kilo than container shipping,” says Liu. “But right now that gap is just 6–8X and shrinking. Couple that with a China-to-USA, door-to-door transit time for container freight of up to 40 days and brands will be open to alternative modes.”