Air freight costs start to stabilize as countries reopen, says DHL executive

HONG KONG (Reuters) - Air freight costs started stabilizing in late April after a surge due to the COVID-19 outbreak that grounded most passenger flights and forced freight forwarders to resort to chartering cargo flights, said an executive for DHL Global Forwarding.

With some countries such as China and South Korea starting to relax their containment measures for the coronavirus that causes COVID-19, Kelvin Leung, CEO Asia Pacific of DHL Global Forwarding, said in an interview with Reuters on Monday that he expected a return to some normalcy in the third quarter.

Leung declined to give any details on freight costs or customer rates that he said are still changing week by week, but he said the peak of disruption to freight industry has past.

Nearly 99% of passenger flights are still grounded, however, part of measures to stop the spread of COVID-19, and freight operators have had to resort to chartering flights at prices between $1.3 million to $1.7 million each between Asia and United States, Leung said.

That compared with about $500,000 to charter a flight on average during normal times, he said.

Passenger flights often carry cargo, and with the flight disruptions amid the coronavirus lockdowns, there have not been sufficient regular cargo flights to meet air freight demand.

The situation had price-sensitive customers resorting to cheaper alternatives, and in one case, Leung said, DHL handled an order that would have been done by air via long-distance trucking services from to China to Sweden, taking 19 days.

Reporting by Pei Li; Editing by Tom Hogue