Global air freight rates are surging again, with prices up more than 8% in
the past week.
China to the US saw rates rise 8.6% to $5.16, while Hong Kong to the US
jumped 9% to $5.35, according to the latest TAC Index figures.
Forwarders have reported, however, that the rates tend to be even higher
than the index records.
Freight Investor Services (FIS) said rising rates were encouraging carriers
to continue to trade in the spot market, rather than opt for longer-term
“A boost in ex-Asia Pacific prices, perhaps the last thing shippers will
want in this market, lifts the curve upwards,” it said.
“We would see that this could create a bit of persistence on the carrier
side of the market in holding onto spot pricing, creating a bit of instability
in forecasting considering the lack of more than month-long fixed-price
Last week, it was reported that DSV are looking to re-contract
an Atlas Air aircraft, after its ACMI contract for Panalpina’s 747 network
expired in May. Any potential deal with Atlas looks likely to be for international
routes… with rates surging, it appears that DSV, while wanting to ensure
capacity, will also want to avoid exposure to continual spot market rates
increases. But it would be a tough negotiation.
Another major cause of transpacific price rises is new demand for PPE in the
Americas, where daily infection rates continue to rise.
“As demand to the Americas and Indian Subcontinent is so high, carriers are
feeding into these routes with higher yields.”
The European forwarder added: “General commodities are really starting to
come back into the air freight market with retailers, etailers, manufacturers
and other general shippers having requirements now for seasonal air freight, as
their backlog stocks run down and are sold through.”
And with a rise in second waves of the virus, there is still very little
passenger travel, preventing freight travelling on commercial flights. IATA
noted this morning that hold capacity for international air cargo in June was
down 70% on last year.
While this was partially offset by a rise in freighter capacity on the
market, up 32%, overall global capacity was down 33.9% for international
operations, year on year, while demand in cargo tonne km was down 19.9%.
“Cargo is far healthier than the passenger markets, but doing business
remains exceptionally challenging,” said Alexandre de Juniac, IATA’s director
“While economic activity is re-starting after major lockdown disruptions,
there has not been a major boost in demand. The rush to get PPE to market has
subsided as supply chains regularised, enabling shippers to use cheaper sea and
rail options. And the capacity crunch continues because passenger operations
are recovering very slowly.”
Of course, while there are expectations of a peak anyway, there are also
growing concerns that if a vaccine for Covid is found, air freight demand will
soar beyond all capacity availability.