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Air rates

The airfreight rates have decreased in January, but still remain higher compared to pre-Covid times, according to the Baltic Exchange Airfreight Index (BAI). Despite the decline to $6.14 per kg from Hong Kong to North America and $4.96 per kg from Hong Kong to Europe, compared to the rates in December and a year ago, the rates are 67.8% and 73.5% above the rates in January 2019 respectively.

The high airfreight rates are sustained by expensive fuel prices, limited belly hold capacity on specific trades, and ongoing costly charter/BSA operations during the pandemic. However, the overall air cargo capacity in November was just 3% below the levels in 2019, with a decrease in belly capacity and an increase in dedicated freighters.

According to TAC Index's Neil Wilson, the bigger markets such as Hong Kong and Shanghai still have higher airfreight rates, while smaller markets like India and Vietnam have more fluctuating spot rates.

The 2023 contract renegotiations are also reportedly being done at lower levels due to decreasing demand and a boost in the capacity as China begins to reopen post-Covid.

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