Airfreight rates up as capacity comes under pressure

Issued on 5 Aug 20

Airfreight rates from key Asian hubs continued to climb last week as ocean capacity shortages and personal protective equipment shipments pick up. The latest figures from TAC Index show that average airfreight rates from Hong Kong to North America last week climbed for the fourth week in a row as they increased by 4.6% week on week to $5.70 per kg.

From Shanghai to North America average prices increased for the second week in a row as they jumped by 10.2% on a week earlier to $5.62 per kg. From Hong Kong to Europe there was a 1.5% decline to $3.21 per kg but from Shanghai to Europe there was a 14.8% increase to $3.81 per kg. Rates continue to track ahead of last year’s levels but they are down on the high levels recorded in mid-May.

Eytan Buchman of rate portal Freightos said that ocean capacity shortages could be having an impact on the market. “The high rates and additional lead time to ship by ocean are pushing some time-sensitive shippers from ocean to air, contributing — together with the increase in personal protective equipment demand and peak season electronics — to the recent increase in air rates.” Peter Stallion of air cargo derivatives broker Freight Investor Services (FIS) also said that electronic product launches were beginning to affect the market, along with an uncertain capacity outlook.

“In fundamental terms we are still looking down the barrel of various airfreight-centric product launches that correlate with a bullish viewpoint. However capacity still remains highly uncertain, linked to passenger traffic inconsistencies,” he said. “The market appears (at least on ex.APAC routes) to pricing about 25% above its 2019 level for the time-being. What is more of a concern for shippers, is a new and persistent requirement to absorb both the higher airfreight rates, and direct market volatility.” Freight forwarder Flexport concurred that product launches were helping push up rates — it expects capacity to remain tight for the year. The forwarder added that several Chinese carriers had sent their freighter aircraft in for heavy maintenance over the last couple of weeks.

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