Airfreight rates on key trade lanes out of Hong Kong were largely flat in July compared with June but they continue to be higher than a year ago.
The latest figures from the Baltic Exchange Airfreight Index (BAI) calculated by TAC Index show that rates from Hong Kong to Europe in July were down slightly to $4.50 per kg from $4.56 a month earlier.
Meanwhile, rates from Hong Kong to North America declined to $5.72 per kg from $5.75 per kg in June. The overall BAI index was down 0.9%.
The flat rates come as the industry is in the midst of the quieter summer months. However, prices remain up on last year. From Hong Kong to Europe they are up 24.3% and from Hong Kong to North America they are ahead by 22%.
This reflects higher e-commerce demand and modal shift from ocean but also a weak summer in 2023.
Writing in his monthly column for the Baltic Exchange newsletter, TAC Index editor Neil Wilson said: “Other routes out of Asia also remain a long way up on levels of 12 months ago, particularly on lanes from Vietnam to the US, and from India to Europe. This was ahead of recent news that Apple, for instance, is starting to move some of its high-end iPhone 16 production to India.”
“However, an IT outage in late July that resulted in thousands of cancelled flights failed to have a huge impact on rates, with US carriers hit in particular,” wrote Wilson.
“With the likelihood that at least some cargo got delayed and that some planes and crew were dislocated from planned positions, some feared this might have a further ratcheting effect on rates.
“However, there was also a long list of other players – from UPS to Lufthansa to Saudia Cargo – who said there was little or no impact on them from the IT outage.
“The disruption – and potential market distortions – has thus far been much less than initially feared.”
Atlantic doldrums
Meanwhile, rates on the transatlantic remain in the doldrums due to overcapacity in the market as passenger airlines have added a wave of capacity this year.
TAC figures show that prices from Frankfurt to North America were down 9.9% year on year in July at $1.92 per kg and flat compared with June.
The amount of capacity between the Americas and Europe has seen freighter operators, such as Air France KLM Martinair and Qatar Cargo, start to move aircraft to Asia Pacific to capitalise on high prices there.
Looking ahead to the peak
For the peak season, Wilson said many are expecting rates to rise.
“Looking ahead, some sources have been arguing for a while that the peak season surge started early – at least a couple of months ago – and capacity was already looking tight for later in the year. With a lot of capacity already reserved in block space agreements (BSAs), some are predicting a big spike in spot rates for the latter months of the year,” he wrote.
However, he added that some have argued that the demand growth figures also reflect a weak market last year.
“Global consumer demand is still relatively lukewarm, [commentators suggest], and rates could be rising mainly because shippers are moving goods earlier, which may simply cannibalise future growth.
“If that more negative view proves correct, it could be that any strong peak season spike proves transitory, with rates then slipping back rapidly.”
There are also ongoing issues in container shipping, he pointed out.
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