Air freight rates spike again ex-Asia

Air freight spot rates out of Asia have spiked again in the last few weeks, with prices from China and Hong Kong to the US rebounding back to and beyond their level in December to an average of US$8 per kilo.

Figures from TAC Index show average prices from China and Hong Kong to the US rising by more than 50% in the space of just four weeks from an actual net price (ANP) average of just over US$5 per kilo in the week commencing 15 March to more than US$8 per kilo ($8.18) in the week from 12 April. 

Although average prices slipped back very slightly this week to an average of $8.06 per kilo, they remain slightly higher than their peak level during the fourth quarter last year, although below the exceptional peak levels of more than US$10 per kilo seen last May.

Prices from China and Hong Kong to Europe remain more modest, although they have also risen slightly in the last three weeks. After spiking to almost US$5 per kilo in the week of Chinese New Year in mid-February, rates plateaued in early March at slightly above US$4 per kilo before rising again since the end of March, reaching an average actual net price of US$4.55 per kilo this week, figures from TAC Index indicate.

One market in Europe where rates have risen very sharply in recent weeks is Shanghai to London Heathrow, which saw a spike of more than 35% in the week commencing 12 April to more than CNY 35 per kilo.

These pricing figures broadly reflect anecdotal industry reports, including from freight forwarders.

In its latest Freight Market Update this week, US freight forwarder Flexport noted: “The export market from Asia took another step up this week as demand continues to surge and capacity remains extremely tight. Yields have risen to their highest point of the year with rates rising alongside.” 

Flexport said Asia-Europe (FEWB) market “is in relatively better shape from most origins to major gateways in Europe”, although it noted that “all capacity departing Asia is solidly booked until early May.”

It said one piece of “welcome news” was that Hong Kong’s Civil Aviation Department, had “agreed to soften the quarantine rules for pilots, allowing Cathay Pacific (CX) to resume a large part of their freighter schedule by mid-May”, promising to bring much-needed capacity back into the market that had been cut for several weeks.

But at the same time, Flexport noted that two China Airlines (CI) pilots had tested positive for Covid-19, prompting calls for stricter rules, reflecting that “the regulatory situation remains quite fluid”.

Europe export demand

Meanwhile, European export demand “shows continued strength to the Americas and Asia”, Flexport noted, highlighting that space to the US West Coast “is the most constrained”. It added: “ORD, JFK and ATL had a slight influx of new capacity from PAX and freighter carriers, providing some relief.” 

Flexport said capacity to Asia “remains very well utilised” with carriers on the transatlantic westbound (TAWB) and Far East eastbound (FEEB) reporting load factors in the 90% range. 

It said major airport hubs in central Europe were “reporting normal throughput on the import and export side, while some secondary airports report some minor backlogs in breaking down freight”.

Americas: export capacity ‘remains tight’

And from the Americas, Flexport said export capacity “remains tight due to continued lack of belly capacity”, adding: “It still takes several days from booking to uplift into European key destinations. Capacity from West Coast gateways is the most constraint to Europe, while the Midwest and East Coast are manageable. Capacity from the West Coast to Asia is seeing increased demand for perishables.

Flexport noted that many US carriers have delayed the start of transatlantic passenger services as surges in Covid cases lead European countries to re-impose lockdowns and close borders to tourists with no end date. 

Meanwhile, congestion at some key US airports has continued. 

“With high number of freighter flights from Asia and Europe, LAX and ORD airports still have large backlogs of import freight,” Flexport noted. “Ground handlers are reportedly <10 days behind in breaking down freight from arriving flights. In addition, trucking is scarce for airport recoveries and local deliveries.”