Air cargo prices to weaken says Drewry

AIR CARGO pricing is expected to weaken in the coming months, while global airfreight traffic growth will be held back by weaker demand in the intra-Asia region.
That is the view of Drewry, the UK-based research house, in its latest briefing on the demand and supply equation for global airfreight and ocean container trades.
Simon Heaney, research manager at the consultancy, says: “Drewry expects overall [air cargo] pricing to weaken further in the coming months as more seasonal belly hold capacity comes onto the market.
“Ongoing freighter capacity rationalization has helped stabilize the market but rising cargo capacity from passenger aircraft does remain a big challenge for the airlines and their forwarder partners. This will serve to keep freight rates in check.”
Drewry’s east-west airfreight price index fell 4.5 points in May to 99.3, on a par with the baseline of May 2012, and ending two months of consecutive small price gains.
Adds Heaney: “We thought that the market would experience some pricing erosion and this is usually the case at this time of year, a seasonal correction following a cargo rush of Asia origin trades into Europe and North America.”
Drewry research on Asia to America airfreight pricing benchmarks saw the Shanghai to Los Angeles rate fall by ten per cent month on month in May. The equivalent Hong Kong to New York benchmark saw a price erosion of five per cent.
“The fall in rates from Asia to Europe was less severe but it did impact most of the routes that we cover,” adds Heaney.
The limited range of airport cargo data so far available for May “paints a mixed picture”, with Hong Kong achieving a year on year gain of 8.3 per cent, while Incheon in South Korea saw volumes remain flat.
Pricing on backhaul trades from North America into Asia remains stable, as does Europe, with the exception of the Frankfurt to Shanghai trade, which fell 17 per cent, month on month.
Says Heaney of the Frankfurt fall: “We do not think this is representative of any broad trend but rather a market correction that brings rates for that lane into line with other eastbound trades.”
One positive note is that demand for computer chips, “a good bellwether for future airfreight demand”, continues to rise.
Says Heaney: “The semiconductor industry saw demand worldwide for micro chips jump 11.5 per cent in April, year on year, and that is the twelfth month in a row of consecutive growth.”
He concludes: “Economic drivers of international trade are improving, boding well for continued cargo demand growth in both the sea and air sectors. However, we do not expect growth levels to get close to double digits anytime soon. And one dark cloud is the downturn in some emerging economies.” 

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