Air cargo prices slide in November and difficult 2016 expected

Air cargo carriers had a tough November peak season as prices declined for the first time in four months, while next year is also expected to be a difficult period for airlines.
The latest Drewry East-West Air Freight index saw average rates for November decline to $3.22 per kg from $3.31 a month earlier.
November’s result is the first time in four months that Drewry has reported a decline.
The year-on-year comparisons also make for difficult reading as prices for November last year stood at $3.92 per kg.
However, it should be noted that the Drewry index includes fuel surcharges, which are down on the year ago figure because of weaker fuel prices, something World ACD pointed out in a recent market analysis.
Drewry, meanwhile, said the decline compared with the October 2015 level was a surprise and added that next year was also likely to be tough.
The consultant said: “Rates were expected to strengthen as November is normally the peak shipping month on the main Asia-origin routes, representing the finale to pre-Christmas peak season. But weak demand has taken its toll on a depressed market.
“We are forecasting another year of flat lining growth in 2016 as international air freight volumes are weighed down by lacklustre development in global trade.
“Meanwhile, we expect airfreight capacity to continue to expand through 2016, as increasing passenger demand drives supply of additional bellyhold capacity.
“The combination of zero growth and rising capacity will put further pressure on already depressed freight rate levels.”

Source: Drewry Sea & Air Shipper Insight
Notes: This index is a weighted average of all-in air freight "buy rates" paid by forwarders to airlines for standard deferred airport-to-airport air freight services on 21 major East-West routes for cargoes above 1,000 kg. Rates are expressed in $/kg and include three components: the base rate, the fuel surcharge and the security surcharge. They exclude door delivery costs.

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