Asia-Europe air rates rocket but show signs of easing on the transpac

Airfreight rates between China and Europe increased rapidly last week but there was a drop to North America.

The latest figures from TAC Index show that average prices from Shanghai to Europe last week increased by a huge 42.3% to $7.33 per kg.

This is a new record for the index, which was launched in March 2015.

There was also a 27.4% week-on-week increase to $5.11 per kg on services from Hong Kong to Europe – also a trade lane record for the index.

However, the situation on services from China to the US began to show signs of easing.

TAC Index figures for Shanghai to North America fell by 3.5% week on week to $6.36 per kg – although this is still the second highest amount recorded by the index.

Hong Kong to North America also showed signs of easing as rates increased by 6% to $5.30 per kg, which represents the smallest week-on-week percentage increase since the start of March.

However, this is still one of the highest levels recorded on the lane.

Rates also dropped on the westbound transatlantic – down 18.9% to $3.39 per kg on Frankfurt to North America. Chicago to Europe registered a 15.9% increase to $2.70 per kg.

The high rates come as air cargo capacity has been reduced by around 35% globally due to passenger airlines heavily reducing services.

Peter Stallion, a derivatives broker at Freight Investor Services, suggested that medical equipment demand and containership capacity shortages were sustaining high rates out of Asia Pacifc.

“The oscillation of weekly basket volatility tells an interesting story, as the rush of medical equipment and pharmaceuticals into Europe spikes the lane price to never-before-seen highs,” he said.

“This contrasts with the US which for the moment at least, has seen a freeze in its price gains. Both lanes are of course, priced in at very high levels.

“It would also appear the traffic from Europe to the US has started to falter from a price standpoint, as most major lanes (including Frankfurt and London to US) see a dip in rates.

“The overall picture is still outweighed by strong APAC airfreight prices, as more container capacity is restricted forcing urgent cargo onto airfreight.”

Freight forwarder Agility said that there was continued pressure on China outbound and inbound, but with some signs of recovery.

Outbound air freight capacity is under tremendous pressure among all mainland China export markets as production resumes and passenger flight cancellations are sustained.

“A trend of ocean-to-air conversions exacerbates pressure on capacity outbound China. However, more freighters are entering the market.”

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Damian Brett

Damian Brett
I have been writing about the freight and logistics industry since 2007 when I joined International Freighting Weekly to cover the shipping sector.After a stint in PR, I have gone on to work for Containerisation International and Lloyds List - where I was editor of container shipping - before joining Air Cargo News in 2015.Contact me on [email protected]