A tough year for air cargo rates but some positives

By Damian Brett

Image source: Shutterstock

Airfreight rates on major east-west trade lanes ended the year behind 2018 levels, but the picture is more positive when taking a longer term perspective.

Data from TAC Index shows that in December rates on services from Hong Kong to North America declined by 22.6% on last year to an average of $3.62 per kg.

On Services from Hong Kong to Europe there was a 10% decline for the month to $3.15 per kg.

The performance on both trades is in line with recent months and reflects a decline in the overall air cargo market in 2019.

While the drop off in prices compared with 2018 may not be good news for carriers – compounded by an estimated decline in volumes of 2.2% on a year earlier – overall performance for 2019 stands up well when compared with recent years.

For both routes last year saw prices at their second highest average level since 2015.

The average price on the Hong Kong-North America route in 2019 stood at $3.54 per kg. This lags behind the $4.11 per kg reported in 2018, but it is up slightly on 2017’s $3.53 per kg, 2016’s $2.82 and 2015’s $3.40 per kg.

On Hong Kong-Europe, average prices in 2019 stood at $2.75 per kg, which is behind $2.82 per kg in 2018, but up on 2017’s $2.41 per kg, $2.14 per kg in 2016 and 2.57 per kg in 2015.

Looking ahead, derivatives broker Freight Investor Services (FIS) said indicators are improving for the coming 12 months.

“Trade wars are set to resolve, although much of this appears to rely on Trump’s activity on his Twitter account, Brexit appears to be laid in, and inventory cycling appears to be at a recovery point.

“[However], as usual we end up with a highly peculiar and uncertain set of macro-economic and geo-political conditions that remove any sense of comforting certainty.”

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