Airfreight rates remain elevated in January despite seasonal slowdown

By Damian Brett

Airfreight rates on key trade lanes declined in January compared with a month earlier but remain far above last year’s levels.

The latest statistics from Baltic Exchange Air Freight Index (BAI) show that average rates on services from Hong Kong to North America slipped to $6.43 per kg in January compared with $7.50 per kg in December.

However, prices are around 104% higher than a year ago as result of the loss of belly capacity from the market.

There was a similar trend on services from Hong Kong to Europe, where prices declined from $5.59per kg in December to $4.28 per kg in January.

When comparing with a year ago, rates on the trade were up 51% in January.

On services from Frankfurt to North America, there was a month-on-month decline of $0.15 per kg in January to $4.45 per kg. Against a year ago, prices are up by 133%.

The decline in prices in January compared with December shouldn’t come as too much of a surprise as rates usually drop following the pre-Christmas peak season and then start climbing again in the summer.

However, there are so many different market dynamics at play this year it is hard to predict whether pricing will follow the usual seasonal trends.

Container shipping issues, the need to transport Covid-19 vaccinations, demand for personal protective equipment, increased e-commerce demand, reduced belly capacity, the UK leaving the European Union and Covid lockdowns are having an impact on supply and demand dynamics.

One thing that is for certain is that it is likely that airfreight prices will remain at an elevated level in 2021 given the loss of bellyhold capacity.

And the capacity shortage could continue beyond this year; many airline executives are expecting it to take at least three years until passenger services are back up to pre-Covid levels.

 

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