China airfreight rates predicted to rise in coming months

Image: Shutterstock

Airfreight rates out of China are expected to rise over the coming months while the peak season could be muted, according to Bruce Chan, senior analyst at investment bank Stifel.

In the latest Baltic Exchange market round-up, Chan said that rates out of Hong Kong and China had remained high over the last couple of months despite an easing of demand.

And with Shanghai now emerging from a months long lockdown, there is expected to be a surge in volumes as production levels continue to ramp up and companies look to meet a backlog of demand that has built up.

“As China takes some of its biggest steps toward reopening major cities, we expect rates to climb again over the next month,” wrote Chan.

“With Covid-19 cases declining in Shanghai, for example, the city is entering its final stages of reopening, which is expected to carry through mid-July, and we anticipate that the significant backlog will be cleared through origin port and airport facilities.”

Chan added that orders for the fourth-quarter peak season could also be pulled forward as companies look to tackle ongoing supply chain disruption in the latter part of the year.

This could result in a more muted peak season that usual.

However, this does not necessarily mean that the high prices currently being registered in air cargo will begin to ease this year, he explained.

Chan said: “Will that mark the end of one of the longest airfreight bull pricing cycles in history?  At this point, we think it is difficult to say, especially with the industry still in crisis management mode.

“Pricing will normalise, especially as we think about the continued recovery of international belly capacity and a robust long-term order pipeline for freighters.

“However, the timeline will likely be protracted and shippers are well-advised, in our view, to manage toward resilience versus freight spend efficiency, at least for now.”

The latest figures from the Baltic Exchange Airfreight Index (BAI) show that average rates from Hong Kong to North America in May increased by 21.7% year on year to $9.69 per kg, while they up 1.2% compared with April.

From Hong Kong to Europe average rates for May increased by 34.2% year on year to $6.35 per kg, which is up 5.7% on April.

Airfreight rates pick up in May despite demand declines

Airfreight volumes fall again in May

Share this story

Related Topics

Latest airfreight rates news

Putzger perspective: Air cargo navigates stormy skies

By Ian Putzger

Recent months have been relentlessly tough to navigate for air cargo carriers, as imploding demand has yanked rates and yields…

Read More

Share this story

Air cargo capacity rises above pre-pandemic level while industry faces risk of zero growth

By Rebecca Jeffrey

Air cargo capacity is continuing to climb and rose above the pre-pandemic level for the first time in four years,…

Read More

Share this story

First signs of recovery in air cargo?

By Damian Brett

The air cargo market could be showing the first signs of a possible recovery fuelled by the restart of production…

Read More

Share this story

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]