New air cargo spot rate assessments go on trial

Copyright: Jaromir Chalabala/ Shutterstock

TAC Index, which offers “live actionable market intelligence to the airfreight industry, is – in collaboration with the Baltic Exchange – trialling spot rate only assessments for air freight flying from India and Vietnam to Europe.

Additional trial routes will be added shortly, all of which will, TAC Index said, “pave the way for futures contracts and other risk management tools currently unavailable for the air cargo market”.

Baltic Exchange Spot Indices (BAI.S) will be based on both airline and forwarder data.

TAC and the Baltic Exchange, the body that represents a global community of shipping interests including shipowners, charterers and shipbrokers, already publish rates for major hubs based on both contracted and spot data.

The initial testing phase on the India and Vietnam to Europe sectors takes the form of a private, blind trial designed to ensure that assessments meet the Baltic Exchange’s rigorous methodology and thresholds for benchmarks.

The results will be reviewed to see if improvements could be made to the methodology in use, before proceeding to a later stage of public trials.

Should the subsequent public trial phase be completed successfully, the new BAI.S would then go live.

The methodology for the existing suite of air cargo assessments published by TAC and the Baltic Exchange remains unchanged.

Peyton Burnett, managing director of TAC Index, remarked: “Our customers have been eagerly awaiting a new set of indices that focuses primarily on spot pricing.

“The air cargo industry is increasingly using floating rate air cargo index-linked agreement contracts (ILAs) based on TAC Index data sets.

“These indices are transactional-based, timely and fully audited.”

But, “The new BAI.S will ultimately enable further, more advanced risk management tools to be developed for all types of air cargo counterparties, greatly enhancing their ability to manage the volatility of the air cargo market.

“This will be a fantastic development for the industry,” Burnett enthused.

Mark Jackson, CEO of the Baltic Exchange, added: “If the trials prove successful, BAI.S will be the first spot assessments, based on actual shipments, for the air cargo market.

“Thanks to the support of the airline industry, we are able to draw out and assess the volatile spot rate element and provide a unique benchmarking tool.”

TAC Index offers weekly pricing data accessed by a broad array of freight forwarders and airlines.

Statistical filtering using proprietary algorithms is applied to generate truly representative general cargo indices.

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Established in 1983, Air Cargo News is the leading source of news, information, interviews, analyses and reports to the global airfreight industry. Our leading portfolio includes print, digital and events that give businesses in the airfreight industry the ability to connect with decision-makers in this sector.