Airfreight rates show signs of improvement in January

Airfreight rates showed signs of improvement in January, but the outlook is clouded by the timing of the Chinese New Year and the impact of the coronavirus.

The latest data from Tac Index shows that in January prices on services from Hong Kong to Europe were level with a year earlier at $2.83 per kg.

This is the first time that rates on the trade lane have achieved parity with a year earlier since June 2019.

There was also an improvement on rates between Hong Kong and North America, where prices were 14.2% down year on year at $3.14 per kg.

This is the narrowest year-on-year decline recorded on the trade since July 2019.

However, the picture on both routes is clouded by the Chinese New Year, which sees a rush of cargo – and therefore rate hikes – ahead of factory closures for the national holiday.

This year the holiday started on January 25 whereas in 2019 it began on February 5.

The outlook is also clouded by the impact of the coronavirus. Chinese exports and cargo capacity are both down as a result of the outbreak but there is expected to eventually be a rush of demand when production returns to full capacity.

With capacity down, this is likely to cause a spike in air cargo rates.

At the time of writing, there was no indication of an increase in rates. Early February figures were largely in line with expectations.

Derivatives broker Freight Investor Services (FIS) warned that rate data for the start of February was volatile due to the low volumes.

One trend noted by FIS is a shift in demand to Shanghai for European traffic and Hong Kong for US destined volumes.

“All eyes will be on how quickly air and sea carriers can muster capacity to provide suitable uplift for any freight volume spike, and how substantial and quantifiable this volume spike might be,” FIS said.