Rates end 2022 on a flat note but ahead of pre-Covid levels
05 / 01 / 2023
By Damian Brett
Airfreight rates on key trade lanes ended the year on a flat note, but remain above pre-Covid levels.
The latest statistics from the Baltic Exchange Airfreight Index (BAI) show that average rates – both contract and spot – paid by forwarders on services from Hong Kong to North America in December stood at $6.50 – flat compared with November and down 48.9% on a year ago.
Rates on the trade have been falling since around May last year as passenger operations have continued to recover after the pandemic and demand has eased off due to weakening economic conditions.
However, it should be noted that prices on the trade remain above pre-Covid levels – in 2019 forwarders were paying an average of $3.62 per kg, while in 2018 the average rate stood at $4.68 per kg.
On services from Hong Kong to Europe there was a similar trend as average rates in December stood at $5.52 per kg – slightly down on a month earlier and 31% down year on year.
However, prices to Europe are also up on pre-Covid levels when forwarders were paying $3.15 per kg in 2019 and $3.50 per kg in 2018.
Meanwhile, average prices from Frankfurt to North America increased by 11 cents on November to $4.36 per kg.
Prices on the trade are down 16.3% year on year but remain far ahead of the $1.76 per kg achieved in December 2019.
Looking ahead, it is yet to be seen how the easing of Covid restrictions in China will affect the market.
“The effect of China’s sudden decision to relax Covid restrictions was not immediately clear with rapid spread of Covid there impacting both production and manpower in air transport – and unlikely to be clearer until after Chinese New Year,” said TAC Index in its weekly bulletin.
Xeneta-owned CLIVE Data Services of Xeneta is expecting rates to come under pressure in the coming months.
“It’s clear it remains in a very unpredictable state given world events. We don’t see demand recovering quickly because of what is happening around the world, but we do expect to see supply continuing to come back into the market,” said Niall van de Wouw, chief airfreight officer at Xeneta.
“This, of course, will put further pressure on load factors and rates. So, we struggle to see where the tailwinds will come from, but looking at the broader perspective, we still see a very efficient air cargo market.”
The industry “will likely be impacted by the earlier Chinese New Year and growing concerns of rising Covid levels which, in China, is already impacting some factory production”, CLIVE added.