Airfreight rates to stay above pre-Covid despite muted peak

Credit: Shutterstock

Airfreight rates are expected to stay above pre-Covid levels for some time despite a muted peak season.

Over the last few months, air cargo rates have been falling, said senior analyst at investment bank Stifel Bruce Chan in the latest Baltic Exchange newsletter.

However, while they are expected to slip further given the economic outlook, he does not expect them to dip back below pre-Covid levels in the near term.

“Given more inventory in the system, more fluidity in the supply chain, less residual boost from fiscal and stimulus policy, and uncertainty over the direction of the global economy, we do not believe there will be much of a peak,” Chan said.

“That said, we believe pricing is likely to remain structurally higher than pre-pandemic levels for some time, due to a number of factors.

“Namely, geopolitical instability is keeping a cap on supply, even as passenger belly capacity is coming back online.”

He added: “Finally, we believe residual volatility and still-out-of-balanced supply chains should support freight volumes as shippers look to both insure against rapid changes in the market and restore balance to their networks, even as core demand softens.”

He also pointed out that FedEx had scrapped plans to expand its capacity after revenues fell short of expectations, others could follow suit and reduce market capacity.

Chan said that Stifel is expecting a muted peak season, but added that there is always the possibility of a downswing or an upswing, if inventories fall low enough to result in a late peak season spike.

“The one certainty is that freight markets in general – and especially highly dynamic airfreight markets – continue to see unprecedented levels of volatility and unpredictability,” he said.

“Forecasts and budgeting are more challenging than ever, and safety, insurance and flexibility remain king.”

Airfreight rates to grind lower despite high inventories

Transpacific airfreight pricing dips below 2021 levels in August

Share this story

Related Topics

Latest statistics news

Airfreight rates slide in line with Lunar New Year holiday demand decline

Airfreight rates began their Lunar New Year holiday decline last week after rising in the first six weeks of the…

Read More

Share this story

Survey: Air cargo optimistic for the year ahead

Air Cargo News recently carried out a survey of airfreight professionals and found the majority are expecting market conditions to…

Read More

Share this story

DSV sees air revenues and volumes tumble in 2023

DSV’s airfreight revenues, volumes and gross profits all took a hit last year due to improved ocean shipping operations, high…

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]