Hong Kong-US air cargo rates index reaches new high for the year
15 / 09 / 2021
Air cargo prices on services from Hong Kong to North America surged to a new high for the year last week as the peak season kicks in and Golden Week approaches.
According to the Baltic Exchange Air Freight Index (BAI), average rates on the route reached $9.70 per kg last week, which beats the previous high of $9.53 per kg recorded in mid-May.
Compared with the same week last year prices are up by around 85%.
And prices on the spot market are likely to be higher as the index includes block space agreements.
The Golden Week holiday in China, starting October 1, also causes a surge in demand out of locations across Asia as companies stock up before the one week break.
Freight forwarder Flexport said the market out of Hong Kong remains tight with limited capacity and longer transit times expected.
“The [Hong Kong] market demand remains strong through Q3 and extended transit times are expected. More ocean to air conversions are also contributing to higher rates,” it said.
There is also ongoing congestion at Shanghai PVG as the airport continues to catch up from closures in mid-August due to covid outbreaks.
Index prices from Shanghai to North America are understood to be even higher, at almost $11 per kg – the highest they have been since the PPE crisis in mid-May last year.
Compounding issues is the closure of Shanghai’s ports and the cancellation of many flights from the city due to the expected arrival of Typhoon Chanthu earlier this week.
“PVG airport is still operational at a lower capacity,” Flexport said “Additionally, Typhoon Chanthu has pushed airlines to cancel more flights than the previous week. As a result, rates have increased for transpacific eastbound and transit times are expected to extend by five to seven days.”
Judah Levine, head of research at rate portal Freightos, said: “Though air cargo rates out of China have stabilised as Pudong continued to recover from the recent Covid outbreak, the typhoon has closed airports around Shanghai, adding a new disruption to air cargo which could push prices up again soon.”
Prices from Hong to Europe were also on the rise last week, reaching $5.24 per kg – the highest level since December last year. Compared with a year ago, prices are up by 54.1%.