Airfreight rates climb in July despite demand slowdown

03 / 08 / 2018

Airfreight rates on major trade lanes reached their highest levels so far in 2018 in July, despite a slowdown in market growth.

Usually, weaker demand growth is followed by a slowdown in rates, but this does not appear to be the case in 2018, perhaps because of concerns over space shortages after the situation in the second half of last year.

Also, while growth levels have not as strong in 2018 as last year, the amount of cargo being handled is putting some major cargo hubs under pressure.

The latest figures from TAC Index show that prices on services from Hong Kong to North America increased by 16.2% year on year in July to $3.88 per kg and were also up on the level recorded in June of $3.80 per kg.

This, along with June, is the highest level monthly prices on the trade lane have reached in 2018.

There was a similar result on services from Hong Kong to Europe, where rates increased by 23.2% year on year in July to $2.76 per kg.

This is also ahead of the level recorded in July 2015 and 2016 and is the highest level prices on the trade lane have reached in 2018.

Looking ahead, the forward curve produced by derivatives broker FIS Investor shows continued growth with a mid-point of $3.20 per kg reported for September, $3.60 per kg in October and $3.70 per kg for the fourth quarter.

“Air Cargo rates have continued to grow throughout July and look to continue to rise, resulting in a reluctance of airlines to commit their space for quarter four early,” FIS’ Nicola Hughes said.

“This is in the hope that they will achieve greater rates through the spot market at a later date. Leading shippers and freight forwarders to look for smarter ways to secure capacity in an environment where time to market is critical.”

Finally, the Frankfurt-North America lane saw rates increase by 24% year on year to $2.57 per kg. This lags behind the $3.06 per kg recorded in February, but this should not come as too much of a surprise as airlines add capacity to the trade for the summer tourist peak.

Click on chart for interactive version

 

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