Airfreight rates on key trades reach new highs for 2018

07 / 11 / 2018

Airfreight rates on the transpacific and Asia-Europe lanes continue to improve in October despite capacity growth outstripping demand improvements.

Figures from TAC Index show that prices on services from Hong Kong to North America reached an average of $4.80 per kg in October, the highest level of the year so far and 18.5% up on last year.

Meanwhile, prices on services from Hong Kong to Europe were up 20.2% year on year to $3.09 per kg, also a high for the year so far.

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Prices on both trade lanes are also up on September levels, although this is a reflection of the usual seasonal trend.

The rise in prices follows the trend experienced for most of the year and also as the industry heads into its traditional peak season.

Shippers are looking to move cargo ahead of several key retail events: Christmas (December 25), Black Friday (November 23), Cyber Monday (November 26) and Singles Day (November 11).

There is likely to have been some catching up after the Golden Week holiday in China at the start of October. Weather conditions also had a negative affect on services during the month.

The continued increase in rates comes despite weaker market conditions – WorldACD reported that September was the first month in two-and-a-half years that saw cargo volumes decline on a year earlier, although weather conditions and fewer high volume Fridays played their part in this decline.

IATA, meanwhile, reported that supply additions continue to outstrip demand growth.

Rates rising despite capacity increases suggests that the additions are not enough to offset the demand growth of recent years and that shippers are still concerned about a repeat of past capacity shortages and are therefore willing to pay more to guarantee space.

WorldACD also pointed out that more expensive special products such as pharmaceutical, express and live animals continued to grow at double-digit percentage rates in September, much faster than lower value general cargo.

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