Date: Tuesday, September 5th, 2023
Source: Air Cargo News
Major trades out of Hong Kong and Frankfurt saw airfreight rates stabilise in August after months of declines [see dashboard at end of article].
The latest figures from the Baltic Exchange Airfreight Index (BAI) show that average prices paid by forwarders – both contract and spot – on services from Hong Kong to North America increased to $4.85 per kg in August compared with £4.69 in July.
Rates are lagging 41.8% behind the same month a year ago, although this is an improvement on recent year-on-year performance and prices remain above the pre-Covid 2019 level of $3.29 per kg.
Meanwhile, rates from Hong Kong to Europe in August increased to $3.65 per kg from $3.62 per kg a month earlier. The last time rates didn’t decline compared with the previous month on the trade was August 2022.
Rates on the trade are down 42.4% on a year ago but are up on the $2.56 per kg recorded in August 2019.
There was also an improvement on rates from Frankfurt to North America as prices climbed to $2.19 per kg from $2.13 per kg.
It is the first time rates on all three trades have improved in the same month since May 2022.
The improvements in rates on the trade in August compared with July mirrors usual seasonal patterns when prices tend to be fairly flat over the summer months.
However, as they come off the back of a period of declines, they are perhaps another signal that the market may have reached the bottom.
Data provider WorldACD said that global tonnages increased in the third full week of August, following a similar pattern as last year, mainly driven by Europe rebounding from the holiday season, while rates remained stable.
TAC Index said in its weekly market report that strong e-commerce business out of southern China continued to keep rates edging up from that region.
However, it also reported that the overall Baltic Air Freight Index slipped another 1.8% in the week to August 28, taking its fall over 12 months to -45.9%.
“With jet fuel prices rising sharply in the past month, continuing weak cargo rates will be piling further pressure on operators of dedicated freighters – especially those with older, less fuel efficient planes – in what some see as a ‘survival of the fittest’ test,” TAC said.