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Air freight rates spike above $8 a kilo

Air freight rates spike above $8 a kilo
Freight and logistics sources are reporting strong rises in air freight prices on major lanes out of China and other parts of east Asia, as surges in demand meet continuing constrained capacity.

And the rises in air freight spot market prices are particularly crucial currently, because most capacity out of key Asian freight hubs is now being sold at spot market prices, freight sources confirm, with the market’s usual long-term capacity and pricing arrangements largely dispensed with this peak season due to the exceptional circumstances this year that have led to the majority of passenger belly freight capacity being cancelled due the Covid-19 crisis.

Figures from TAC Index confirm the recent strong rises in air freight prices on major lanes out of China, especially to the US. And although Hong Kong to US prices remained flat in the week to 19 October and significantly below those out of mainland China, prices from Hong Kong to Amsterdam rose by almost 15% last week. 

But from Shanghai, rates to major US gateways rose sharply in the week to 19 October, including rises of more than 30% to LAX and DFW – to around $8.60 from Shanghai to DFW – and around 25% increases from Shanghai to the US as a whole, taking average Shanghai-US rates above US$6 per kilo. 

Prices from Shanghai to major European airports have remained relatively flat overall recently, figures from TAC Index indicate, averaging around US$4 per kilo, although prices to key airports such as Frankfurt (FRA) and Amsterdam (AMS) rose last week by 7% and 10% respectively, to $3.82 and $4.68, respectively, while rates to Heathrow dropped slightly to an average of $3.44 per kilo. However, US forwarder Flexport said Asia-Europe prices had also jumped sharply in recent days.

Peak season has arrived

In its weekly Air Freight Market Update yesterday, Flexport commented that “the peak season has arrived”, noting that “rates ex-China spiked this week to over US$8.50 per kg to North America”, observing that “all of the anticipated product launches are now shipping in large volumes”.

It confirmed that rates ex-HKG “are lagging mainland China but are expected to quickly catch up in the coming week”. And it said capacity in many other southeast Asian origins “continues to be very tight as ground-handling congestion grows in key airports like BKK and SGN, with extremely long truck wait times and subsequent delays in getting freight built for the flight.”

And on the Asia-Europe market, Flexport noted that on the Far East Westbound (FEWB) “we finally see the expected peak season, with rates up more than two times the previous week. A key driver of the demand surge has been large automotive projects by Daimler Benz and BMW that have consumed hundreds of tonnes of air freight capacity daily and created capacity shortages continent wide. 

“Capacity is tight and longer transit times are expected especially from the key gateways of AMS and FRA.”

Elsewhere, Flexport noted that capacity on the Transatlantic Westbound (TAWB) was “highly constrained”, noting: “US rates have increased, especially in the east coast and mid-west, where capacity is particularly short.” It added: “Pre-booking is needed and longer transit times are to be expected.”

https://www.lloydsloadinglist.com/freight-directory/news/Air-freight-rates-spike-above-8-a-kilo/77643.htm#.X5aoEIgzbIU

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