Forwarders and carriers are watching the airfreight rate market with much interest right now – but the data remains dominated by Chinese New Year.
WorldACD explained: “The impact on air cargo is unlikely to be clearly visible in data terms until at least next week, although the extent is likely to be masked for several weeks by the effects of lunar new year.”
The Asian holiday season – and a fortnight of factory closures – accounted for a global 12% drop in volumes, with a 33% decline from Asia Pacific in the week to 2 February.
WorldACD noted that the fall in tonnages was “partially offset” by increases in volumes from flower-growing regions, with Central and South America up 16%, and Africa up 11%.
“Nevertheless, total worldwide tonnages in week five were down 14%, compared with the same week last year. Alongside a 29% year-on-year drop from Asia-Pacific origins, there were also YoY falls from Europe (-7%), Middle East & South Asia (MESA, -5%), and North America (-1%).”
Average global rates, a mix of spot and contract, are 5% higher than this time last year, with MESA up 33%, Asia Pacific up 11% and Africa up 12%.
“Despite the big drop in tonnages from Asia Pacific origins, spot rates from that region rose, week on week, by 3% to $3.87 per kg, 21% higher than the equivalent week last year,” said WorldACD.
“Spot rates from MESA origins rose by further 4%, WoW, taking them 58% above the levels this time last year, when they had just begun rising, in the relatively early days of the Red Sea crisis. A 14% week-on-week rise from Africa has lifted spot rates from that region 25% higher, YoY. The only origin region where spot rates were lower than last year’s week five was North America (-5%, YoY).”
The air cargo market will be desperately trying to see whether the Trump administration’s ban on de minimis shipments from China will have a significant effect.
WorldACD reported that “China to Europe tonnages in week five recorded a bigger (-28%) WoW percentage drop than China to US volumes (-21%). However, China to Europe spot rates held up better, dropping just 1%, WoW, whereas China to US spot rates saw a deeper (-8%) WoW fall.”
But the Baltic Exchange said today that “it appears as though many in the air freight sector are beginning to prepare to absorb the short-term costs” [of the de minimis ban].
It added: “The Baltic Air Freight Index highlights the opposing performance across key tradelanes. Rates from Shanghai to North America stand at $5.17/kg, reflecting a $0.12 decline, while transatlantic demand remains robust, with Frankfurt to the US increasing to $3.17/kg.
“Despite some resilience in certain regions, the impact of policy changes in the United States and South-east Asia’s manufacturing boom is creating volatility and altering capacity dynamics globally.”
It added: “Tariff-driven concerns have softened rates on key transpacific routes. Despite initial pre-tariff surges in January, Shanghai-origin rates … now reflect a softening of ecommerce-driven demand. “
It added that some carriers were shifting freighter capacity to intra-Asia routes, “capitalising on South-east Asia’s manufacturing growth, especially across Vietnam, Indonesia, Thailand, and the Philippines”.
“These adjustments are helping balance capacity across regions, but highlight the need for quick strategic redeployment as demand patterns keep shifting.”
The TAC Index-powered Baltic Exchange revealed that the transatlantic was surprisingly strong.
“European exports to North America remain a bright spot for the air cargo market, which is an unusual situation for this time of the year. High-value industrial shipments are sustaining strong demand, with London Heathrow to North America (BAI42) rising to $1.87/kg. This resilience is supported by stable economic activity and the need for reliable delivery channels, particularly for sectors like aerospace and automotive.”
Neel Jones Shah, former head of airfreight for Flexport, told Freight Buyers Club podcast that, last year in particular, ecommerce had continued to fly through Chinese New Year, but it’s different this year. He said charter operators had made “massive cuts”.
“We’ve seen quite drastic reductions in schedules.
“I think that over the next few weeks we’re going to get a really quick read on how the consumer is reacting, and at the end of the day it’s really the low-income consumer that gets impacted the most, because their access to really cheap goods gets cut off.
“We’re going to know really fast. In two weeks, I guarantee you, we’re going to have a really good read on what’s going on in volumes, because the reaction will be very real-time.”
