Airfreight rates are beginning to “soar”, according to one Chinese forwarder, and airfreight indices have shown decent growth since 1 October.
TAC Index data shows rates out of China to the US up 6%, and up 4.6% to Europe, in the past month – but, out of Hong Kong, rates grew 14% to North America, to $5.80 per kg, and 9.7% to Europe, at $4.26/kg.
Freightos’ FAX shows bigger jumps: rates from South Asia to North America have jumped 12.5% since the start of October; and there was a hefty 21% rise from South Asia to Europe – in the 100kg to 300kg category.
One Shanghai-based forwarder said the market was finally taking off.
“Airfreight rates have increased week by week since the end of September actually. It started from North America, with some significant rates increases throughout October. Then airfreight rates to Europe gradually increased – but in the past couple of weeks they have been soaring.”
The forwarder added that volume demand was also changing.
“Space is tight, and pre-booking is a must. It is rare to see, but in Shanghai lately larger cargo has attracted more expensive rates than smaller cargo, which indicates it is getting hard for some airlines to take large consignments.”
He added that e-commerce was one major driver behind the rates increase, but he is also seeing retailers rush to fill Christmas stock.
It’s not true for every large company, but many US retailers saw inventories finally fall in the first half, after a long period of being overstocked. DIY store Lowe’s saw inventory fall some 10% in the first half, as did Home Depot, and Target inventories fell more than 17%. Walmart’s fell by less, just 5.3%, while Procter & Gamble bucked the trend, seeing its inventories up 13%.
The forwarder believed the need for Christmas shipments would see this ‘peak’ last and added: “I think this is likely to continue through this month and until early December, at least.”