SENIOR analyst at investment bank Stifel Bruce Chan says airfreight rates are expected to stay above pre-Covid levels for some time despite a muted peak season, reports London's air Cargo News.
In the latest Baltic Exchange newsletter, Mr Chan sad that while rates are expected to slip further given the economic outlook, he however does not expect them to dip back below pre-Covid levels in the near term.
'Given more inventory in the system, more fluidity in the supply chain, less residual boost from fiscal and stimulus policy, and uncertainty over the direction of the global economy, we do not believe there will be much of a peak,' Mr Chan said.
'That said, we believe pricing is likely to remain structurally higher than pre-pandemic levels for some time, due to a number of factors.
'Namely, geopolitical instability is keeping a cap on supply, even as passenger belly capacity is coming back online.'
He added: 'Finally, we believe residual volatility and still-out-of-balanced supply chains should support freight volumes as shippers look to both insure against rapid changes in the market and restore balance to their networks, even as core demand softens.'
He also pointed out that FedEx had scrapped plans to expand its capacity after revenues fell short of expectations, others could follow suit and reduce market capacity.
Mr Chan said that Stifel is expecting a muted peak season, but added that there is always the possibility of a downswing or an upswing, if inventories fall low enough to result in a late peak season spike.
'The one certainty is that freight markets in general - and especially highly dynamic airfreight markets - continue to see unprecedented levels of volatility and unpredictability,' he said.
'Forecasts and budgeting are more challenging than ever, and safety, insurance and flexibility remain king.'
SeaNews Turkey
In the latest Baltic Exchange newsletter, Mr Chan sad that while rates are expected to slip further given the economic outlook, he however does not expect them to dip back below pre-Covid levels in the near term.
'Given more inventory in the system, more fluidity in the supply chain, less residual boost from fiscal and stimulus policy, and uncertainty over the direction of the global economy, we do not believe there will be much of a peak,' Mr Chan said.
'That said, we believe pricing is likely to remain structurally higher than pre-pandemic levels for some time, due to a number of factors.
'Namely, geopolitical instability is keeping a cap on supply, even as passenger belly capacity is coming back online.'
He added: 'Finally, we believe residual volatility and still-out-of-balanced supply chains should support freight volumes as shippers look to both insure against rapid changes in the market and restore balance to their networks, even as core demand softens.'
He also pointed out that FedEx had scrapped plans to expand its capacity after revenues fell short of expectations, others could follow suit and reduce market capacity.
Mr Chan said that Stifel is expecting a muted peak season, but added that there is always the possibility of a downswing or an upswing, if inventories fall low enough to result in a late peak season spike.
'The one certainty is that freight markets in general - and especially highly dynamic airfreight markets - continue to see unprecedented levels of volatility and unpredictability,' he said.
'Forecasts and budgeting are more challenging than ever, and safety, insurance and flexibility remain king.'
SeaNews Turkey
