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Airfreight rates tick up as passenger-freighters depart from the market

Airfreight rates have increased after the declines of the past weeks, with forwarders reporting further increases on the way

23 July 2020 - 19:06

Airfreight rates have increased after the declines of the past weeks, with forwarders reporting further increases on the way.

One forwarder noted that rates have jumped up by US$1 per kg from Shanghai to Europe, and carriers also announced increases. 'We expect further advice tomorrow and for the weekend.'



The unnamed forwarder said the rate rises were due to falling capacity as passenger-freighters leave the market, weak passenger demand, rising PPE requirements for some countries seeing more Covid cases and an increase in general cargo, reports UK's The Loadstar.



Medium-term expectations show both demand and capacity likely rising.



Freight Investor Services (FIS) has pointed to a potential slew of tech launches in September, while, according to some reports, Amazon has set its delayed Prime Day for October 5.



'On the demand side, near-term volumes remain somewhat slack (we use this term cautiously?? and tech releases (the sort that spiked the transpacific market in 2017), stacked up for September onwards, loom,' noted FIS.



The latest figures from the TAC Index, for last week, show the biggest rises out of China, with China to the EU up 6.17 per cent to $3.27, and Hong Kong to the EU up 3.29 per cent to $3.14. Hong Kong to the US rebounded 10.9 per cent to $4.90, while China to the US rose 4.86 per cent to $3.27. The only declines were Shanghai to the US, down 1.08 per cent and Chicago to the EU, down 7.95 per cent.



Accenture's Seabury noted last week that 'air cargo capacity has been deteriorating for the last two weeks. North America to Latin America is the only tradelane that shows an improvement in cargo capacity. Transpacific cargo capacity declined (both ways) for the first time since early May'.



And there have been more announcements on the supply side, as airlines release schedules and raise the number of passenger flights. Emirates, for example, expands its destinations to 63 in August. Most carriers now have secured funding packages and have begun to work out their future shape.



'We have started to see a bit more clarity on the passenger supply side; airline right-sizing has generally been announced in their entirety, as have the wide-array of bailouts,' said FIS. 'Load factors, particularly on the long-haul wide body routes that take the lion's share of global cargo, remain low. A good indicator of this, London Heathrow's Terminal 4, remains out of use until 2021.'



Few expect passenger traffic to come back with any real impetus soon, further buoying freighter operators. Nadeem Sultan, chief executive of Cargologicair, said: 'Everyone in the air cargo world has been affected by the overall impact on the passenger side and how much widebody capacity will come back into the market.



'If passenger capacity comes back, it could become a challenge. But so many widebodies are parked, and you don't do that for the short term.'


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