Global airfreight rates edged higher last week, reflecting shifts in market dynamics due to disruptions in ocean shipping. According to the latest data from TAC Index, the premier price reporting agency for airfreight, the global Baltic Air Freight Index (BAI00) rose by 0.4% in the week ending May 26. While the index remains 5.5% lower year-on-year, industry sources suggest rates may climb further in the coming weeks.
The recent stand-off on tariffs between the U.S. and China, which led to canceled ocean shipments, has prompted speculation that shippers may turn to air cargo as an alternative. This shift could potentially create a "COVID effect," reminiscent of the increased air cargo reliance seen during the pandemic. However, some experts note that ongoing customs challenges are causing hesitancy in certain U.S.-bound shipments.
Regional Highlights
Asia Pacific:
Rates from China rose week-on-week for both U.S. and European destinations, although they remain below last year’s levels.
General cargo activity on transpacific lanes remains steady, while e-commerce demand continues to lag.
Spot market activity has grown, driven by the cancellation of numerous block space agreements (BSAs) earlier this year. Spot rates, particularly from Shanghai (BAI80), surged 6.1% week-on-week, rebounding from prior declines, yet they are still 10.3% lower year-on-year.
By contrast, rates from Hong Kong (BAI30) dipped 1.2% week-on-week and are 6.1% lower year-on-year.
Rates from Vietnam showed little change for European destinations but declined for U.S. routes, leaving them significantly lower year-on-year for both directions.
Rates from India also softened slightly week-on-week for both Europe and the U.S., and now sit well below year-ago levels.
Europe:
Airfreight rates from Europe remained largely stable, with variations across specific routes.
Rates to China posted gains, while those to the U.S. and Japan declined.
Frankfurt (BAI20) recorded a modest 0.2% week-on-week increase, leaving rates 8.7% higher year-on-year.
Outbound London Heathrow (BAI40) saw rates ease down 0.8% week-on-week, now sitting 4.1% lower year-on-year.
North America:
Rates from North America to Europe were flat overall but dropped for routes to China and South America.
Overcapacity on Latin American routes has emerged after substantial rate increases in the past year.
Chicago (BAI50) experienced a sharp 11.3% week-on-week decline following recent gains but remains 4.1% higher year-on-year.
Market Insights
The global airfreight market continues to experience volatility as businesses navigate shifting trade policies and logistics disruptions. Spot market activity has intensified, reflecting the ongoing adjustments to supply chain dynamics. While certain routes, such as Shanghai to Europe, are rebounding, others face downward pressure due to overcapacity and softer demand.
As the industry adapts, the interplay of ocean shipping disruptions, customs challenges, and market adjustments will remain pivotal in shaping airfreight trends.
Source: https://aircargoweek.com/rates-edge-up-amid-ocean-shipping-disruptions/
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