Airfreight rates on key trade lanes were on the rise in March and there is an expectation of further increases ahead.
The latest monthly figures from TAC Index show that average rates paid by forwarders – a combination of spot, contract and surcharges – on services from Hong Kong to Europe increased by 13.2% year on year to $4.97 per kg as a result of the US/Iran War and subsequent closure of airspace, loss of capacity and increase in jet fuel prices.
Prices from Hong Kong to North America were 3.4% down on a year ago on average for the month as a whole at $5.11 per kg, but sources indicate that by the end of the month, prices were ahead of the year-ago level.
The overall global Baltic Air Freight Index based on TAC data gained 9.4% over the four weeks to 30 March and was up 10% year on year.
“However, with rates surging much more on many key lanes, particularly between Asia and Europe, and with jet fuel prices more than doubling, signs are now pointing towards potentially steeper rises ahead,” TAC Index editor Neil Wilson said in his monthly market round-up.
Indeed, to 7 April, the four-week gain had risen to 25.2% and the year-on-year increase was at 15.8% with overall rates close to peak season levels.
TAC said that pure spot market prices are likely to be even higher as contracted rates would have been agreed before the outbreak of fighting.
“TAC Freight indices out of some other locations in Asia, such as from India, Vietnam and Thailand, were also showing steeper rises for the month, reflecting perhaps that these markets are typically dominated more by spot market activity,” Wilson said.
“Rates from other locations out of Asia, such as Korea and Taiwan, which were already at elevated levels, reflecting the boom in semiconductors and AI-related activity, were also higher in March but to a lesser extent as affected less directly by disruption in the Middle East.”
The air cargo market has been recovering from the initial impact of the outbreak of fighting, which resulted in a 20% loss of capacity on a global basis as market cargo players Emirates, Qatar and Etihad were forced to ground operations.
Figures show that capacity is now down by a lower amount of about 3-5% as supply chains have switched away from routing via the Middle East. Meanwhile, a two-week ceasefire was agreed earlier in the week
However, fuel prices continue to rise – TAC points to Platts data showing jet fuel price has increased by more than 100% since the start of March and others have warned that it could take months for airfreight operations to fully resume.
