A fairly mixed picture through June with index prices slowly coming off from a second peak earlier in the year, down to $4.32/kg on Hong Kong to Europe, with a sharper decline from Shanghai to Europe down to $4.08/kg today. Much of this is attributed to a general tapering of demand, despite sea-air conversion on the back of strong ocean freight congestion as a result of incidents in The Suez Canal and Yantian. The forecast remains for another peak following a highly supportive summer period (an unusual thing for the ‘normal’ airfreight market), stretched inventories and the reopening of economies post-COVID brings with it both strong demand but also strong forward capacity.

The Asia to USA route saw several supporting factors through June. Fairly consistent demand was bolstered by sea-air conversions and some relatively persistent problems drawing off capacity from specific operators (Cathay Pacific and the now remedied quarantine issues being a key factor). The transpacific route, as with Asia-Europe, remains dominated by Freighters. And even with rates coming off slightly since the start of June, these have since rebounded once again. 

Looking forward into the near-term market, a lot still rides on the return of long-haul travel, most likely impacting transatlantic routes first before the Asia market.

Looking forward into the near-term market, a lot still rides on the return of long-haul travel, most likely impacting transatlantic routes first before the Asia market. This has been driven by indications from European and US governments to reopen passenger travel for vaccinated travellers (some of these announcements have already happened) and provides a window into how any long-haul Asia inbound/outbound passenger travel might develop. Owned charter capacity is still king. However, as rates come off - and passenger-freighters become less viable - we may also see another rebound in rates as capacity goes off-line, and then comes back online, as demand and prices recover.

 

About Peter Stallion, Head of Air and Containers, Freight Investor Services

Peter Stallion heads up the Air and Container Freight desks at FFA brokerage Freight Investor Services. He started his career in air freight chartering, and has a passion for emerging risk management markets and the logistics industry.