BAI Index: Current Market Summary
The much-hyped large “vaccine” volumes did not materialize in January 2021 as per our data. It is probably fair to say the supply chain planning was done properly. Volumes in January were more or less stable, and this is most likely because of the “vaccine” shipments. Without them, we expect volumes would have dropped. There is increased demand for hi-tech / communication equipment from consumers in the USA and naturally, parcels and e-commerce still see a growing trend.
Currently, schedules and capacity are visibly being driven by cargo demands. Since there is hardly any passenger business the payload for cargo is at an absolute maximum as little baggage is being transported. Most positions on passenger aircrafts can therefore be used for cargo. The rest of the capacity comes from freighters and “pfreighters”.
The current price for a 40’ ocean freight container from Asia to Europe is about USD $8k. On an assumed payload of 25 tons and converted to current average airfreight pricing this would translate into USD $110k.
We must also note the impact the current situation in container ocean freight has had on January volumes.
The lack of ocean carrier capacity and even equipment has contributed to a modal shift last month from ocean to air. The current price for a 40’ ocean freight container from Asia to Europe is about USD $8k. On an assumed payload of 25 tons and converted to current average airfreight pricing this would translate into USD $110k.
When comparing January (4 weeks) with December (5 weeks) we can see particularly in North America a general drop by BAI-FRA02 (-11.16%) and BAI-PVG02 (-19.73%). Both trades have in common that pricing was strong into the first week, then dropped significantly before recording an upward trend of 9% and 20% respectively in the last week compared to the previous week.
It is fair to assume that this is driven by the upcoming Chinese New Year on February 12, 2021.
From Asia to both North America and the EU, prices dropped significantly with a maximum drop by BAI-HKG01 of -23.40 % for the latter, but also here the last week saw an increase of close to 6% compared to the previous week.
North American routes BAI-HKG02 and BAI-PVG02 both dropped by -14.33% and -19.73% respectively. When looking at BAI-HKG04 to the USA however, the drop was a more significant -23.06% which leads to the assumption that the Mexico/Canada pricing did hold up in January. The reverse seems to be true for BAI-PVG02 since the index change of BAI-PVG04 into the US was a lesser -18.95%.
Prices into South East Asia increased most trades with BAI-HKG03 up 2.51% and BAI-LHR03 up 13.55% though BAI-ORD03 dropped by -13.38%.
Out of London Heathrow prices were again up - BAI-LHR04 1.33% and BAI-LHR03 13.55%. Only BAI-LHR02 dropped by -2.53%, the lowest drop in North America of all trades.
About Robert P. Frei, Business Development Director, TAC Index
Robert was instrumental in defining the TAC Index product. His air freight experience spans over 25 years in high-level positions at one of the leading freight forwarding companies. He is recognized for his passionate involvement in several innovations in the air freight industry. At TAC Index he focuses on the data providers.