After coming off quite dramatically at the start of January, the February forward curves paint a fairly stable picture for Q1 2021, with Q2 2021 and further out still rocked by uncertainty. In terms of Airfreight FFA pricing, Ex.Asia prices still remain slightly backdated, attributable to a seasonal drop-off in demand after Chinese New Year. However, the base price level remains much higher than the start of 2020 (pre-COVID). Price still remains highly capacity rather than demand-driven.

Most of the airfreight story remains centred around Europe. Prices have jostled between minor price losses and gains driven by strong ad-hoc business and bolstered by vaccine cargo. Similar to the ex.Asia routes, capacity remains the key factor for price levels rather than any year-on-year changes in demand. However, much of this price development will rely heavily on the return of passenger travel. The underlying gauge for this is the progress of vaccinations. Following on from this will be the scope of international travel restrictions, particularly between Europe and North America. Recent uncertainty and the aggressive nature of travel restrictions on both sides of the Atlantic have been bullish for forward pricing.

There has actually been relatively little material change in forward capacity, with the market content in considering COVID-19 a truly black swan event that is slowly drawing down in terms of market impact.

There has actually been relatively little material change in forward capacity, with the market content in considering COVID-19 a truly black swan event that is slowly drawing down in terms of market impact. However, forward markets remain notoriously difficult to predict, with a potential demand shock with a logical move of consumer spending away from goods to services, reversing the 2020 trend.

 

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.