A sign of the times – forwarders recording record air freight revenues in the first half of 2021. This is happening as economies kick back into action on the back of what remains to be a very tight capacity market across the vast majority of freight modes. 

These resurgent volumes haven’t really been matched by any strong resurgence in passenger travel particularly on long haul routes – the recent opening of the US-UK and US-EU travel corridors provides a glimmer of hope in terms of passenger strength. However, the overriding sentiment is caution.

We saw volumes return to a normal level, with 2020 volumes reducing noticeably against an absolute capacity cap after passenger flights were grounded. These resurgent volumes haven’t really been matched by any strong resurgence in passenger travel particularly on long haul routes – the recent opening of the US-UK and US-EU travel corridors provides a glimmer of hope in terms of passenger strength. However the overriding sentiment is caution.

Large hubs in China (including Beijing) have gone into lockdown, pushing more 14 day quarantine requirements for flight crews on completion of missions into and out of Europe and the US from China. A symptom of this, PVG01 Shanghai to Europe had started to rebound inside of the normal slack season, up from $4.08/kg to $4.59/kg 21 June – 2 August with more bullishness in the short term. PVG04 Shanghai to USA also rebounded within the same period now closer to May21 levels at $7.61/kg.

Trans-Atlantic routes have remained highly supportive ever since their sudden boost in 2020 following passenger flight cancellations, riding high at $4.92/kg as of 2 August – with the attempt at an opening of travel on the core US-EU and UK routes. Directionally the market should be quite bearish. However caution still prevails – there is very little evidence of any sense of renewed confidence to open capacity. On the passenger side, capacity will react to demand. Anecdotally, it still remains very common that passenger schedules will effectively roll or cancel in reaction to actual demand for the flight. This makes the picture for trans-Atlantic prices very difficult to predict with any certainty. Caution is more obvious on the Frankfurt outbound, FBX04 Frankfurt to USA sitting flat today and fairly in line with its consistent level since the end of April 2020.

A good sign of passenger sentiment is expressed in a headline from The Times on 1 August 2021 – “Flights are boarding now, but for sunseekers only”.

 

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.