The recovery we saw in January and February of this year slowed down in March and we can see this in the BAI decrease of -4.31% month over month. If we look at a comparison to March 2019 (since 2020 was an unusual year) air freight analyst CLIVE Data Services also shows a decline in demand of -3%.  

This year, capacity in March was very limited and therefore also volumes.  Against 2019, capacity was down 14%. However the load factor, last month at 73%, is an increase of 7% from that year. It appears current markets are still very much supply driven. A comparison with March 2020 volumes would show an increase of 29%, but the specific needs of early last year (ie PPE transport) means it cannot be a true comparison.

Now let’s look at some of the markets where we see interesting developments. The greatest volatility was on the North Atlantic routes last month:

 

BAI-FRA02 - Frankfurt to North America

·        Comparing February over March average pricing there has been a decline of EUR .04/kg or less than 1%.

·        Comparing March ‘20 vs March ‘21 the average rate increased by EUR 1.17. Looking at the highest rate in March ‘20 vs March ‘21 they were EUR 3.83 (week 4/2020) and EUR 3.84 (week 3/2020) making it more or less par.

This means we are still at very high levels and only EUR -.50/kg off the highest rate ever reached which was EUR 4.33/kg in December 2020.

 

BAI-LHR 02 – London Heathrow to North America

·        Comparing February over March average pricing there was an increase of GPB 0.28/kg or 8%.

·        Comparing March ‘20 vs March ‘21 the average rate increased by EUR 2.13/kg. Looking at the highest rates, they were GBP 2.79 (week 4/2020) and GPB 4.04 (week 4/2021) which is an increase of nearly 45%.

It is even more dramatic when we compare the first weeks of March 2019 at GBP 0.93, and 2020 at GBP 0.96 to 2021 at GPB 3.7 which represents an increase of close to 400%.

 

BAI-ORD01 – Chicago O’Hare to Europe

·        Comparing February over March average pricing there was an increase of USD 0.03/kg which is more or less on par.

·        Intra month volatility in March reached 10% in weeks 1 and 2 and was about twice as high (max to low) than in February.

·        The month start and end pricing for the two months almost equal in terms of volatility, but the two weeks in between for March showed higher volatility.

Capacity tightening or higher load factors could be an explanation, also overall demand would be a good indicator.

 

CN/HK – EUR
I have combined the two indices BAI-PVG01 (Shanghai Pudong-Europe) and BAI-HKG01 (Hong Kong Int’l to Europe) to take a brief look at the Asia markets.

Looking at the average pricing we do get an interesting picture:
·        March 2019 USD 2.70/kg

·        March 2020 USD 3.51/kg

·        March 2021 USD 4.09/kg

This represents an increase of 30% from ’19 to ’20, an increase of 17% from ’20 to ’21 and if we compare 2021 with 2019, an increase of over 50%.

 

The intra month changes (first week vs last week) were obviously most dramatic in 2020 but worth looking at in comparison:

·        March 2019 USD 2.70 vs USD 2.67 – USD 0.03

·        March 2020 USD 2.64 vs USD 4.58 + USD 1.94

·        March 2021 USD 4.07 vs USD 4.11 + USD 0.04

·        Feb 2021 USD 4.84 vs USD 4.17 – USD 0.67 – impacted by CNY

 

In summary, rates in March and February did not show huge volatility month on month and the intra month volatility was not as big as in previous periods. Whether this can now be viewed as a relatively stable situation on a much higher level than in 2019 remains to be seen. 

What is interesting is that pricing on all lanes discussed here are still higher than end March 2020 when the PPE impact was felt. 

What is interesting is that pricing on all lanes discussed here are still higher than end March 2020 when the PPE impact was felt.  The CN/HK to EUR lanes does have the bigger impact but on the North Atlantic, from the historical periods looked at, we see much steeper pricing trends.

 

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.