For March it was more of the same in the air freight market since February. However, the big change is attempted sea-air conversion:  a result of  congestion at the Suez Canal delayings cargo.  What were straightforward cargo schedules will become time-critical and start to move via aircraft charter. The nature of the index (with a delay of one week) means we haven’t really seen a responding impact in the index prices on any of the routes. However, looking forward into April and May 21, we’ve seen corresponding buy interest pushing up Asia to Europe prices. 

Shanghai to Europe climbed seven cents on settlement for March and five cents for April and May, with a corresponding five cent push for Hong Kong to Europe.

Shanghai to Europe climbed seven cents on settlement for March and five cents for April and May, with a corresponding five cent push for Hong Kong to Europe.

On Asia to USA, we’ve seen sharp corrections through the month on the back of persistent volatility. Shanghai to USA gained 47 cents on March settlement and 45 cents on April. The bullish sentiment was already somewhat priced in early in the month, as air freight had already seen sea-air conversions on the back of North America West Coast port congestion. Further congestion in container freight as a result of Suez delays will also impact availability of air freight capacity that is already stretched or booked out under charter programmes with major freight forwarders.

Trans-Atlantic prices, and everything ex-Europe, tended to remain range-bound throughout March. We’ve seen a lot of inter-week volatility continuing to push prices and correct the forward curve up and down, currently pricing two cents higher for Chicago to Europe Apr21 and 10 cents lower for Frankfurt to USA. 

On the back of the confidence in vaccines, we’ve seen the Q3/Q4 trans-Atlantic FFA price start to collapse on the predication that passenger volumes will start to return from Q3 onwards, alleviating the required rates for aircraft.

On the back of the confidence in vaccines, we’ve seen the Q3/Q4 trans-Atlantic FFA price start to collapse on the predication that passenger volumes will start to return from Q3 onwards, alleviating the required rates for aircraft.

The key driver for any substantial price action remains passenger volumes, something that should become a core indicator for everyone watching prices in the air freight market. 

 

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.