As reported widely in the trade press, airfreight capacity is still scarce on many key trade lanes. Prices remain strong as economic activity picks up whilst passenger air capacity remains constrained due to restrictions on international travel.  The BAI increased by 3% in May over April: a marked slowdown on  April’s growth of 17% over March.  

Pricing strength continues to be seen ex China and Hong Kong to the US and Europe and from Europe to the US with all three trade lanes seeing price increases in May over April, although prices peaked in early May and have fallen away in recent weeks.  

Pricing strength continues to be seen ex China and Hong Kong to the US and Europe and from Europe to the US with all three trade lanes seeing price increases in May over April, although prices peaked in early May and have fallen away in recent weeks.

US to Europe saw a price decline in May over April levels. However, prices have started to rise in the last two weeks after an almost continuous decline since late March.  Comparing the May average price levels to May 2019 shows the relative strength of the four trade lanes. The EU-US leads the way at +173% followed by CN/HK-US at 151%, CN/HK-EU and US-EU have more modest levels at 84% and 64% respectively.

May 2021 CLIVE data versus the same month of 2020, when Covid restrictions caused severe disruption to the global aviation market, show +41% growth in chargeable weight, a +42% rise in available capacity, and a +1% point increase in dynamic load factor. These figures, however, also represent a slowing down versus April when volumes were +78% year-over-year.

There continue to be market differences in the airfreight indices as can be seen below.

CN/HK – US

On average May prices were up versus April by 9% with the highest rate of the year of USD 8.90 recorded in the week ending 10 May.  The underlying trend continues to show prices rising steadily.

  • HKG – US (BAI-HKG04) continued to be exceptionally strong with the highest rate of the year at USD 9.23 recorded in early May and the monthly average up 8% on April.
  •  PVG – US (BAI-PVG-04) also recorded its highest level of the year in early May at USD 9.22 and although the rates dropped through the month, the average was 5% above April levels.

CN/HK – EUR

Although the average rate in May is up 5% on April, there have been declines in recent weeks from the 2021 high of $5.07 in the week ending 3 May.

  • Both indices (BAI-PVG01 & BAI-HKG01) to Europe show a remarkably similar picture with an improvement in May over April by 3% and 4% respectively.  Both saw a year to date and monthly high at the start of the month followed by lower levels in subsequent weeks.

US – EUR

There has been a steady decline in the weekly rate since the 2021 high of USD $2.13 in the week ending 23 March, with the May average down 5% on April. 

  • ORD – EUR (BAI-ORD01) reflected this trend with a price of USD 1.63 down versus April by 3% although the month finished strongly at USD 1.89, a 30c increase on the previous week.

EUR – US

This market continues to be the most volatile with the rates trending upwards in recent weeks so that the May average was up 2% on April.

  • FRA – US (BAI-FRA04) at 4.03 was up 2% on April but still down 7% versus March levels. 
  • LHR – US (BAI-LHR04) at 5.68 is up on April by 7% and 11% versus March levels.

In summary, the airfreight market continues to be strong, particularly CN/HK to US and is likely to continue for some time as demand in several markets continues to outstrip supply as E-commerce continues to flourish and economic activity strengthens in many markets.

 

Gareth Sinclair, Advisor to the Board, TAC Index

Gareth started with British Airways Passenger Business in Financial & Commercial management roles almost 30 years ago. In 2007 he joined British Airways World Cargo, driving significant transformation in Pricing and Revenue Management systems. As Head of Revenue Management and Pricing for IAG Cargo, he introduced enhanced analytical capabilities, dynamic bid price vectors and the move towards dynamic pricing.