BAI Index October: Market Summary
Many in the industry are asking, ‘Peak, what peak?’.
We have had peak conditions for months as supply chain disruption and rebounding demand have combined to create a huge imbalance between demand and supply of capacity. Capacity is increasing, particularly on the North Atlantic, as passenger restrictions have been eased by the US and Europe. However, this also means more passenger bags and less freighter only opportunities for passenger cargo businesses.
The latest week’s level is the second highest of the year and only 0.6% of the record level seen in the week ending September 27th. The upward trend since late June has continued almost uninterrupted other than a fall in early October.
The BAI index average 4,148 for the month of October which is an improvement of 4% on September, +62% versus 2020 and a huge 165% increase over the same period in 2019. The latest week’s level is the second highest of the year and only 0.6% of the record level seen in the week ending September 27th. The upward trend since late June has continued almost uninterrupted other than a fall in early October.
The differences by market in the airfreight indices are detailed below.
China and Hong Kong markets saw differing performance in October versus September with China declining marginally. This is likely due to golden week and declining production, whilst Hong Kong improved by 8%. Both continued to show strong gains versus last year at +70% and exceptional growth versus 2019 (170% and 201% respectively).
- Both indices (BAI31 & BAI81) to Europe saw month-on-month improvements of 21% and 10% respectively.
- The difference by market was on flows to North America with HKG +3% versus September levels whilst PVG was -5%.
- Hong Kong did see declines month-on-month to Southeast Asia (BAI33) which finished the month -7%.
The market ex Chicago saw positive performance to both Europe and Southeast Asia but to different magnitudes.
- ORD – EUR (BAI51) was up 1% versus last month, but down 3% versus 2020. However, the latest month was still positive versus 2019 by 80%.
- ORD – SEA (BAI53) was up 7% versus September and 101% higher than last year and 84% growth versus 2019.
The European markets showed a positive performance versus last month overall with FRA +6% and LHR +7% although there continued to be a mixed performance by lane.
- FRA – US (BAI24) was up 3% versus September, 14% on last year, and +134% versus 2019.
- FRA – SEA (BAI23) was up by 9% over last month and 81% versus 2020 whilst FRA – China (BAI25) was +18% and +134%.
- LHR – US (BAI44) was down 2% versus September, up 14% versus 2020, and up a huge 343% versus 2019.
- LHR – SEA (BAI43) was up 21% on last month and 86% versus 2020.
SIN to SEA (BAI63) continued to be very erratic and its downward trend, although recovered slightly in recent weeks. October’s average level fell by 3% versus last month but is still 9% above 2020 and 80% versus 2019.
In summary, air freight prices continue to move upwards in response to demand and capacity constraints and may remain high even beyond the holiday period as inventories continue to be replenished.
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.