Global air cargo capacity is almost back to 2019 levels, however, there are big variations by trade lanes which is impacting the movement of freight rates.  

Passenger capacity has increased significantly in recent months, particularly on the North Atlantic, and freighter capacity continues to be high so that capacity is no longer under the pressure seen over the last couple of years.

Passenger capacity has increased significantly in recent months, particularly on the North Atlantic, and freighter capacity continues to be high so that capacity is no longer under the pressure seen over the last couple of years.  However, demand continues to be fairly strong, particularly for fashion and automotive parts despite the pressures of inflation on consumer demand.

The average index for the month of June versus May was down a further 2% on the 5% fall in May over April, although it was still positive versus last year, up 31%, +55% versus 2020, and +148% versus June 2019.  Seven of 17 lane indices saw an increase in June over May, but nine indices were down on the previous year and one index flat.

The differences by market in the airfreight indices are detailed below.

CN/HK Markets

China and Hong Kong markets experienced contrasting performance month over month with Hong Kong down significantly at -8% whilst China was +1%. Both were still positive versus last year at +19% and +41% respectively.

  • The indices (BAI31 & BAI81) to Europe saw this divergence in performance versus May with Hong Kong -1% and China +5%. 
  • There was also mixed performance to North America with HKG -11% versus May whilst PVG was -1%.
  • Hong Kong to Southeast Asia (BAI33) rates decreased 7% month on month.

US Market

The market ex Chicago saw a positive performance with rates up 11% versus the previous month and 67% versus the same period in 2021.

  • ORD – EUR (BAI51) was up by 2% over May and 37% versus 2021.
  • ORD – SEA (BAI53) saw an increase of 15% versus May and was +85% versus last year.

EUR Markets

The European markets continued to see some mixed performance in June versus last month with variances by lane and a contrasting picture overall with FRA +1% and LHR -8%.

  • FRA – US (BAI24) increased 6% versus May and was +9% versus last year. 
  • FRA – SEA (BAI23) was flat over last month but still +89% versus 2021.
  • LHR – US (BAI44) was -5% versus May and declined versus last year by 27%.
  • LHR – SEA (BAI43) was -10% month on month and up 53% versus the previous year.

SEA Market

SIN to SEA (BAI63) was down 2% versus May.

It is likely that air freight rates will continue at levels significantly above pre-pandemic levels for some time. However, volatility and uncertainty in the world economy and capacity levels will continue to make it difficult to predict how rates will move in the coming months.

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.