Demand for air freight has reduced in recent weeks, driven by macroeconomic factors so that capacity is less constrained, although there are regional variations.  Demand and capacity continue to be down on pre-Covid-19 levels, with inflationary pressures in the global economy constraining demand for many products that move by air.

The average index for the month of May versus April was down 5%, although it was still positive versus last year, up 27%, up 6% versus 2020, and up 147% versus May 2019.  Seven out of 17 lane indices saw an increase in May over April, but 10 indices were down on the previous year.

The average index for the month of May versus April was down 5%, although it was still positive versus last year, up 27%, up 6% versus 2020, and up 147% versus May 2019.  Seven out of 17 lane indices saw an increase in May over April, but 10 indices were down on the previous year.

The differences by market in the air freight indices are detailed below.

CN/HK Markets

China and Hong Kong markets experienced contrasting performance month over month, with Hong Kong (+3%) positive whilst China (-9%) was negative.   

  • The indices (BAI31 & BAI81) to Europe saw an even bigger divergence versus April with Hong Kong +6% and China -9%. 
  • There was also mixed performance to North America with HKG +1% versus April whilst PVG was -10%.
  • Hong Kong to Southeast Asia (BAI33) rates increased 3% month on month.

US Market

The market ex Chicago continued to see mixed performance.

  • ORD – EUR (BAI51) was up 4% over April and 30% versus 2021.
  • In contrast, ORD – SEA (BAI53) saw a decrease of 9% versus April and was up 49% versus last year.

EUR Markets

The European markets continued to see some mixed performance in April versus last month, with big variances by lane and a negative picture overall with FRA -3% and LHR -12%.

  • FRA – US (BAI24) declined 26% versus April and was down 3% versus last year. 
  • FRA – SEA (BAI23) was down 5% over last month but still up 79% versus 2021.
  • LHR – US (BAI44) was down 12% versus April and declined versus last year by 30%.
  • LHR – SEA (BAI43) was up 7% month on month and up 70% versus the previous year.

SEA Market

SIN to SEA (BAI63) was down 3% versus March.

It is likely that air freight rates will stay at levels significantly above pre-pandemic levels for some time, however volatility and uncertainty in the global 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.