A fairly predictable outcome in the airfreight market for March, as it fell  in line with the wider inflationary picture. Cargo demand pulled back 4% year on year with March seeing a noticeable bounce on rates prior to the end of Q1. Rates are still held well above 2019 levels, with higher feedstock costs also largely linked to inflation. Airfreight rates could become a victim of their own successes, with orders being pulled by major retailers already over-stocked on the tail-end of the pandemic. 

Even with a near-term stabilization in rates, risk abounds. Primary impacts come on the back of sustained volatility in energy and crude-oil/ petroleum projects with Brent crude shooting up earlier in April on the back of surprise OPEC+ cuts in output.

Even with a near-term stabilization in rates, risk abounds. Primary impacts come on the back of sustained volatility in energy and crude-oil/ petroleum projects with Brent crude shooting up earlier in April on the back of surprise OPEC+ cuts in output. The pace and intensity of the war in Ukraine has been sustained since last year, providing a backdrop of macroeconomic instability that remains highly precarious. Whilst jet fuel has been pricing down, this trend appears to be easily bucked by supply decisions from major oil producing nations looking to prop up prices and throttle supply in line with demand.

Generally speaking however, western economies appear to be emerging from a low point, driving up equities at a pace not seen since the market recovery in 2020. Any recovery in the wider market does also bring with it a renewal in passenger demand which has been on a straight line recovery since the end of 2022 – intra-Asia and domestic Chinese travel now nearly at pre-Covid levels after a rapid recovery. Hong Kong will recover cargo after the ban on vapes lifts (some 10% of Hong Kong Airport’s output), with all BAI Hong Kong export routes ticking up slightly at the end of March. 

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.