Transpacific spot prices have begun to fall in the weeks since Chinese New Year but they appear to be holding relatively firm from China to key destinations in Europe.
Asia-US air freight spot prices have begun to fall in the weeks since Chinese New Year (CNY), but they appear to be holding relatively firm from China to key destinations in Europe, according to figures from TAC Index and the Baltic Air Index (BAI).
In the week to 22 February, spot prices began to fall sharply to the US – particularly to LAX, where average prices were down by almost 43% to around CNY 28 (US$4.33) per kilo. Overall Shanghai-US spot rates were down by around 38% compared with the previous week, TAC figures indicate.
Figures from TAC Index indicate that in the week to 22 February, prices from Shanghai to Frankfurt have remained relatively stable during that same period, dropping by 5.7% to around CNY 28, and to Heathrow are down by around 4.3% to CNY 32.75. But prices from Shanghai to Amsterdam fell sharply, by more than 22% to around CNY 26.4.
BAI figures suggest that spot prices from Shanghai to Europe dropped by around 24% in the week to 22 February to a rate of CNY 26.6 (US$4.1) per kilo, although prices remain up, year on year, by around 70%.
In its latest update on 23 February, Flexport noted that “with CNY over, factory production is returning to normal levels but air freight demand exit China is still weaker than anticipated and rates have declined this week as many additional charters hit the market. However, 1 March is likely to see a rapid return of volume and higher rates.”
For markets in North Asia, it said Taiwan and SE Asia have remained strong through CNY with rates averaging between $7-8.50 per kg on the transpacific eastbound (TPEB) and slightly lower on the Asia-Europe (Far East westbound – FEWB) market.
Indeed, Flexport said it was beginning a new dedicated-charter flying this week “with one additional frequency from HKG to LAX, and the inauguration of 2x per week charters from TPE to LAX”.
Europe situation
It said rates ex-Europe “remain at elevated levels as capacity ex Europe to Asia and North-and South America is constrained”, with “carriers reporting high load factors from all major outbound hubs in Europe, mainly driven by high demand from the automotive and manufacturing and pharma industry verticals”. Capacity constraints have led to more increases of underlying air-freight rates to North and South America.
It said the main airports in Europe were “fully operational, but report back smaller backlogs from import moves, which have a slight negative domino effect on the outbound side causing some throughput delays”.
Figures from WorldACD suggest that in the week up to Sunday 21 February (week 07), demand remained high and capacity remained tight, with worldwide volume decreasing by just 3% compared with the previous week and worldwide capacity decreasing by 5%.
On a regional level, origins Europe and Middle East & South Asia did best with a volume increase of 2% week-over-week, while business from Central & South America showed the largest decrease (-9%).
The average worldwide yield/rate in week 07 went down compared with week 06, breaking with the trend of the last few weeks.
Load factors hold firm
As reported last week, average air freight load factors on westbound flights from China to Europe have remained far higher than normal during the week of Chinese New Year, as cargo continued to flow and many Chinese factories remained open, the latest data from CLIVE Data Services indicates.
CLIVE’s latest data also shows the drop in volumes during the week of Chinese New Year (CNY) compared with the previous week was roughly half of what CLIVE Data Services has seen in previous years. Niall van de Wouw, managing director of CLIVE Data Services, said this seems to be in line with stories of factories remaining open and offering bonuses for people to stay at work to remove backlogs.
Available capacity also appears to have been maintained at somewhat higher levels than in previous years.
CLIVE’s figures indicate a drop of 30% in chargeable weight from China to Europe during the week of CNY compared to the preceding week, contrasting with drops of 61% and 57% during the equivalent periods in 2020 and 2019, respectively. The 2021 volumes in chargeable weight in the week before CNY were on a par with the week before CNY in 2019 and 4% higher than in 2020.
And CLIVE’s figures indicate that there was barely any week-on-week decline at all in dynamic load factor on China-Europe westbound flights during the week of CNY compared to the preceding week, with a drop of just 1 percentage point. That compares with a decline of 21 percentage points in 2020 and 18 percentage points in 2019.
Source: Lloyd’s
