Freight rates — good news and bad.

Air freight rates on major east-west routes rose slightly in August, according to UK-based freight market analyst Drewry. It’s a good news/bad news situation, and we’ll start with the good news.

In its monthly East-West Airfreight Price Index, Drewry showed rates up 0.7 points in August, continuing a trend of rising rates that began six months ago. The Index now stands at 87.5 (based on a value of 100 for May 2012)

On the bad news side, Drewry points out that while rates are now at their highest level this year, they are still well below August 2015, when the Index was at 94.4. Further, the 87.5 rating for August 2016 is the lowest for any August since Drewry launched the Index in 2012.

However, as we always do in these sorts of discussions, we point out that freight rates are a top-line item, and that to evaluate a rise or fall in rates one has to know what has happened with related costs. For example, if fuel surcharges decrease in line with falling fuel price, then a decline in rates may have no impact on the bottom line.

Also, as we said in our examination of August data from major carriers and airlines (you can read it here), we believe that worldwide air freight traffic was likely up between 3% and 5% y-o-y in the month. Combine the modest rate increase with the increased volume, and it seems safe to say that, even if the good news wasn’t great news, it almost certainly outweighed the bad news.

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