No drop in rates as 2017 ends

Switzerland-based forwarder Panalpina says there is no sign of a slow-down in air freight demand.

In early December, online freight pricing platform Freightos warned shippers that, for the first time in at least ten years, they might have to bear “sky-high air rates” for the remainder of the year to get their shipments loaded. Freightos WebCargo’s CEO Manel Galindo added that the capacity crunch in Europe had “triggered holiday-season auctions, with bookings bumped by the highest bidder.” In one case, he said, the price reached as high as US$13 per kilogram for a trans-Atlantic route.

Since then, things have only become worse. Or better, depending on which side of the air freight rate equation you sit.

Even in a year with a good peak season, demand for air freight usually begins to decline by mid-December. And as demand declines, so do rates. But this year, strong demand has continued right through Christmas, and Freightos says that not only have air freight rates on most trade lanes not fallen, in some cases they have increased. According to Freightos’ last update:

Note, though, that these rates are for standard shipments, and Freightos points out that rates for urgent shipments are much higher – as much as $21/kg from Hong Kong to Europe, and up to $26/kg on the Europe-to-South America lane.

Looking ahead, Freightos predicts that rates will stay high “for several more weeks yet,” and that “the current backlog probably won’t fully clear before the lead up to the Chinese New Year closedown starts.”

Freightos is not alone in its view. Panalpina’s global head of Air Freight, Lucas Kuehner, confirmed that year-end air freight rates are elevated as capacity remains tight. He provided a peak season update in late December, saying, “As for the peak season, there is no sign of a slow-down as of yet.” Looking at individual trade lanes, Kuehner added:

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