Air freight rates on major east-west routes fluctuate month-to-month, and for the year 2017 reached their highest levels yet in October. After a pronounced slide following the end of 2016’s peak, rates were relatively stable until September, when prices began picking up ahead of peak season. Although aggregate data is not yet available for November, early reports suggest that relentless demand − combined with insufficient capacity on many trade lanes − boosted rates much higher through November and into early-December.
In its monthly East-West Airfreight Price Index, Drewry reported rates up 6.9 points between September and October, the steepest rise this year. The Index now stands at 97.3 (based on a value of 100 for May 2012). In dollar terms, average rates in $/kg now stand at $2.89. On a year-over-year basis, rates are $0.07, or 2.3 points, higher than they were at the end of October 2016.
Later this month when November rate data is reported, we expect an even steeper increase to the East-West Airfreight Price Index, resulting in part from stronger global e-commerce sales. Singles Day, which falls on 11 November, and the flurry of replenishment activity ahead of Black Friday in the United States (which this year fell on 24 November), absorbed much of the available capacity along major trade lanes. Delays of up to three weeks were reported at some airports in China as shippers rushed to get products to China in time for Christmas.
For the first time in ten years, capacity to Europe maxed-out, according to online freight pricing platform Freightos, which warned shippers that they might have to bear “sky-high air rates” to get their shipments loaded. Freightos WebCargo’s CEO, Manel Galindo, added that the capacity crunch in Europe “triggered holiday-season auctions, with bookings bumped by the highest bidder.” In one case, the price reached as high as US$13 per kilogram for a trans-Atlantic route.
While current prices have stabilized this week, Galindo warned that “this frenzy may happen again in the run-up to Christmas.” Typically, post-Christmas rates have fallen slightly before rising again for the Chinese New Year, which will occur in mid-February in 2018, but e-commerce is set to change that. Freightos expects rates to remain high until tapering off in January.Like This Post