Airfreight rates on Asia-Europe and India trade lanes soar
Sources suggest that spot rates on services operating from Hong Kong to Europe are now comfortably higher than rates from Hong Kong to North America, heading above $5.15 per kg.
This is an increase of almost 30% compared with the $4 per kg being paid on the route shortly before the outbreak of fighting.
Meanwhile, rates from India to the US have increased by around 60% since the outbreak of the conflict, sources said, and from India to Europe, there has been an 80% increase.
Writing in a weekly market update, air cargo pricing data provider TAC Index said there were currently big differences in rates on different lanes depending on how affected they are by the outbreak of fighting.
For instance, the global Baltic Air Freight Index calculated by TAC gained another 2.6% in the week to March 16, leaving it still “narrowly lower” than 12 months earlier at 0.7% down year on year.
“There were, however, some wide variations in rate patterns – with rates surging on some routes, particularly on Asia-Europe lanes and out of India,” TAC Index said.
“And sources were bracing for significant further increases given an explosion in the width of the ‘crack spread’ between crude oil and jet fuel, with jet now close to double where it was last year, and likely fuel surcharges yet to be applied to many flights.”
TAC said that there were much bigger week-on-week gains from elsewhere in Asia compared with Hong Kong and China – notably from Vietnam, particularly to Europe, as well as from Seoul and Taiwan.
“One exception was from Bangkok, where rates were falling week on week, though still up year on year both to Europe and the US,” TAC said.
“But the biggest impact from events in the Middle East was seen on rates out of India, which showed 30% increase WoW both to Europe and the US.”
Freight forwarders are already beginning to feel the impact of rising fuel prices. Earlier this week, freight forwarders based in Hong Kong hit out at airlines for ramping up cargo fuel surcharges (CFS) in response to the rising cost of jet fuel as a result of the conflict in the Middle East.
The Hong Kong Association of Freight Forwarding and Logistics (HAFFA) expressed “deep dissatisfaction” at the magnitude of the increases, stating that some “far exceeds resonable limits”.
Oman Air Cargo has also announced that it will introduce a war surcharge in response to the development.
Meanwhile, capacity continues to be down on pre-conflict levels. According to data from Rotate, global air cargo capacity was last week down 12% compared with pre-Chinese New Year levels.
The hardest hit lanes over that comparison period are Asia Pacific to the Middle East and the Middle East to Europe, which are both down by around 40%.
