China airfreight rates spike

Airfreight rates from China increased rapidly last week as demand from China begins to ramp up but spare capacity remains tight.

The latest figures from TAC Index show that last week average airfreight prices from Shanghai to North America increased by 32.3% on a week earlier to $4.02 per kg, while prices from the Chinese city to Europe jumped by 15.8% compared with the prior seven days to $2.71 per kg.

Prices from Shanghai to North America are now above the $3.29 per kg that carriers were charging on the route at the corresponding point last year and to Europe they are just slightly lower than the $2.75 per kg reported in early March 2019.

Meanwhile, prices from Hong Kong to North America increased by 11.5% week on week to $3.59 per kg and there was a 3.2% increase to $2.58 per kg on services to Europe.

The price jump from China comes as factories continue to ramp up production following an extend Chinese New Year break as part of efforts to contain the coronavirus.

Meanwhile, capacity remains tight as passenger flights – and therefore belly space – has been cut.

Peter Stallion of derivatives broker FIS said the price spike doesn’t really come as a surprise.

He adds that carriers are set to benefit from an emerging price war between oil producing OPEC states and Russia.

“However, the ongoing impacts of coronavirus dull the benefits of lower input costs, whilst the high airfreight price, although beneficial to the global freighter fleet, cannot be booked as revenue due to the missing belly capacity,” Stallion said.

“Thus, we’ve seen carriers with a highly abundant fleet of parked passenger aircraft utilise these assets to provide much needed cargo lift.”

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