Some substantial ups and downs in February as we finally see Asia export markets come off, shedding several dollars off the per kilo price with much of the price action occurring post-Lunar New Year as demand slips away.

On the Asia-Europe routes, prices had been slipping since the beginning of the month – with an uptick at the start of March lifting prices in line with a forward market that has been priced in well in advance.

On the Asia-Europe routes, prices had been slipping since the beginning of the month – with an uptick at the start of March lifting prices in line with a forward market that has been priced in well in advance. Prices remain backwardated, however, remaining well above their 2019 levels. Much of the sentiment remains long-term bearish on the back of a projected recovery in the airline passenger market.

Asia to US has had a very bumpy ride, after gaining serious support mid-month the price has since crashed, and then risen back up again. A big driver for rate support has been Sea-Air conversion. Depleted inventories in the US had been exacerbated by port congestion and fed back into the airfreight market, which had since spiked once again. Forward pricing has been equally volatile, with pricing only calming down near the back-end of the month after constantly correcting in line with the volatile physical market price. Index prices were in fact tempered by the large amount of charter capacity on forwarder charter networks across the Pacific.

Ex Europe, prices continue to be supported by low passenger volumes and vaccine cargoes. Much vaccine cargo remains ‘well-managed’ without much spiking of prices. Instead, prices remain relatively flat month on month with backwardation in the forward curve pricing in a slight ‘return-to-normal’ from Q3 21 onwards. The market remains extremely uncertain largely as a result of capacity, rather than demand – IAG recently forecasted that they would not return to 2019 passenger travel levels until 2023. 

 

About Peter Stallion, Head of Air and Containers, Freight Investor Services

Peter Stallion heads up the Air and Container Freight desks at FFA brokerage Freight Investor Services. He started his career in air freight chartering, and has a passion for emerging risk management markets and the logistics industry.