The logistics chain continues to experience disruption driven by manpower shortages due to Covid causing congestion and backlogs at many international airports, which continues to create an environment that drives higher rates.  

The BAI index average of 4,759 for the month of November was an improvement of 15% on October, +57% versus 2020 and a staggering 192% increase over the same period in 2019.   The latest week’s level is the highest of the year with the upward trend continuing almost uninterrupted since late June.

The BAI index average of 4,759 for the month of November was an improvement of 15% on October, +57% versus 2020 and a staggering 192% increase over the same period in 2019.   The latest week’s level is the highest of the year with the upward trend continuing almost uninterrupted since late June.

The differences by market in the air freight indices are detailed below.

CN/HK Markets

China and Hong Kong markets both saw a 19% increase in November versus October.  Both continued to show strong gains versus last year at +68% and 56% respectively and exceptional growth versus 2019 (234% and 186% respectively).

  • Both indices (BAI31 & BAI81) to Europe saw month on month improvements, although China was relatively modest at +6% whilst Hong Kong was 22%. 
  • Both markets saw strong growth to North America with HKG +18% versus October levels whilst PVG was +21%.
  • Hong Kong to Southeast Asia (BAI33) rates bounced back, up 10% after a decline of 7% in September.

US Market

The market ex Chicago saw positive performance to both Europe and Southeast Asia.

  • ORD – EUR (BAI51) was up 7% versus last month, up 5% versus 2020 and +93% versus 2019.
  • ORD – SEA (BAI53) was up 6% versus October, 96% higher than last year and 110% growth versus 2019.

EUR Markets

The European markets had a mixed performance in November versus last month with FRA +11% whilst LHR declined by 1%.

  • FRA – US (BAI24) was up 12% versus October, 11% on last year, and +165% versus 2019. 
  • FRA – SEA (BAI23) was up by 5% over last month and 95% versus 2020 whilst FRA – China (BAI25) was +15% and +178%.
  • LHR – US (BAI44) was +3% versus October, up 9% versus 2020, and up a huge 372% versus 2019.
  • LHR – SEA (BAI43) drove the overall decline on LHR with a 6% drop month on month although it was up 67% 2020.

SEA Market

SIN to SEA (BAI63) continued its erratic behaviour but has been trending upwards since early October.  November’s average level increased by 11% versus last month, 19% on 2020 and 100% versus 2019.

In summary, air freight prices continue to move upwards in response to demand and capacity constraints driven by unprecedented levels in disruption across all supply chains.  There is currently little evidence that rates will fall significantly in the New Year as backlogs are cleared and inventories restocked. 

 

Gareth Sinclair, Advisor to the Board, TAC Index

Gareth started with British Airways Passenger Business in Financial & Commercial management roles almost 30 years ago. In 2007 he joined British Airways World Cargo, driving significant transformation in Pricing and Revenue Management systems. As Head of Revenue Management and Pricing for IAG Cargo, he introduced enhanced analytical capabilities, dynamic bid price vectors and the move towards dynamic pricing.