All eyes on China and Shanghai over the previous two weeks after service closures, linked to COVID, has severely restricted output from Shanghai airports. This on top of what looked like a walk-out of handling staff restricting air freight volume.

Whilst lifting in what was anecdotally a surging market, this is no way close to the pace of rate changes given a baseload of medium to long-term contracts still fills up the Asia-Europe and Asia-US markets.

We saw a delayed and muted reaction to this in the index prices, BAI81 pushing up +$1.23, BAI84 up $1.56 to $9.77. Whilst lifting in what was anecdotally a surging market, this is no way close to the pace of rate changes given a baseload of medium to long-term contracts still fills up the Asia-Europe and Asia-US markets. A large amount of capacity is still booked out on charters’ pricing away from the index, making the picture for any spot market changes quite obfuscated.

Hong Kong saw an uptick however at nowhere near the levels seen out of Shanghai, BAI31 rising only $0.03, with the biggest gain into the US on BAI34, up +$0.41 to $9.28. These markets remain driven by the lack of long-haul passenger demand. Pressure from COVID variants inside of China and into South-East Asia has restricted passenger schedules, with no consequent let up in the airfreight capacity squeeze. Out of China generally, Sea-Air conversion might continue to have impacts on prices, with congestion worsening on ocean freight the trans-pacific trade routes.

Transatlantic prices have carried over the outlook from last month, with prices remaining fairly stable (if very high) with intra-month movements fairly inconsequential in terms of the index. Most in the market wait for a drop-off point, entirely reliant on wholesale recovery of the transatlantic passenger market.

 

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.