Traffic slowdown does not halt rising rates
With the exception of the Middle East and South Asia (MESA), airfreight tonnage was in retreat across the globe during week 14 (March 30 to April 5), falling -4% from the previous week (WoW), which can be attributed at least in part to the Easter weekend. The latest weekly figures from WorldACD Market Data show volumes from the other origin regions contracted between -3% from Asia Pacific (APAC) and -9% from the Americas.
Despite low single-digit percentage week-on-week rate decreases from Central & South America (CSA), Europe and MESA, pricing in week 14 rose +4% overall to US$3.10, driven by increases from North America, APAC and Africa, to end up +21% higher year on year (YoY). Compared to a year ago, rates were up in double digits from all regions except CSA, led by a +59% jump in pricing out of MESA.
Air cargo exports from APAC declined -3% WoW to Europe and -1% to USA. The decline to Europe was driven by drops of -14% from Thailand, -13% from Singapore, -9% from Hong Kong and -3% from China, which resulted in a -8% decrease YoY to Europe. To the US, APAC tonnage dropped -6% WoW from Thailand, -4% from both China and Japan and -2% from Hong Kong, almost fully compensated by increases from Malaysia (+10%) and South Korea (+9%).
Nevertheless, pricing from APAC to Europe was up +3% WoW, driven by increases out of China (+9% to $5.29), Singapore (+7% to $5.83), Taiwan (+6% to $5.92) and Hong Kong (+5% to $5.62). And APAC origin spot rates climbed +9% WoW to USA, rising from all origins except Japan and Singapore, with rates jumping +15% from Hong Kong to $6.07, +10% from Vietnam to $6.63 and +9% from China to $6.22.
Middle East volumes continue recent upward momentum
Despite the war, traffic from the Middle East continued to increase in week 14, with chargeable weight from MESA rising +10% WoW for a +11% increase year on year (YoY). As capacity grew +15% over the previous fortnight (2Wo2W), the region’s chargeable weight for weeks 13 and 14 combined was +3% higher than in the previous two-week period, the only origin region to register tonnage growth on a 2Wo2W basis. Notwithstanding WoW increases in capacity and tonnage since week 11, capacity from the Gulf area was in week 14 still more than half down and tonnage at -40%, respectively, compared to before the outbreak of hostilities.
Pricing from MESA retreated -1% WoW to an average rate of contract and spot at $4.07, as spot rates from Dubai to USA dropped -16% to $8.71, while pricing out of India slipped -2% to Europe and -1% to USA, which cancelled out rate increases to Europe from Dubai (+3%) and Bangladesh (+13%). Compared to the same period last year, pricing from MESA in week 14 was up +59%, driven by rate increases to the US of +71% and to Europe of +87%, respectively.
A pronounced momentum change in March
Tonnage flown in March reflects the impact of the war in the Middle East. After YoY growth of +8% in January and +7% in February, it fell -4% last month. The MESA region (-21% lower, YoY) took the majority of the impact, but the disruptions also affected Africa (down -13%), while Europe and APAC registered a contraction in chargeable weight of -5% and -4%, respectively.
The combination of capacity loss in the Middle East with fuel and war risk surcharges drove up global pricing in March +12% higher YoY, coming from -1% in January and +5% in February. Average rates last month were up +52% from MESA, +24% from Europe and +18% from Africa.
Return to normal some way out still
The ceasefire agreement between Washington and Teheran raised hopes of a lasting settlement of the conflict, but the truce appears fragile at this point, with many open questions over the terms of the agreement. While news of the diplomatic breakthrough triggered a drop in the price of oil, most observers have warned that inflation and elevated fuel costs will persist for some time.
By the same token, bellyhold capacity through the Middle East will take time to recover, keeping a floor under pricing. For their part, container lines are awaiting details from Teheran for the resumption of moves through the Strait of Hormuz and do not expect a return to pre-conflict flows for some time.
