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WorldACD Weekly Air Cargo Trends – week 14

Rate rise continues into April as South Asia-Europe rates soar

Worldwide air cargo rates have continued to rise into the first week of April, boosted by a surge in prices and demand from Middle East & South Asia origins, according to the latest weekly figures and analysis from WorldACD Market Data, despite a fall in tonnages from most regions linked to various holiday periods around the world, including Easter, Ramadan, and China’s Qingming Festival.

Average global rates rose, week on week (WoW), by more than +2% in week 14 (1-7 April) to $2.54 per kilo, following consecutive weekly WoW rises of between +2% and +3% last month, taking them to just -1% of their level in week 14 last year and significantly above pre-Covid levels (+41% compared to April 2019).

Surging MESA-Europe spot rates

Close examination this week by WorldACD reveals a big surge in spot rates from Middle East & South Asia (MESA) to Europe in recent weeks, especially from India and Bangladesh, linked to strong demand developments combined with supply issues caused by disruptions to container shipping and Ramadan. According to the latest weekly figures and analysis from WorldACD, MESA to Europe spot rates have soared in the last three weeks to around double their level this time last year, rising to $3.43 a kilo in week 14 (+109%). But the figures for India and Bangladesh origin points are even more dramatic, with India-Europe spot rates rising to more than $4 a kilo in week 14 ($4.13/kg, +160%), and Bangladesh-Europe spot rates soaring to $4.59 a kilo in week 14 – a near-trebling of their level this time last year (+179%).

Alongside continuing rates rises from Asia Pacific and MESA origin points, boosted by strong demand from cross-border e-commerce and because of the ongoing disruptions to container shipping in the Red Sea, another factor beginning to have an impact on rates is increasing jet fuel prices, which rose by more than +4% in week 14, compared with the previous week, and rose more than +3% on the previous month, although they remain slightly below their level this time last year (-1%).

Expanding the comparison period to two weeks, average worldwide rates in weeks 13 and 14, combined, rose by +4% compared with the previous two weeks (a 2Wo2W comparison), boosted by a +6% 2Wo2W increase from Asia Pacific and MESA origin points. That rise in rates comes despite a 2Wo2W decline in tonnages (-6% and -3%, respectively) from those two regions, and a -9% drop in global tonnages, 2Wo2W. Rates from Africa, Central & South America (CSA), Europe, and North America origin points were more or less flat, on a 2Wo2W basis, despite significant 2Wo2W declines in tonnages, including a -15% fall ex-Europe, -9% drops ex-North America and ex-CSA, and a -7% decline ex-Africa, based on the more than 450,000 weekly transactions covered by WorldACD’s data.

Examining the main intercontinental lanes, the biggest 2Wo2W falls in tonnages can be seen ex-Europe, including -17% to Asia Pacific and to CSA, -15% drops to MESA and Africa, and -13% on the North Atlantic (in both directions), consistent with some of the patterns last year in the two weeks surrounding Easter. Meanwhile, the biggest increase in 2Wo2W pricing can be seen from MESA to Europe (+11%), despite a -7% fall in tonnages on that lane. Other significant 2Wo2W rates rises can be seen on Asia Pacific to North America (+7%), MESA (+4%), and Europe (+3%).

Year-on-year comparisons

Compared with last year, average worldwide rates in weeks 13 and 14, combined, were down by -4%, with the small increase in chargeable weight (+1%) failing to keep pace with the +7% year-on-year (YoY) growth in capacity. MESA was the only origin region to record a YoY increase in rates (+39%, based on a mix of contract rates and spot rates), and the only origin region where growth in demand (+11%) outstripped increases in capacity (+6%), in a market still strongly affected by the disruptions to container shipping in the Red Sea. Meanwhile, rates ex-Asia Pacific have now recovered to their level this time last year, thanks to a +8% increase in tonnages and despite a corresponding +13% recovery in capacity. Elsewhere, rates fell, YoY, ex-Africa (-3%), Central & South America (-6%), ex-North America (-18%), and ex-Europe (-22%), as all of those origin regions except Africa (+10%) recorded YoY declines in tonnages of between -5% and -7%.

As noted last week, the consistent recovery in global rates in the last 5 or 6 weeks means that average rates have recovered to close to their peak levels in the fourth quarter (Q4) of last year, and are now slightly above their average level in Q4 of $2.47 per kilo.

Dubai-Europe demand still booming

WorldACD has once again examined certain key hub airports in the Middle East and Asia that have seen particularly strong demand this year due to the disruptions to container shipping in the Red Sea, particularly those commonly used as Asia-Europe sea-air hubs or road-air hubs, including Dubai, Colombo and Bangkok. Dubai-Europe tonnages were still massively elevated (+114%) in week 14 compared with the same week last year, with tonnages in week 14 very close to their peak levels recorded in week 8.

Bangkok-Europe tonnages are also still up significantly (+33%) compared with last year, boosted by road-air volumes trucked down from Vietnam and other origin points in southeast Asia where ocean freight traffic and supply chains have also been impacted by the disruptions to Asia-Europe container shipping. But Colombo-Europe tonnages have fallen back significantly from their exceptionally high levels in weeks 6, 7 and 8, with demand in week 14 even slightly below (-2%) the same week last year.

Meanwhile, average air cargo rates to Europe from all three of those origins were up significantly, YoY, with Colombo up +39%, Dubai up +22% and Bangkok up +20%.

For more details, please refer to the attached WorldACD weekly report.

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