Air freight rates from China, HK to US, Europe revert from Dec peak

Air cargo costs out of China and Hong Kong to the United States and Europe have returned to levels last seen in September after surging on e-commerce demand through the 2023 peak season.

The welcomed return of the peak season provided some positivity to the air freight market following a lacklustre couple of years, according to the latest update from TAC Index. "The only upturn in rates in 2022 was due to the invasion of Ukraine that caused capacity disruptions from the closure of Russian air space and the loss of Russian airlines such as AirBridgeCargo, which were significant capacity providers. Since then, it has been a constant downward trend until the first green shoots emerged in September."

New geopolitical events in the Middle East, with the ongoing Red Sea crisis, means ocean freight is now being diverted around Africa. This increases both the cost and transit times for ocean shipments. With the reduction in air cargo prices in the new year, the cost differential between ocean and air freight has narrowed, making air freight a more attractive option in the run-up to the Lunar New Year in February, the update added.

"Freight forwarders are also getting an increase in enquiries for multi-modal sea air solutions via Dubai, Singapore and Los Angeles. This could provide a good compromise between the speed of air freight and the cost of sea freight."

There has been no significant impact from the ocean freight disruptions on North Asia air freight rates, according to TAC Index. "However, out of China air cargo prices to Europe have dropped less, and more slowly, from their peak range compared to the U.S. This difference in rate reversion could be indicative of the relatively higher impact from the Red Sea crisis on Asia to Europe shipping than to the US. Christmas and New Year are a quiet period for air freight. So, we will only see the full impact on air cargo costs as we approach the Lunar New Year holidays."

The impact on air freight costs differ regionally as this peak reversion is less evident from other South East and South Asian countries. "Vietnam also saw a peak surge, rising more than 80 percent from their July averages at the end of 2023, and these high rates out of Vietnam to Europe and the United States persist into the new year."