Global air freight rates rise amid Middle East disruptions
Air freight rates increased last week, led by strong gains from Asia and India, as Middle East conflict and fuel costs impacted markets.
Global air freight rates continued to rise last week as disruptions caused by the Middle East conflict impacted markets, according to data from TAC Index. The global Baltic Air Freight Index (BAI00) increased by 2.6 percent in the week to March 16, although it remained slightly lower year-on-year by 0.7 percent.
The increase was uneven across routes. Rates rose sharply on several lanes, especially between Asia and Europe and on outbound routes from India. Market sources are also expecting further increases, driven by a widening gap between crude oil and jet fuel prices. Jet fuel prices are now close to double last year’s levels, with fuel surcharges yet to be applied on many flights.
In Asia, spot rates from Hong Kong continued to rise steadily throughout the week, particularly on routes to Europe. Overall rates from China were also higher to both Europe and the United States. The Hong Kong outbound index (BAI30) rose 1.2 percent week-on-week but remained 1.3 percent lower year-on-year. Shanghai outbound (BAI80) increased 4.9 percent week-on-week, reducing its annual decline to 1.7 percent.
Stronger weekly gains were recorded elsewhere in Asia, especially from Vietnam to Europe, as well as from Seoul and Taiwan. Bangkok was an exception, where rates declined week-on-week, although they remained higher year-on-year to both Europe and the US. The most significant impact of the Middle East situation was seen in India, where rates surged by around 30 percent week-on-week to both Europe and the US.
From Europe, rates were mostly higher, particularly on routes to the UAE, reflecting airspace closures and reduced capacity. Rates also increased on lanes to China, Japan, India, Australia and Brazil. However, rates declined slightly week-on-week on Transatlantic routes to the US, as well as to Mexico and South Africa. The Frankfurt outbound index (BAI20) rose 7.8 percent week-on-week, narrowing its year-on-year decline to 5.1 percent. London Heathrow outbound (BAI40) fell 4.3 percent week-on-week after recent gains but remained significantly higher year-on-year at 21.9 percent.
In the US, rate trends were mixed. Rates increased on Transatlantic routes to Europe and on lanes to South America, although not on the busiest southbound routes from Miami. Meanwhile, rates to China and other parts of Asia declined. The Chicago outbound index (BAI50) rose 3.9 percent week-on-week, reducing its annual decline to 7.8 percent. Rates from Mexico to Europe also rose sharply week-on-week, returning to positive territory year-on-year.
