Global air freight rates fall for third straight week: TAC Index

Air freight rates continued to decline last week as lower jet fuel prices and weaker seasonal demand put pressure on the market, according to the latest data from TAC Index. The global Baltic Air Freight Index (BAI00) fell for the third consecutive week, dropping 2.5% in the seven days to July 13. Despite the decline, the index remained 20.4% higher than a year ago following this year’s military conflict in the Gulf.

According to TAC Index, the fall in jet fuel prices during June continued to influence freight rates, although the recent increase in fuel prices has not yet had a significant impact. Demand also softened as the market entered the usual summer low season. However, the market remained vulnerable to sudden rate increases as the conflict in the Gulf has yet to reach a final resolution.

Overall rates on the busiest routes out of China declined again week on week for both Europe and the US. BAI Spot rates from Hong Kong, Shanghai and South Korea also continued to ease. The index for outbound routes from Hong Kong (BAI30), which reflects both spot and contract rates, fell 3.0% week on week but remained 23.9% higher than a year ago. The outbound Shanghai index (BAI80) dropped 1.8% week on week and was still 20.5% higher year on year.

Rates also declined on routes from South East Asia, including Bangkok and Vietnam. In contrast, rates from northern Asia were stronger, with increases from Taiwan. From Seoul, rates rose sharply on routes to Europe but fell on routes to the US, reversing the trend seen the previous week. Overall rates from India increased week on week to the US but declined to Europe, while BAI Spot rates from India strengthened again following the recent tit-for-tat re-escalation of hostilities in the Gulf.

From Europe, overall rates were mostly higher week on week. Increases were seen on transatlantic routes to the US as well as on routes to India, Brazil, Mexico, South Africa and the UAE, where rates remain more than double last year's levels. However, rates were slightly lower to China, Japan and Australia. The Frankfurt outbound index (BAI20) edged down 0.5% week on week but remained 22.6% higher than a year earlier. The London Heathrow outbound index (BAI40) rebounded 9.3% week on week after recent declines, although it was still marginally down by 0.1% compared with a year ago.

Rates from the US also began to ease after recent increases. Overall rates fell week on week on routes to Europe and South America, while some routes to Asia, including China and Malaysia, recorded gains. The Chicago outbound index (BAI50) dropped 15.9% week on week after recent increases, bringing it more in line with the global average while remaining 23.1% higher year on year. Rates from Mexico to Europe also fell sharply week on week after recent gains, although they continued to remain above last year's levels.