Middle East turmoil leaves global air freight rates largely steady

Global air freight rates remained largely stable despite a week of turmoil across the Middle East, according to the latest data from TAC Index. The global Baltic Air Freight Index (BAI) edged up by 0.2 percent in the week to March 9, leaving it slightly below last year’s level at 1 percent down year-on-year.

The limited movement in the overall index came despite major airspace closures across the Middle East and rising crude oil and jet fuel prices. However, the global index masked large variations across different trade lanes, with spot rates from Hong Kong and India rising sharply in recent days, particularly on routes to Europe.

Rates on major lanes from China increased week-on-week to Europe, although some routes to the United States saw declines. The full index of outbound routes from Hong Kong rose 8.7 percent week-on-week, with higher rates to both Europe and the US, although still 1.3 percent lower year-on-year.

Outbound Shanghai also recorded higher rates to Europe during the week, but steep declines on transpacific lanes led to an overall drop of 9.7 percent week-on-week, leaving the index almost flat at 0.2 percent higher year-on-year.

From other Asian markets, rates to Europe rose sharply week-on-week, including double-digit percentage increases from Vietnam, Bangkok, Taiwan and India. Rates to the United States from most of these locations also moved higher. One exception was Seoul, South Korea, where overall rates fell week-on-week in both directions, although spot rates from the city increased as the week progressed.

Rate patterns from Europe were mixed. There were modest declines on transatlantic routes to North America and on lanes to China, Japan, Mexico and Brazil. These were partly offset by increases on routes to the UAE, India, Australia and South Africa.

The index of outbound routes from Frankfurt dropped sharply by 13.4 percent week-on-week, with declines across most major lanes including routes to the United States and China. This left the index down 18.8 percent year-on-year.

By contrast, outbound London Heathrow recorded further gains, driven mainly by higher rates to the United States. The index rose 8.8 percent week-on-week and stood 41.6 percent higher year-on-year.

Rates from North America also showed a volatile pattern. Declines on transatlantic routes to Europe were balanced by increases on routes to China, South Korea and South America.

The index of outbound routes from Chicago rebounded strongly with a week-on-week increase of 19.9 percent after recent declines, reducing its year-on-year drop to 10.8 percent. Rates from Mexico to Europe edged slightly lower during the week.