News / Forwarders warn of likely further air freight rate rises ex-India

© Andrii Yalanskyi |

Forwarders are reporting air cargo congestion and rising air freight rates out of the Indian sub-continent – a situation they fear may get worse, owing to religious festivals.

Rates from India to Europe have risen 75%, month on month, according to data from Xeneta, with spot rates for the week ending 10 March at $2.85/kg. Bangladesh to Europe has risen 29%, to $3.44.

Wenwen Zhang, Xeneta airfreight analyst, said: “The surge in spot rates from India to Europe is primarily due to spikes in demand in recent weeks, in particular, apparel. In the week ending 25 February, demand out of India was 29% higher than last year’s peak week in early June.”

Source: Xeneta

Xeneta confirmed: “Looking at the general cargo market at a country level, India, Bangladesh and Sri Lanka experienced significant increases in their general cargo spot rates, which rose by a considerable 81%, 40% and 55% respectively, in the week ending 3 March, compared with four weeks earlier, driven by strong demand for apparel products from these markets.”

One forwarder said he expected the situation to worsen, explaining: “Ramadan is creating further issues on productivity in factories, and in the Middle East for connections. It’s a mess and getting worse – and then there is Easter also.”

And the congestion also appears to be affecting Dubai, which has been “flooded with cargo from India”, said Nick Coverdale, director of AeroMar Sea Air. “That has put pressure on the more traditional origins inSouth-east Asia. Surely, that will happen soon, and rates from anywhere in East Asia to Europe will be above $5 per kg.”

Xeneta said rates from Dubai to Europe rose 10% month on month, to a relatively low $1.24, while rates from Dubai to the US were up 12%, to $2.52.

A Transport Intelligence report issued today on Q1 air freight explained: “There was, and for the moment continues to be, quite strong demand from specific markets in parts of Asia, such as Bangladesh and Vietnam. This appears to be a specific response to the problems around the Suez Canal, with clothing and other consumer goods producers resorting to airfreight to get their goods to market in Europe. However, these markets do seem to be the exception.

“What has been sustained over the past few quarters is demand from India. Although Indian demand remains largely consumer-driven, investment in sectors such as electronics are growing, and this ought to be emerging as an important element in air freight volumes.”

Rates from Sri Lanka to Europe have remained flat, said Xeneta, but increased 19% to the US. India to US has also gone up 19%, to $3.34, and from Bangladesh to the US, up 11% to $3.36.

Hans-Henrik Nielsen, global development director at CargoGulf, added: “We don’t see so much cargo from India, but definitely China and South-east Asia have increased.

“Air rates have gone up about 30% in the last two weeks – but they were very low. This has, to some extent, been countered by lower FCL rates ex-China in the past three weeks. The sea-air rate levels are still well below $ 3/kg, ex-Asia to European main airports.”

But he noted: “I’d hasten to add that that there might well be lots of sea-air ex-India via Dubai too, but since we don’t focus on ISC trades per se (our port rotations are ex India outbound to Asia), we don’t go after such business.”