News / Air freight rates improve a little, but in relation to what?

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Air freight rates edged back towards last December levels in August – but September “Hanjin effect” spikes are expected to be shortlived.

Drewry’s East-West Airfreight Price Index noted a 0.7 point rise in August, to $2.84 per kg, taking air freight rates to their highest level so far this year.

However, it’s all relative, as it’s also the lowest August level since Drewry began recording the data in 2012.

The industry had been hoping that September would see a spike in rates, following the supply chain disruption caused by the Hanjin financial collapse and Samsung’s Galaxy Note 7 recall. There are also some product launches planned, which has triggered some optimism in the market, and given some sustenance to operators such as Cathay Pacific.

Drewry Sea and Air Shipper Insight noted: “Pricing is expected to have recovered further in September thanks to tighter short-term container shipping capacity conditions following the collapse of Korean ocean carrier Hanjin Shipping.”

However, air cargo industry sources – which had been optimistic – said any market tightening was unlikely to last.

While at least one cargo carrier is thought to have gained a number of charters from Samsung in advance of next month’s Golden Week holiday, others have been disappointed.

“The prices rose for a day or two owing to Hanjin – then normalised,” said one source. “There was excitement, and then it all seems to have abated.”

Drewry noted that on the whole, it was unlikely to be a good year.

“Despite the recent recovery, Drewry expects airfreight pricing to remain under pressure for the rest of the year as air cargo capacity continues to expand at a faster pace than demand.”

China closes its factory doors next week for the Golden Week holiday, while retailers gear up for a busy time. The pre-holiday rush can boost freight rates as factories try to get out inventory and retailers stock up.

But continued overcapacity and weak demand look likely to keep any potential ‘peak’ at relatively low levels, with little joy expected next year either.