News / Soaring air freight rates may level out as summer capacity takes off

Airfreight rates have soared this month, as the market continues to be propped up by e-commerce and Red Sea disruptions. 

WorldACD reported today that the average global air freight rates rose week on week by more than 2% between 1-7 April, and now sit at $2.54 per kg – 41% above April 2019 pre-Covid levels. 

But the back-to-back airfreight rate rises have been dubbed “surprising” by Niall van der Wouw, head of airfreight at analytics platform Xeneta.

He told the new Loadstar Podcast: “I think I was not the only one who was surprised. If you would’ve asked people in October ‘what is your outlook for Q1?’ I don’t think many people would have expected demand increase to be double-digit year over year.” 

The rise has been largely attributed to spot rate ‘hot spots’ that have emerged from Middle East and South Asia to Europe. Mr van der Wouw said: “What I’ve seen is that in India, Sri Lanka and Bangladesh, rates have gone through the roof and, in some cases, doubled compared with earlier this year.” 

According to WorldACD, India to Europe spot rates rose to $4.13 per kg last week, representing a160% year-on-year increase. Moreover, Bangladesh to Europe spot rates have seen a 179% increase compared with last year, and now sit at $4.59 per kg.  

Judah Levine, head of research at online freight marketplace Freightos, cited liner network disruption as a main contributor to the uptick in airfreight rates from the region. 

He said: “There is still quite a strong ocean-to-air shift, especially out of India. Red Sea disruption is still pushing volumes to air, and in South Asia the volumes have increased by 95% since the disruption began. 

“It’s likely we will see this increase continue as long as there are diversions,” he predicted. 

Indeed, Mr van der Wouw said: “I’ve been hearing a lot of stories about apparel companies wanting their apparel on western shop shelves in time for spring, and not wanting to run the risk of moving it by ocean.”  

WorldACD also noted that there had been a 6% average increase in rates from Asia Pacific origin points, likely due to the continued e-commerce boom originating from China and Hong Kong. 

But Mr Van der Wouw assured that pressure would ease soon. He said: “We’ll see a lot of capacity coming into the market, because of the summer schedules of the passenger airlines, so that should provide some relief in some of these markets.” 

However, while WorldACD predominately attributed the rising rates to cross-border e-commerce and Red Sea disruptions, it found an increase in jet fuel prices was also having an impact. 

The data company reported jet fuel prices had risen by 4% in week 14, from the previous week, and 3% from the previous month.