Nature and demand pushing up airfreight rates

Airfreight spot rates continued to rise last week as weather conditions, volcanic activity and wars put capacity under pressure, with fears of a major eruption in Iceland growing – possibly within days.

With the airfreight sector preparing to benefit from a potential reduction in ocean shipping reliability next year, as the container shipping lines grapple with antitrust rule changes, current airfreight indexes show airfreight rates stabilising and rising on some routes, driven by demand and nature’s operating challenges.

The global Baltic Air Freight Index was up almost 5% last week compared with the previous seven days, with the increases led by China. 

According to the Baltic Index, prices out of Hong Kong increased by 11.5%, with outbound Shanghai spot rates increasing by 5.3%, and the massive demand to Europe recording a 25% increase on the Freightos air index.

Trans-Pacific rates from both Hong Kong and Shanghai to the US also increased and are now some way above where they were a year ago, driven largely by some big moves out of China.

Trans-Atlantic rates increased 9% last week to their highest level since June, marking a gradual 21% climb since early October, possibly on improved holiday season demand.

Airfreight rates have also been impacted in recent weeks by heavy snowfall in Anchorage which resulted in cancellations and price inflation, while ash clouds from Russia’s Klyuchevskoy Volcano forced flights from the US, China, Japan and South Korea to route further south, resulting in longer flight times and refuelling stops.

In 2010 European flights were suspended due to ash clouds from the Eyjafjallajцkull volcano eruption in Iceland and concerns are growing that the likelihood of another eruption in Iceland is high, possibly within just days, after more than 20,000 earthquakes struck the country’s southwest since late October.

However, any eruption of the Fagradalsfjall volcano would take place under very different circumstances to 2010, which significantly lower the chances of similar flight chaos. 

In the past three years, three eruptions have taken place in the same area, with no impact on air travel, and the European Aviation Safety Agency (EASA) is also better prepared for a major volcanic ash event. 

“In the event of an eruption and development of an ash cloud, the agency will work with other aviation actors to assess the impact for aviation and make recommendations accordingly” a statement on the EASA’s website reads. 

At this time all flights are operating normally and no carrier has any plans to review.

While the Icelandic situation may not be as dire as 2010, ‘natural events’ are unpredictable, which may disrupt flights and there is a definite tightening in the market on many routes, which means it is critical that pending airfreight shipments are scheduled at the earliest opportunity, to secure space and the best available rate.

We have solutions for every critical shipment, with extremely competitive rates and really interesting service and route combinations. 

EMAIL Elliot Carlile, Operations Director, for insights, prices and advice.