WorldACD: Cargo rates fall further but threat of renewed disruption returns

Global air cargo average rates fell at the end of June and early July, also due to decreasing fuel prices, according to the latest weekly figures from WorldACD Market Data. At the same time worldwide tonnages dropped, mainly due to the 4 July Independence Day holiday in the US, and also partly due to declining volumes from Hong Kong to Europe following the 1 July start of new EU ‘de minimis’ import rules. Although renewed fighting between the US and Iran this week threatens to increase air cargo disruption and pricing in the coming days and weeks, average worldwide rates edged downwards, week on week (WoW), by a further -1% in week 27 (29 June to 5 July) to US$3.13 per kilo, having dropped by -2% the previous week, based on a mix of contract rates and spot rates. Average worldwide spot rates fell -2% to $3.62 per kilo in week 27, with declines of -4% from Europe and North America, and drops of -2% from Asia Pacific (to $5.03 per kilo) and Central & South America (CSA). Nevertheless, average worldwide spot rates remain +37% higher, year on year (YoY), including +46% higher from Middle East & South Asia (MESA) and North America origins, +42% from Africa, and +37% from Asia Pacific. Worldwide tonnages dropped, WoW, by -2% in week 27, having declined by -1% the previous week, with the biggest fall coming from North America (-10%) due to the US’s Independence Day public holiday, followed by a -7% decline from CSA, linked also to the 4 July celebrations at its northern neighbor. This year’s WoW drop of -2% in worldwide volumes is comparable with the -3% WoW decline observed last year for the same week. However, worldwide chargeable weight is +4% higher than this time last year, driven by a +8% YoY increase from Asia Pacific origins, based on the more than 500,000 weekly transactions covered by WorldACD’s data. Looking in more depth at Asia Pacific traffic trends reveals a very significant -12% WoW drop in tonnages on the key e-commerce export lane from Hong Kong to Europe in week 27, following declines of -7% and -2% the previous two weeks – influenced by the end on 1 July of the EU’s ‘de minimis’ import duty exemption on goods valued below €150. That takes Hong Kong to Europe tonnages back to their levels at the end of March. Meanwhile, volumes from China to Europe were stable in week 27 after declining by -6%, WoW, the previous week, with Asia Pacific to Europe tonnages overall down -2% in week 27 and -4% the previous week, while spot rates fell by very similar figures in those two weeks to $5.09 per kilo in week 27. At the same time, there has been a surge in tonnages from Taiwan to Europe in the last three weeks, rising around +20% in that period, reflecting movements of AI-related computer equipment. In comparison, Taiwan to the US tonnages fell by around -5% in that period, and Hong Kong to US tonnages have dropped by a total of around -7%, but nothing like the roughly -20% drop in Hong Kong to Europe traffic in the same period. On the pricing side, Asia Pacific to US average spot prices dipped for the second consecutive week, dropping -3% to $6.83 per kilo. China and Hong Kong to the US spot prices have dropped by a total of around -12% in the last two weeks. On the capacity side, total global air cargo capacity edged downwards -1%, WoW, in week 27, mainly because of a drop in capacity from North America (-4%) due to Independence Day in the US. That was partially offset by a further WoW increase from MESA origins (+3%). Total worldwide capacity has now rebounded slightly (+2%) above its level in week 7 just prior to the onset of the US-Israel war with Iran, thanks in part to a further reduction of the capacity deficit to and from MESA, which narrowed to -10% in week 27 compared with -14% the previous week and -30% in early June. But that recovery of capacity may change in the coming weeks if the escalation of the US-Iran conflict continues. For Editorial Inquiries Contact: Editor Matt Driskill at [email protected] For Advertising Inquiries Contact: Head of Sales Sally Passey at [email protected]