Worldwide average air cargo rates edged up slightly in week 38 as demand held steady and overall capacity remained stable, despite disruptions at several European airports. But the gap between current average air cargo prices and their equivalent level last year has widened to -5%, with a deficit of at least -20% for Asia Pacific to USA spot prices, due to the impact of the disruptive new US trade and tariff policies – particularly on e-commerce cargo.
According to the latest weekly analysis from WorldACD Market Data, average worldwide rates rose, week on week (WoW), by +1% in week 38 (15 to 21 September) to US$2.44 per kilo, thanks to increases from Africa (+3%), Asia Pacific (+2%), North America (+2%) Europe (+1%) and Middle East & South Asia (MESA, +1%). But rates from some key regions are now well below their levels last year, with Asia Pacific prices lagging -7% below last year, and MESA prices down -22% on last year’s elevated levels, based on a full-market average of spot and contract rates.
For Asia Pacific origins, average spot rates last week of $3.65 per kilo were flat compared with the previous two weeks, but they are well (-11%) below their levels last year – when strong demand from e-commerce markets, in particular, had already begun driving up spot prices. This year, in contrast, higher US tariffs and the elimination of tariff-free de minimis exemptions for low-value shipments has undermined growth and pricing.
Average spot rates of $4.79 from Asia Pacific markets to the US were broadly stable, week on week (WoW), in week 38, despite some WoW demand volatility. But for the last three weeks, average spot rates from Asia Pacific markets to the US have been at least -20% below their equivalent level last year, based on the more than 500,000 weekly transactions covered by WorldACD’s data. Taiwan is the only significant Asia Pacific origin market where rates to the USA are currently higher than last year, at $6.18 per kilo (+11%, YoY), thanks to surging volumes of high-tech equipment.
Spot prices to the USA from South Korea (-3%) and China (-7%) have been more resilient than most origin markets, whereas Hong Kong (-11%), Japan (-29%), Vietnam (-23%), Thailand (-25%), Malaysia (-31%) and Singapore (-34%) to USA rates are down more significantly, YoY. Those big YoY deficits come in spite of the fact that tonnages from most of those origin markets to the USA are well above last year’s levels, as US suppliers and Asian shippers have sought alternative supply sources this year. Tonnages from China (-1%), Hong Kong (-19%) and Japan (-12%) were down, YoY, in week 38 but volumes from Taiwan (+51%), Vietnam (+44%), Thailand (+43%), Malaysia (+28%), and Singapore (+12%) are well ahead of last year’s equivalent levels.
Compared with the previous week, there were week-on-week (WoW) rises in tonnages from some Asia Pacific markets, such as South Korea (+14%), Thailand (+10%), Singapore (+8%) and Hong Kong (+7%) to the USA, but those mostly follow declines in the previous two or three weeks in what remains a volatile market. Overall tonnages from Asia Pacific to the US were up +2%, WoW, and were +5% higher, year on year (YoY).
In comparison, tonnages from Asia Pacific to Europe have been up, as a whole, by a similar amount (+6%, YoY) in week 38, but the performance of individual country markets has been quite different from those markets to the US. For example, chargeable weight from China and Hong Kong are both up, YoY, to Europe, by +8% and +5%, respectively, as are volumes from Taiwan (+26%) and Vietnam (+9%).
On the pricing side, spot rates from Asia Pacific to Europe are also down, YoY, but to a much lesser extent than to the US, with an average of -6%, including YoY declines from Hong Kong (-7%), Japan (-11%), Vietnam (-21%), Thailand (-16%), Malaysia (-26%) and Singapore (-9%). Spot rates from China to Europe have mostly also been down, YoY, in recent months, although they edged back into positive territory in week 38 (+3%, YoY), as did rates from South Korea (+2%) and Taiwan (+5%).
Air cargo services and capacity this week out of parts of east Asia, including south-eastern China, Hong Kong, Taiwan, and the Philippines, have been significantly impacted by ‘super-typhoon Ragasa’, the world’s strongest typhoon so far this year. With the disruptions occurring so close to China’s Golden Week holiday next week, anecdotal reports indicate that air cargo spot rates out of China have spiked significantly in the early part of week 39 – which WorldACD will report on more fully next week.
Meanwhile, volumes ex-India to the USA rebounded (+12%, WoW) somewhat after three weeks of consistent WoW declines since the implementation of new higher US import tariffs on goods from India. But this rebound was part of a broader surge (+16%, WoW) in tonnages from MESA origins to the USA in week 38, which may in part be related to a recovery of traffic following the Mawlid holiday. Nevertheless, flows from India and MESA origins as a whole to Europe have been less volatile, rising just +1%, WoW, in week 38.
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