Recent stand-off on tariffs between the US and China have an impact
Rates out of China were up overall week-on-week both to the US and to Europe, though still below where they were a year ago – with general cargo activity steady on transpacific lanes, but e-commerce said to be staying on the sidelines for now. Following the cancellation of many block space agreements (BSAs) this year, there has been an increase both in spot market activity and spot rates, particularly in the past week. However, the index of outbound routes from Hong Kong (BAI30) was a little lower overall, dipping 1.2 percent week-on-week to leave it at 6.1 percent lower year-on-year. By contrast, outbound Shanghai (BAI80) rebounded from recent falls, gaining 6.1 percent week-on-week – though still lower by 10.3 percent year-on-year. Rates out of Vietnam were little changed to Europe, but down to the US – and now considerably lower year-on-year in both directions. Rates from India were also slightly lower week-on-week both to Europe and the US, and now well down year-on-year.
The global Baltic Air Freight Index (BAI00), calculated by TAC, rose 0.4 percent in the week to 26 May – and though still lower by 5.5 percent year-on-year, some sources anticipate rates could rise further in the weeks ahead. The disruption to ocean shipping due to cancellations during the recent stand-off on tariffs between the US and China could lead shippers to turn to air cargo instead, these sources suggest – causing a ‘COVID effect’ similar to what occurred during the pandemic period – though others suggest that customs issues are still causing some hesitancy on business to the US.
Out of Europe, rates were little changed overall – though with considerable variations on different lanes, with gains on routes to China but falls to the US and Japan. The index of outbound routes from Frankfurt (BAI20) edged up 0.2 percent week-on-week to leave it ahead by 8.7 percent year-on-year. Outbound London Heathrow (BAI40) eased down 0.8 percent week-on-week to leave it slightly lower by 4.1 percent year-on-year.
On the pricing side, worldwide average rates of US$2.33 per kilo edged up slightly higher (+2 percent) in week 20 compared with the previous week, thanks largely to a +2 percent WoW increase from Asia Pacific origins, although both were down by -4 percent compared with week 20 last year. And the pattern for spot rates was similar, with average worldwide spot rates of US$2.50 rising +2 percent WoW, but -3 percent below last year’s levels.
Although prices are now slightly lower YoY from most origin regions, the biggest YoY change is for MESA origins, where spot rates and overall average rates are down by -23 percent and -15 percent, respectively, compared with their inflated levels this time last year.