TAC Index: Air cargo pricing from China surges again

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Airfreight rates from Shanghai to Europe and the US surged again last week as capacity on the trade lanes remained tight.

The latest statistics from TAC Index show that prices on services from Shanghai to North America last week increased by 9.3% week on week to $6.95 per kg, which is a new record for the trade on the index (beginning March 2016).

The increase follows on from a slight decrease in prices on the trade two weeks ago. However, since the start of March prices are now up by a staggering 130.9%.

On services from Shanghai to Europe, there was an 18% increase to $8.65 per kg — also a record on the trade for the index. Since the start of March prices have increased by 272.8%.

Conversely, rates out of Hong Kong to Europe fell by 8.8% week on week to $4.66 per kg and from Hong to North America there was an increase of 4.5% to $5.54 per kg.

Derivatives broker Freight Investor Services (FIS) suggested that the increases from Shanghai and the (relatively) flat performance from Hong Kong was the result of Beijing clamping down on rogue shipments of personal protective equipment (PPE).

Looking further ahead, questions remain as to what will happen once demand for medical equipment weakens.

“The sudden capitulation of Hong Kong prices comes as news of PPE shipments from mainland China are being forced through mainland airports, rather than trans-shipped through capacity out of Hong Kong,” said FIS.

“Chaos has apparently ensued as the Chinese government clamps down on not fit-for-purpose equipment being bought with blank cheques by anxious governments.

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“All the while, overall cargo volumes have seen around a 19-30% drop year-on-year, leaving the market very little to fall back on if and when the flow of PPE and other medical equipment dries up. Talk throughout most markets has been that of post-covid recession, however recent buying sprees at re-opened stores in China (and some in the West) gives us hope for downstream demand.”

Freight forwarder Flexport said that capacity remained tight out of Shanghai, Guangzhou, Shenzhen and Hong Kong — reporting backlogs at several hubs.

It added that there are signs of commercial business shipments beginning to pick up in south China following the easing of lockdown restrictions.

It believes that sustained and high demand out of China will continue until at least May.

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Devender was born in the year when the Beatles Group was formed. He holds two master’s degrees in English Literature and Public Administration. He also has an Honors degree in English Literature and a post-graduate diploma in Corporate Communications and Public Relations. He was closely associated with the Indian State Transport Undertakings and Ministry of Transport in his role as Corporate Communications and PR specialist for over two decades handling domestic and international organizations. He ventured into business forming his own Media House, Profiles Media Network Private Limited which is now a twenty years old company. Excelling as an editor, Marketing, PR, Anchor, and Advertising specialist, he is now expertly navigating the world of social media. A widely traveled professional internationally, Devender has a deep understanding of the Air Cargo, Cargo Business, Cargo Airports, Freighters and Cargo Industry at large.