Trace
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November 11, 2024
The Future of Air Cargo: Why 2025 Will Be a Game-Changer
In a rapidly changing global landscape, air cargo is emerging as a key player in the supply chain...
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May 29, 2024
Ocean freight shipping has once again captured attention with rapid increases in spot rates on major trades out of the Far East. Between 1 April and 22 May, average spot rates surged into key regions such as North Europe (+31%), US West Coast (+30%), Mediterranean (+25%), and US East Coast (+22%).
While these increases have sparked speculation about an early peak season in 2024, it's crucial to delve deeper into the dynamics of other significant trade lanes beyond the Far East.
Latest update examines spot rate trends across the top 13 trades, encompassing both major global front hauls and significant backhauls. While seven trades have experienced rate increases since 1 April, six have seen rates continue to decline.
Among the notable increases, the spot rate from the Far East to South America East Coast has soared by 83% since April 1, reaching USD 6,320 per FEU by 22 May. This surge, despite a more modest increase during the Red Sea crisis, reflects the highest spot rate observed since October 2022.
Conversely, there's relief for shippers as some trade routes have witnessed rate softening. Notably, backhauls from North Europe to the Far East, the Far East to the Mediterranean, and the US West Coast to the Far East have seen decreases, offering a welcome respite amid market volatility.
However, the Transatlantic trades present a mixed outlook, with front-hauls from Europe to the US East Coast experiencing rate decreases, albeit following trends observed in major Far East trades with a delay.
Looking ahead, the recent surge in spot rates from the Far East indicates potential upward pressure on rates across other trades in the coming months. While it's uncertain if rates will reach the peak levels seen during the Red Sea crisis, shippers are advised to leverage data to monitor market trends and adapt their strategies accordingly.
Early indications for June suggest continued rate increases on major Far East trades, highlighting the importance of proactive monitoring and strategic planning in navigating evolving market dynamics.
In the latest developments in the air cargo industry, tonnages and rates from key Middle East and Asian origin markets continue to surge, particularly towards Europe. Strong demand, coupled with disruptions to ocean freight services and limited capacity on crucial lanes, are driving dramatic increases in rates on major intercontinental routes.
According to recent data from WorldACD Market Data, worldwide tonnages rebounded by a further +2% in week 20, following a similar increase in the previous week, after experiencing a slight decline at the beginning of May during the Labour Day holidays.
Despite this, average global rates have remained relatively stable, rising just two cents to US$2.48 per kilo in week 20. Year-on-year, rates have increased by around +2%, and significantly exceed pre-Covid levels (+40% compared to May 2019). Tonnages globally have also risen by +9% YoY, driven largely by strong demand from Asia Pacific (+15%) and Middle East & South Asia (+16%) origins.
Rates from Middle East & South Asia (MESA) are notably elevated (+45%), especially to Europe, where average rates from MESA origins remain more than double their level from the previous year (+119%). Tonnages from MESA to Europe in the last two weeks have increased by +31% YoY, with Dubai emerging as a top growth point in terms of origin (+148%).
Meanwhile, rates from key South Asia origin markets have witnessed significant increases, with average rates from Bangladesh to Europe standing at $4.66 per kilo in week 20, almost three times their level compared to last year (+186%). Similarly, rates from India to Europe have surged by +163% YoY.
In the Asia Pacific region, tonnages and rates vary across main origin markets. While tonnages from China and Hong Kong to Europe have shown mixed trends, Vietnam has experienced extremely high price levels, with rates doubling compared to last year (+120%) and recording the second-biggest tonnage increase in recent weeks (+13%).
These developments underscore the ongoing dynamics in the air cargo industry, driven by shifting demand patterns, supply chain disruptions, and evolving market conditions. Stay tuned for further updates on this dynamic sector.
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