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Hits:Updated:2022-11-25 09:11:15【Print】
Seaborne spot rates continue to fall. Fixed-rate air freight contracts with maturities of more than six months almost disappeared in the fourth quarter as demand from Asia slowed, capacity returned to the market and spot rates fell during the traditional peak season.
According to the latest data of Shanghai Container Composite Index released by Shanghai Shipping Exchange, the freight rate (sea freight and sea surcharge) for exports from Shanghai port to European base port market is 1,172 US dollars per TEU, down 20.7% from the previous period.
According to one UK freight executive: "The Asia-Europe westbound market seems to be in a panic and I am getting emails every day from agents offering very low rates. There hasn't been a Christmas rush on the westbound route and I put that down to the recession, we're not shopping like we did during the previous pandemic."
Spot freight rates from Shanghai, Tianjin and Shenzhen to northern European container ports such as Le Havre and Hamburg have dropped to $1,000 per TEU and $1,800 per FEU.
At the same time, spot rates on trans-Pacific routes have also continued to fall, dragging down rates on long-term contracts, forcing shipping companies to renegotiate existing contracts with customers and cut prices. According to SCFI, the rates of Shanghai's exports to the western and eastern U.S. basic ports were $1,559 per FEU and $3,877 per FEU, respectively, down 4.5 percent and 8.2 percent from the previous period.
Air cargo market peak season is not prosperous, the cargo volume in the Asia-Pacific region declined
Fixed-rate air freight contracts with maturities of more than six months almost disappeared in the fourth quarter of this year as demand from Asia slowed, capacity returned to the market and spot prices fell during the traditional peak season.
Long-duration air cargo contracts accounted for just 1 per cent of the global market at the end of October, down from 17 per cent in the third quarter, according to Xeneta, a tariff benchmark platform.
When rate levels fall, airlines often extend the life of their space agreements, usually for 12 months. But growing uncertainty about demand and no sign of rates bottoming out have led to the virtual disappearance of current contracts longer than six months.
According to Xeneta, half of the global air cargo contracts agreed between airlines and freight forwarders in October were for three to six months, up from 36 percent in the third quarter; Activity in the spot market rose to 37 percent in October, up from 30 percent in the third quarter.
"Shippers and forwarders feel that the high volatility of the market is not in line with their long-term contract needs," Wenwen Zhang, air cargo analyst at Xeneta, said during the November webinar on the State of the Market.
The average spot price between China and North America fell to $5.68 a kg this week, down 52 per cent from a year earlier, according to the Baltic Air Index. The average spot price from China to northern Europe was $5.24 per kilogram, down 33% from the same period last year.
The decline in fares from Asia is accelerating as inflationary pressures rise in the US and Europe and demand weakens, while airlines restore grounded capacity or increase long-haul flights to meet growing passenger demand.
Passenger jet belly capacity is a key component of the global air cargo network, providing 51 percent of all available space before the pandemic. The steady return of belly capacity is good news for air shippers, but the deteriorating economic environment is slowing cargo volume growth.
At the recent Air cargo Forum, airline executives and freight forwarders said they did not expect a peak season or the traditional pre-Chinese New Year surge in cargo volumes. Analysts share this view.
WorldACD, an air cargo analyst, said in a recent market update that there was no peak season this year. "There is still no sign of any seasonal increase in air cargo demand or prices in the fourth quarter, and the downward trend of the past few months has continued into the second week of November, which is usually the peak season."
WorldACD reported that through the first half of November, freight volumes in the Asia-Pacific region were down 25 percent from the same period last year, when demand was at an all-time high.
DHL's state of the air cargo industry report, released on November 9, also noted little sign of the traditional fourth-quarter surge in cargo volumes and forecast that rising inflation would continue until 2023, with reduced purchasing power likely to reduce demand and cargo volumes.
Cathay Pacific reported in its latest October figures that cargo volume fell 20% year-on-year to 109,425 tonnes and was down 40% compared to October 2019. In the first 10 months of this year, cargo volume was down 11.1 percent compared with the same period in 2021, while capacity was down 21.9 percent. Global economic headwinds and China's quarantine measures continue to affect trade flows and production, said Ronald Lam, the company's chief customer and commercial officer.
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