Air cargo rates still rising, ME-South Asia prices soar

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Air cargo rates still rising, ME-South Asia prices soar
Image by jacqueline macou from Pixabay
  • Worldwide air cargo rates continued to rise into the first week of April, according to an analysis from WorldACD Market Data
  • Middle East and South Asia to Europe spot rates have soared in the last three weeks to around double their level this time last year
  • The increase took place despite a fall in tonnage from most regions tied to assorted holiday periods worldwide

Air cargo rates continued to rise at the beginning of April helped by a surge in prices and demand from the Middle East and South Asia (MESA), according to an analysis from WorldACD Market Data.

This, despite a fall in tonnage from most regions tied to assorted holiday periods worldwide, including Easter, Ramadan and China’s Qingming Festival.

Average global rates rose by more than 2% in the April 1 to 7 period to $2.54 per kilo. For the month of March, prices also increased between 2% and 3%, or 1% below their level for the same period last year.

The rates were substantially above pre-Covid levels at 41% compared to April 2019.

World ACD’s analysis revealed a huge surge in spot rates from MESA to Europe in recent weeks, notably from India and Bangladesh. This was linked to strong demand developments along with supply issues spurred by disruptions to container shipping and Ramadan.

MESA to Europe spot rates soared in the last three weeks to about double their level compared to the same period last year, soaring to $3.43 a kilo.

Another factor starting to impact rates is increasing jet fuel prices, which rose by more than 4% for the first week of April compared to the previous week. Jet fuel prices, however, were still slightly below the same period last year, or 1%.

Compared with 2023, average worldwide rates in recent weeks were down 4%, with the small increase in chargeable weight unable to keep pace with the growth in capacity.

MESA was the only region to record year-on-year increase in rates – up by 39% based on a mix of contract rates and spot rates – and the only region where growth in demand (11%) outpaced hikes in capacity (6%), in a market still hurt by disruptions in container shipping in the Red Sea.

Asia Pacific rates, meanwhile, have recovered to their level this time last year, due to an 8% increase in tonnages.

A review of the main intercontinental lanes, the biggest drops were seen in Europe, little different from last year in the two weeks leading to Easter.

The biggest increase in pricing is seen from MESA to Europe, despite a 7% fall in tonnages.

WorldACD noted that as of last week, “the consistent recovery in global rates in the last five or six weeks means that average rates have recovered close to their peak levels in the fourth quarter of last year” and are presently just above their average level in the fourth quarter of $2.47 per kilo.

The report adds that once more, certain key hub airports in the Middle East and Asia have seen particularly strong demand in 2024 due to the disruptions in container shipping in the Red Sea, “particularly those commonly used as Asia-Europe sea-air hubs or road-air hubs, including Dubai, Colombo, and Bangkok.”

READ: Air cargo sees strong double-digit growth in Jan, Feb