Air freight prices strengthen as demand outstrips capacity  

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  • The Baltic Air Freight Indices (BAI) increased by almost 17% in April over March, largely driven by China (Hong Kong and Shanghai)
  • For the first three weeks of April, volume was up 84% versus the same period last year at the height of the initial global lockdowns
  • China and Hong Kong markets continue to lead the way in terms of price strength, while the US and Europe see a more volatile and mixed picture

Air freight rates have made a big bounce back in April following the March 2021 slowdown, particularly on the China/Hong Kong to US trade, according to a new report from the Baltic Exchange.

The Baltic Air Freight Indices (BAI), which reflect weekly transactional rates for general cargo as provided by freight forwarders, show that prices have strengthened, as demand outstripped capacity in several markets.

Some lanes recorded even higher pricing levels than those highs seen in 2020, said the report.

The BAI increased by almost 17% in April over March, largely driven by China (Hong Kong and Shanghai air hubs). which showed growth of around 30%, it said.

The key hub of London also saw an improvement on three out of four indices. This improvement was at more modest levels of around 3% in April 2021, building on similar growth levels in March.

Meanwhile, Frankfurt, Chicago and Singapore all saw declines in April compared to March, as operational crewing and permits issues impacted some carrier operations.

For the first three weeks of April, data showed that volume was up 84% versus the same period last year, at the height of the initial global lockdowns. Compared to volumes in April 2019, there was a small decline of 1% as load factors continue to be much higher than pre-Covid levels.

There are differences by market, with the China and Hong Kong markets continuing to lead the way in terms of price strength, while the US and Europe see a more volatile and mixed picture.

“The air freight market continues to be strong, particularly CN/HK to US, and may continue, at least in the short term, with demand strengthening as countries relax lockdowns and subdued passenger travel continues to impact capacity,” said the report.

“With the easing of Hong Kong quarantine rules for crew, Cathay Pacific are looking to restore their full market presence as soon as possible which may dampen pricing,” it added.

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