So far, the much-anticipated surge in rates on healthy global economic growth and tight capacity has not materialized on the major East-West lanes.
     Freightos put it mostly bluntly in declaring: “No News Is The News For Air Freight Rates.”
     The digital marketplace reported in early June that average air freight rates “haven’t moved since late March,” rating them in the range of $2.90-$5.00 per kg on the China-U.S. lane, $2.80-$4.50 on China-Europe, and $1.80-$2.70 for Europe-U.S.
     Flexport reported a similar picture earlier this month with no space constraints evident and rates stable ex-China, ex-Hong Kong, ex-Vietnam, and ex-Europe.
     Ex-U.S., Frieghtos said rates remained high for Latin America, where industrial action and a lack of fuel in Brazil saw flights cancelled in late May, but were stable elsewhere.
     “Space has opened up slightly for exports to Europe and Asia due to the additional seasonal summer flights,” it added. “Space is tighter on certain lanes to the Middle East and India, and space is very tight to Latin America.”
     However, while in the last few months markets have been stable, TAC Index’s specific lane pricing analysis reveals in more detail how rates have risen since last year.
     For example, on June 12, 2017, rates on the Hong Kong-North America lane were $3.24 per kg, but by June 11 this year they were up to $3.77 per kg, having peaked in between at $5.57 during December. Hong Kong-Europe rates over the same period showed a similar pattern (albeit prices were significantly cheaper than on the Transpacific), rising from $2.26 per kg on June 12, 2017, to $2.71 per kg on June 11, 2018, having reached the (relatively) giddy heights of $3.29 in the December peak season.
     Volumes, like rates, are also growing year-on-year. WorldACD’s latest analysis removed distortions related to factory shutdowns during Chinese New Year by shining a light on the first quarter. It found that over the first three months of 2018, volumes were up 4.8 percent year-on-year globally and rose a further 4 percent in April, illustrating what it called “serious business growth in air cargo.”
     WorldACD said that so far in 2018, some key trends had emerged.
     For example, pharmaceutical products and high-tech shipments are up 17 percent and 11 percent respectively, year-on-year.
     The analyst also noted that volume growth in the first quarter was highly variable by region and trade lane. So far in 2018, the Asia Pacific, the largest origin area, has been growing at only 3.7 percent year-on-year, with volumes up 4.8 percent to Europe but only 2.1 percent to North America.      But from Europe, the second largest origin area, growth is mainly to North America, up 4.6 percent year-on-year, rather than to the Asia Pacific, up 1.4 percent.
     While from North America, the third largest origin area, exports are up by 8 percent year-on-year thanks to strong demand from both Asia and Europe.
     “With the exception of growing transatlantic business from Europe, could it be that all these trends are nicely in line with economic theory?” said the analyst.
     “After all, the USD has been relatively cheap in this period and the Euro relatively expensive. One would thus expect North America to export more, and Europe to import more.
     “With the surge of the USD since early May, we may well be able to already ‘test’ this position in one month’s time, when the May results will be in.”
     Looking ahead, IATA argued that relatively becalmed markets were mostly down to the time of restocking cycles and consistent with demand drivers moving away from the highly supportive levels seen last year; for example, the Purchasing Managers’ Index for manufacturing and export orders fell in April 2018 to its lowest level since 2016.
     IATA's Director General and CEO Alexandre de Juniac said he expects markets to pick up later in the year, but warned there were also risks to growth, not least, he implied, from U.S. trade policy under President Donald Trump.
     “We remain cautiously optimistic that demand will grow in the region of 4 percent this year,” he said. “But the forecast appears to have increasing downside potential.
     “Oil prices continue to rise as does protectionist rhetoric. Borders open to people and to trade drive economic growth and social prosperity.
     “We are all disadvantaged when they are closed.”
SkyKing