Air cargo demand in May has continued to wane while rates have kept rising on major East-West trades compared to a year ago.

Average rates from Hong Kong to North America in May increased by 21.7% y/y and 1.2% m/m. From Hong Kong to Europe, average rates for May increased by 34.2% y/y and 5.7% on m/m, according to the Baltic Exchange Airfreight Index (BAI).

The increases come as air cargo operations from Asia continue to face disruption. Following Shanghai’s pandemic related lockdown which impacted production levels in May, airlines responded by removing flights. Meanwhile, cross border trucking and freighter operations out of Hong Kong continue to be affected by COVID restrictions.

The closure of airspace due to the war between Ukraine and Russia similarly affected European operations. Carriers were forced to implement longer routes while Russian carriers, such as AirBridgeCargo and Atran ceased operating in the market. Additionally, jet fuel prices have also surged over recent months.

On the demand side, the latest data from CLIVE Data Services shows May volumes falling by -8% y/y. A surge in cargo is expected by many as Shanghai gradually re-opens to put pressure on shipping lines and in turn airlines.

Bruce Chan, senior analyst at Stifel said this could push up rates further in the months ahead. However, the TAC Index, which provides data for the BAI, indicates that carriers are ramping up capacity which could cool rates.

Source: Air Cargo News