The Slowdown in global trade is increasingly taking its toll on air cargo freight rates.
According to data provider Tac Index, average rates on transpacific services recorded their biggest decline of the year in June. Prices on the Asia-Europe trade for the month failed to record and increase for the first time in 28 months.
Tac index data shows that prices on services between Hong Kong and North America declined by 8.9% year on year to $3.46 per kg.
This represents the largest percentage decrease recorded on the trade lane since September 2016, prices, Prices were also down on the level recorded in May, although prices between the two months also declined last year, the level of drop off was higher in 2019. Meanwhile, prices on services from Hong Kong to Europe were flat in May compared with a year ago at $3.46 per kg.
It is the first time there has not been a year on year increase in prices on the trade lane since February 2017. Prices are up slightly against the $2.65 per kg recorded in May, However, this is not out of the ordinary and level of increase is actually lower than in recent years. Derivatives broker Freight Investor Services said that week-to-week prices across China to Europe and China to the US remained flat, reflecting a potential market bottom in line with a global drop in cargo supply.
Looking ahead, the broker’s forward curve shows that rates are expected to decline as the third quarter progresses on both the China-Europe and China US trades before picking up o both lanes in the fourth quarter.
The Frankfurt-North America trade lane continued to record weak performance in June. Tac Index figures showed a year on year decline of 16.5% compared with a year ago.
Rates were also down on the $2.12 per kg registered in May, although this is to be expected as carriers’ add capacity to the market for the busy summer period.
Source: Air Cargo News