Global air freight rates maintained a firm tone throughout June 2024, according to the latest data from TAC Index, a leading price reporting agency (PRA) for air freight. The Baltic Air Freight Index (BAI00), calculated by TAC, ended the four weeks to July 1 down only slightly by 1.2 per cent, leaving it ahead by positive 10.4 per cent over the past 12 months.

The data confirms that the market has remained surprisingly strong through what is typically a low season. The relative strength of the market reflects ongoing robust activity in e-commerce, driven by large China-based exporters. Additionally, continued disruptions to ocean shipping, made more expensive by ships diverting away from the Red Sea and around the Cape of Good Hope, have significantly increased ocean shipping rates, making air cargo appear relatively less expensive.

These trends are further supported by TAC’s data on air freight rates out of China. The index of outbound routes from Hong Kong (BAI30) gained 2.3 per cent in June, putting it ahead by 21.1 per cent year-on-year (YoY). Outbound Shanghai (BAI80) saw a slight decrease of 2.7 per cent month-on-month (MoM), but remained significantly higher by 42.1 per cent YoY.

Rates are also substantially higher YoY from other major Asian markets, notably from India and Vietnam, particularly on lanes to Europe, according to TAC data.

In contrast, the market out of Europe remains somewhat weaker. The index of outbound routes from Frankfurt (BAI20) decreased by 3.4 per cent MoM, resulting in a YoY decline of 18.3 per cent. Outbound London Heathrow (BAI40) enjoyed a rise in the final week of June, pushing it ahead by 6.4 per cent MoM, but it is still down by 27.2 per cent YoY.

From the Americas, the market also ended the month on a weaker note. A significant drop in the final week left the often volatile index of outbound routes from Chicago (BAI50) down by 15.9 per cent MoM and 32 per cent YoY.

As noted last month, the macroeconomic outlook has started to appear somewhat more optimistic. The US economy is slowing down at a gentle rate, with the Federal Reserve aiming for an ‘immaculate soft landing’. Europe is beginning to recover from the shock of the Ukraine war, and Japan is experiencing robust growth after years of stagnation.

With the economic outlook not too bad, markets have shifted their concerns to the political outlook. Many elections around the world this year, alongside ongoing conflicts in Ukraine and the Middle East, have added to market anxieties.

Fibre2Fashion News Desk (DP)