Global air freight rates reach record high

The global spot prices for air freight reached a peak of $3.34 per kg in April, representing a 30% increase compared to the previous year. This is the highest value since October 2022. However, according to an analysis by Xeneta, the worst may already be behind shippers, as capacities on the routes most affected by conflicts are returning and market conditions are beginning to stabilize air freight prices.

The spot prices in April, which also included an 18% increase in long-term rates, evoke memories of pandemic-related bottlenecks when supply chains suffered from capacity constraints and freight costs soared. In contrast to the Covid shock, which severely impacted global capacity, the current restrictions are largely regional in nature. However, the rising fuel prices, which burden airlines, are concerning.

Niall van de Wouw, Chief Airfreight Officer at Xeneta, expressed optimism, stating that the worst price increases may be over. „The rise in air freight prices was caused by a supply issue. Now that capacities are returning, prices will decrease, but not as quickly as they rose,“ said van de Wouw. This could represent a positive development for shippers who have postponed their bids for the third and fourth quarters.

Market Analysis and Price Development

Global freight capacity has largely recovered to pre-bottleneck levels, and although reports of a fuel shortage are increasing, it has not yet significantly affected intercontinental long-haul routes. Van de Wouw emphasized that spot prices should decrease in the coming weeks, which could provide some relief to shippers.

He advised shippers to develop a better understanding of how their carriers move goods and to be cautious with the so-called „overage charges“ circulating in the market due to rising fuel prices. „We need to debunk the myth that rising fuel prices must lead to higher air freight prices. While fuel costs have increased, rates are decreasing in certain markets,“ explained van de Wouw.

Impact of Regional Conflicts on Prices

The conflict in the Middle East continued to distort air freight prices on key corridors in April. Spot prices from Europe to the Middle East reached a new high of $3.60 per kg in the week ending April 26, representing a 108% increase compared to pre-conflict prices. Similar trends are observed on routes to South Asia, where prices have risen to $2.97 and $4.39 per kg.

However, there are initial signs of price relaxation. Rates from South Asia appear to have peaked in the week ending April 12 and have slightly decreased in the last week of April. The corridors in Southeast Asia show a similar trend, albeit less dramatically. Prices to North America increased by 33% to $6.46 per kg, while rates from Europe to North America fell by 17% to $2.57 per kg.

www.tiaca.org