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‘Boring is good’ as global air cargo market takes another step to recovery

Constrained capacity in the market at a time of rising demand also led to significant increases in rates, according to TAC Index. “It is interesting to see how closely demand/volume and pricing correlate in light of the fact there are a lot less BSAs (Block Space Agreements) in place currently. There were steady increases in pricing week-over-week in September, with rates on lanes from China/Hong Kong to the EU in the last week of September 8% higher than in the last week of August,” commented Robert Frei, Business Development Director at TAC Index.

Latest CLIVE Data Service and TAC Index analyses of the ‘dynamic loadfactor’ and airfreight rates on trans-Atlantic routes reported even higher gains. The elevated load factor for westbound volumes rose to 84% in September – up 18 percentage points versus September 2019 – while the eastbound ‘dynamic loadfactor’ was 67%. Corresponding westbound and eastbound airfreight rates rose 170% and 73% respectively over the same period of last year.

Niall van de Wouw, Managing Director of CLIVE Data Services, said: “A fifth consecutive month of gradual air cargo market improvements may not be sensational news but, in this case, sometimes boring is good. In fact, our latest weekly analyses reveal more positivity than I would have expected based on the global impact of government actions to restrain the spread of COVID-19. The air cargo market seems to be quite resilient. In April, CLIVE stated that the industry’s downward performance was ‘bottoming out’ and this has proven to be correct, with month-over-month improvements ever since.

“While this might be encouraging news for airlines, it means shippers and forwarders are being faced with higher airfreight costs. Uncertainty over how the market will develop alongside very high load factors is a toxic combination for the buyers of airfreight capacity. If this demand persists, and shippers are prepared to pay, we may well see a resurgence in passenger planes being deployed mainly or solely for moving freight. These remain uncertain times but with more optimism in the market for October and November volumes, the question is: how far can the recovery go?”

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