Air Freight Market Update

Outbound China air cargo developments suggest positive signs for global market

• In March, we saw air cargo exports out of China surge by 29% month-on-month, with further gains in April, although at a slower pace of 2%. This suggests China’s export activity has picked up after the seasonal slowdown and the end of its high-profile zero-COVID policy. The output from the country’s factories record a rose by 3.9% in March.

• In terms of air freight capacity, the picture is complex. Outbound China air cargo capacity in March increased by 25% over the previous month, largely due to the post Lunar New Year recovery. However, in the first two weeks of April air freight capacity out of China dropped by 4% compared to the same period a month ago meaning the airlines have yet to deliver any increase passenger belly capacity as the outbound international travel demand remain subdued.

• In terms of capacity utilization, the load factor drops to 89% in the first half of April but the freight rates running against the tide despite the drop in the filing factor, indicate there is still a tight balance between supply and demand in the market.

Outbound China air cargo volumes, capacity, load factor and rate developments
(month over month changes in percentage or percentage points)

* Month over month changes in Apr23 compare the first two weeks of April with the first two weeks of March.

Source: Xeneta

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Ocean Freight Market Update

As Asia-US shipping rates rise, so does skepticism on staying power

Container spot rates from Asia to the US west coast shot up in week 16, as carriers succeeded to implement the mid-month GRIs on 15Apr and are scheduled to implement the next round in May. Both The Freightos Baltic Daily Index and The Drewry World Container Index shows double digit gains last week. To underpin their GRIs, carriers are keeping a tight lid on capacity and are continue to blank sailings. For example, 2M Alliance announced three more cancelled transpacific sailings for May.

However, the market consultancy Linerlytica comment the GRIs are unsustainable as the higher rate is not driven by higher demand. “No sooner had the trans-Pacific rates rebounded than the carriers started to cut rates again, in a pattern that will likely be repeated over the coming months,” view by the analyst. Meanwhile, the SCFI’s latest transpacific assessments fell 2% wow to $1,633 per FEU on the Asia-West Coast route and $2,510 per FEU on Asia-East Coast.

On the other side, the planned GRIs coincide with annual contract negotiations between carriers and shippers, Linerlytica said with some carriers have extended preferential NVOCC rates to the end of June and the contract volumes share has shrunk to less than 30%, believe It’s particularly problematic for carriers to negotiate contracts given current rate volatility.

Top 10 North American Ports Monthly Container Volumes (updated to Mar 2023)

Transpacific container volumes have fallen sharply by 24.9% in Q1 2023 yoy, even lower than pre-pandemic volumes

Source: Freightwaves, theloadstar, linerlytica