Market update

Freight Market Update: December 9, 2022

Shared by Tiffany • June 08, 2023

Air Freight Market Update

Air cargo volumes declined 8% year on year in Oct, the eighth consecutive month of decline, and the outlook is equally downbeat. Market outlook “remains uncertain” and there is also nothing to indicate an upturn next year from its weekly market data. “We are six weeks away from Christmas and there is no indication there will be a peak,” according to the spokesperson of Xeneta.

The latest Baltic Exchange Airfreight Index shows that prices from Hong Kong to North America declined in Oct to $6.74 per kg from $7.94 in Sept. An industry player saw its air and ocean businesses continue to soften through Q3 amid falling demand and freight rates, downturn is expected to last till to last into 2023.

However, some air cargo bosses remain optimistic, saying that in the long term there will be the demand. E-commerce is one of the markets that will drive demand, while some conversion programs are being phased out to make way for new ones, and therefore keeping the number of conversions in the market steady. Demand for perishables is increasing, and consumer demand is high for some products and necessitates aircraft.

Week 40-43 of 2022 compared to similar weeks in 2021 and 2019

Ocean carriers are said to be in “panic mode” as bookings from China to North Europe and the US west coast tank, causing FAK rates to plunge to new depths. Despite aggressive blanking that has reduced weekly capacity on the tradelanes by more than a third, the lines have failed to slow the precipitous fall in short-term rates and, are arguably fueling the fire by offering sub-economic spot rates via their digital platforms. Some carriers are said to be prepared to reduce rates further for volume and relax or even waive demurrage and detention conditions. An industry player expects carriers to remove somewhere between 17% to 20% of capacity to the West Coast in Q4 to account for declining demand and lower rates.

Between late Nov and early Dec, 14% of voided sailings across major container shipping routes. The decline in vessels coming from Asia on the Transpacific route is creating an increase in the wait time of export containers at the Port of Long Beach. Metric hits 18.33 days at the Port of Long Beach, as of November 10.

Empty shipping containers are crowding shipping ports around the world and creating an unexpected bottleneck in the global supply chain. There is just not enough depot space to accommodate all the containers. With the further release of container inventory into the market, there will be added pressure on depots in the coming months. Shipping containers to decline for 1st time in 14 years, according to Drewry.