TAC Index registers biggest price drop since 2016
Airfreight rates on the major transpacific and Asia-Europe routes began to come under severe pressure in August as demand declines increasingly take their toll on pricing.
The latest figures from TAC Index show that average prices on services from Hong Kong to North America slipped by 16.9% year on year to $3.29 per kg.
In year-on-year percentage terms this is the biggest drop off in prices since August 2016.
Earlier this year, contacts said that pricing was holding up despite the decline in the overall cargo market.
Hong Kong-Europe and transpacific routes in the same boat
However, prices on this route have now been down compared with a year ago for nine consecutive months and the drop off has sped up since May.
Airfreight rates on the Hong Kong-Europe route have been following a similar pattern to those of the transpacific this year and August was no different.
The trade lane saw prices decline by 9.5% year on year in August to $2.56 per kg.
This is the second monthly year-on-year decline that the route has suffered in a row and is the biggest drop off in prices since September 2016.
The declines come despite flights out of Hong Kong being affected by ongoing protests during the month. Contacts said this did not have too much of an impact on cargo services as freighters continued flying.
“Market may have reached the bottom”
Airfreight derivatives broker Freight Investor Services believes the market may have reached the bottom and there is hope for next year.
FIS’ Peter Stallion said: “The airfreight market remains as unpredictable as the global political landscape, however indicative and traded interest provides confidence that airfreight rates will climb out of [their] summer lull in line with seasonal trends.
“The market holds on to an 8-15% decrease in spot rates since 2018. However, near-term softening of volume decline gives a glimpse of hope that prices will be unlikely to sink further.”