The global air cargo market has been riding a wave of heightened activity, with freight rates from key markets such as Japan and Bangladesh surging in recent weeks. Airfreight rates have been driven by a combination of factors, including disruptions in ocean freight and seasonal demand, particularly from the Asia Pacific and the Middle East and South Asia (MESA) regions. These regions are playing a crucial role in driving up air cargo rates globally, signalling the start of what could be a robust fourth-quarter peak season.
Escalating rates
Figures show a 14 percent year-on-year increase in overall rates, with the Asia Pacific and MESA regions leading the charge. Rates from Asia surged by 24 percent, while the MESA region, which includes Bangladesh, India, and Dubai, saw a staggering 56 percent increase.
This spike in rates from the MESA region has been largely attributed to disruptions in ocean freight supply chains due to attacks on shipping in the Red Sea. As a result, exporters and importers have increasingly turned to air cargo to keep supply chains moving, particularly in the textile and manufacturing sectors.
Getting the basics right
Bangladesh has emerged as a particularly hot spot for rising air cargo rates. The country, known for its textile exports, is grappling with political unrest and logistics disruptions, which have further strained its shipping infrastructure. As a result, rates from Bangladesh to Europe have exceeded US$5 per kilogramme for three consecutive weeks, a significant increase from the usual rates.
Similarly, airfreight rates from Bangladesh to the US have experienced an even sharper climb, hitting US$7.49 per kilogramme. This is more than triple the rates observed during the same period last year, reflecting the intense pressure on the country’s logistics systems.
India has also contributed to the MESA region’s upward trend, though rates from India to Europe have slightly eased from their peak of US$4 per kilogramme in April to around US$3.30 in recent months. Nonetheless, the demand for air cargo remains robust, bolstered by ongoing supply chain challenges in the region.
Getting the basics right
Japan has also been a major contributor to the current surge in air cargo rates. The country’s air services were disrupted by recent typhoons, which caused delays and pushed up spot rates significantly. Airfreight rates from Japan to the US climbed to US$8.33 per kilogramme in the week ending September 15, marking their highest level of the year. This represents an increase of around 50 percent compared to three months ago, signalling strong demand and constrained capacity.
Southeast Asia has followed a similar trajectory, with countries like Thailand, Singapore, and Malaysia experiencing dramatic price hikes. Spot rates to the US from these countries reached US$6.79, US$6.76, and US$6.60 per kilogramme, respectively, nearing their highest levels for the year. These rates are almost double what they were at this time last year, highlighting the tightening capacity and increasing demand for air cargo services from the region.
Stability in China and Hong Kong
While rates from Bangladesh and Japan have seen steep increases, air cargo prices from China and Hong Kong have remained relatively stable in recent weeks. This could be an indication that, despite the fluctuations in other regions, demand from China and Hong Kong has not yet experienced the same level of surge as their neighbours. However, with the peak shipping season approaching, it remains to be seen if rates from these markets will also rise in the coming months.
Q4 peak season
The surging air cargo rates from Japan, Bangladesh, and Southeast Asia provide early signs of a potentially strong fourth-quarter peak season. The increases in tonnages are broadly in line with the pattern seen last year, suggesting that demand will continue to climb as businesses ramp up shipments ahead of the holiday season.
While rates started bottoming out in late July, they began to pick up again in mid-August, indicating that the market is heating up. The anticipated growth in demand could drive air cargo rates even higher as carriers and freight forwarders grapple with capacity constraints and rising costs.