Airfreight rates on key trades out of Asia remained "firm" in June despite the market entering the quieter summer season.
The latest figures from the Baltic Exchange Airfreight Index (BAI) show that rates from Hong Kong to both Europe and North America remained up on a year ago and also increased slightly compared with May levels.
From Hong Kong to North America, the average rate paid by forwarders in June was up 16.9% compared with a year earlier at $5.75 per kg. Rates are also up on the $5.53 per kg paid in May.
Meanwhile, from Hong Kong to Europe, rates in June increased 22.3% year on year to $4.56 per kg. In May, the average rate on the trade was $4.41 per kg.
Rates in June tend to plateau or even decrease compared with May as demand settles down for the quieter summer months and extra bellyhold capacity is added to the market for the summer tourist season.
Writing in his monthly column for the Baltic Exchange newsletter, date provider TAC Index editor Neil Wilson explained: "The latest data confirms the market has remained surprisingly strong through what is normally a low season in the year, as extra bellyhold capacity comes on stream when passenger traffic increases in the summer.
"Sources said the relative strength of the market reflects continuing robust activity in e-commerce driven by big China-based exporters such as Temu and Shein.
"In addition, continued disruption to ocean shipping, which has been made much more expensive by ships diverting away from the Red Sea and around the Cape of Good Hope, has resulted in a huge rise in ocean shipping rates making air cargo look relatively less expensive."
Wilson explained that outbound routes from Hong Kong gained 2.3% in June to put that index ahead 21.1% year on year.
Outbound Shanghai was slightly lower by 2.7% month on month, but still ahead by a "remarkable" 42.1 compared with last year.
"Rates are also significantly higher year on year out of some other big markets in Asia, notably from India and Vietnam, particularly on lanes to Europe according to TAC data," Wilson said.
He added: "The overall tone of the market remains very firm for the time of year, with some reports even proclaiming peak season had come early. Such reports seem somewhat premature given that traditional peak season is still months away.
"That said, sources report a lot of block space agreement capacity has already been signed up for Thanksgiving and Christmas, which could presage a big spike in spot rates later in the year."
Wilson added that e-commerce players may in the future use ocean to ship to distribution hubs close to the final market, such as Mexico for the US, and then fly to final destination.
This would drive up demand for narrowbody freighters but could see some of the long-haul e-commerce demand change modes.
"The macroeconomic outlook has also started to look somewhat more optimistic, with the US economy slowing down but at a very gentle rate, and the Federal Reserve looking to engineer an ‘immaculate soft landing’; Europe starting to revive after the shock of the Ukraine war; and Japan enjoying robust growth after years of stagnation," he added.
However, he said the US election later in the year could impact trade if more tariffs are added by whoever wins.
