Warn of likely further air freight rate rises ex-India

Source: The Loadstar
Date: 15th March 2024

Air cargo congestion and rising air freight rates out of the Indian sub-continent – a situation they fear may get worse, owing to religious festivals.

Rates from India to Europe have risen 75%, month on month, according to data from Xeneta, with spot rates for the week ending 10 March at $2.85/kg. Bangladesh to Europe has risen 29%, to $3.44.

Xeneta airfreight analyst said: “The surge in spot rates from India to Europe is primarily due to spikes in demand in recent weeks, in particular, apparel. In the week ending 25 February, demand out of India was 29% higher than last year’s peak week in early June.”

Xeneta confirmed: “Looking at the general cargo market at a country level, India, Bangladesh and Sri Lanka experienced significant increases in their general cargo spot rates, which rose by a considerable 81%, 40% and 55% respectively, in the week ending 3 March, compared with four weeks earlier, driven by strong demand for apparel products from these markets.”

The situation is expected to worsen. Ramadan is creating further issues on productivity in factories, and the Middle East for connections. It’s a mess and getting worse – and then there is Easter also.

The congestion also appears to be affecting Dubai, which has been “flooded with cargo from India. That has put pressure on the more traditional origins in Southeast Asia. Surely, that will happen soon, and rates from anywhere in East Asia to Europe will be above $5 per kg.”

Xeneta said rates from Dubai to Europe rose 10% month on month, to a relatively low $1.24, while rates from Dubai to the US were up 12%, to $2.52.

A Transport Intelligence report issued today on Q1 air freight explained: “There was, and for the moment continues to be, quite strong demand from specific markets in parts of Asia, such as Bangladesh and Vietnam. This appears to be a specific response to the problems around the Suez Canal, with clothing and other consumer goods producers resorting to airfreight to get their goods to market in Europe. However, these markets do seem to be the exception.

What has been sustained over the past few quarters is demand from India. Although Indian demand remains largely consumer-driven, investment in sectors such as electronics is growing, and this ought to be emerging as an important element in air freight volumes.

Rates from Sri Lanka to Europe have remained flat, said Xeneta, but increased 19% to the US. India to US has also gone up 19%, to $3.34, and from Bangladesh to the US, up 11% to $3.36.

Air rates have gone up about 30% in the last two weeks – but they were very low. This has to some extent been countered by lower FCL rates ex-China in the past three weeks. The sea-air rate levels are still well below $ 3/kg, ex-Asia to European main airports.

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