Air freight rates remain resilient in May despite low season

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The Baltic Air Freight Index’s latest update for May showed that the air freight market was strong during the traditionally low season.

This is a surprising development, as more passenger capacity becomes available during the summer holidays. This year’s unusual trend is due to a number of factors, including the continued growth in e-commerce from China and disruptions of ocean shipping in the Red Sea, among others.

The index of outbound route from Hong Kong (BAI30), which is the world’s busiest cargo airport, experienced a slight decline of -0.9% month over month but remained higher YoY by +15.0%.

Shanghai’s outbound (BAI80), which measures the number of passengers leaving the city, showed a +3.3% MoM increase. This resulted in a significant +41.4% year-on-year (YoY) rise.

Other Asian routes, including those from India and Vietnam also saw an increase, particularly routes to Europe.

European Air Freight Rates Lag Behind

In contrast, European rates for outbound flights remained stagnant. The index of outbound Frankfurt routes (BAI20), which measures the growth of rates from Frankfurt to Asia, showed a +2.3% MoM in the final week of may.

It was still down -26.0% YoY. London Heathrow (BAI40), which is located in the UK, experienced a -12.2% MoM decline. This left it -39.8% less than its YoY level.

U.S. market continues to grow despite customs crackdown

The market showed more resilience in the United States. The outbound index (BAI50), which measures the movement of passengers from Chicago, increased by +6.5% MoM and narrowed the YoY decline to 17.7%.

The end of May also saw significant industry news regarding a U.S. Customs and Border Protection crackdown on compliance rules for its Entry Type 86 program, which allows duty free shipments for items valued at $800 or less.

CPB announced that multiple customs brokers were suspended for suspected rule violations. The CPB is aiming to combat illicit substances, counterfeits and intellectual property rights violations as well as goods made using forced labour.

There were reports of delays and cancellations for both customs brokers and shippers. Sources indicated that these reports may be exaggerated as major customs brokerage firms already had effective compliance programs in place to mitigate any impact.

The Baltic Air Freight Index has cited Air Cargo News reports that there was no noticeable decrease in air freighter traffic between Northeast Asia and North America at the end of May.

E-commerce and the future outlook

According to the Baltic Air Freight Index some see the CPB crackdown a threat to e-commerce and major players such as Temu and Shein. Some argue that these companies anticipated tighter U.S. regulations, and have successfully expanded to other global markets.

Late May, another key topic was the robust rates that were coming from Asia into Europe. Some sources believe the current average rates are not fully reflecting these rates.

The Baltic Air Freight Index notes that despite the low-season, air freight rates are still performing well. This industry is optimistic about the months to come, especially for routes into Europe.

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