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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

First Global Air Freight Rate Rise in 30 Months

Friday, August 01, 2014 > 08:22:42
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(Lloyd’s Loading List – Will Waters)

Average global air freight prices have seen their first monthly increase for two and a half years, rising by 0.9% in June in US dollar terms, according to air cargo market data specialist WorldACD, although they are still around 10% below their levels in the first half of 2011.

Tonnage figures for June maintained this year’s average for the first six months with 4.8% volume growth, year over year (YoY). But for the first time in 30 months, revenue growth outpaced volume increases among the more than 50 airlines and their transactions with over 15,000 forwarders in WorldACD’s database.

The WorldACD Index inched further upwards for the 12th consecutive month (to 111.1), reflecting a full year of air freight volume growth. Once again, volumes increased most from Asia Pacific (+9.6%).

Europe was the weakest area in June, with outbound volumes down by 1.5% YoY, although this volume decline was more than compensated by improvements in pricing, with 5.2% yield growth in US dollar terms (+2.1% in euros).

Business between Asia Pacific and North America got a real boost in June, with a 17% volume increase in both directions, according to WorldACD. The biggest US dollar revenue gains in the month went to airlines from the Middle East and from Asia Pacific. On average they added 9.7% YoY, with Middle Eastern airlines achieving this through a mixture of volume and yield growth, while airlines from Asia Pacific on average owing their revenue growth purely to volume increase.

Looking at longer-term yield trends, World ACD said average global yields, including surcharges, have ranged during the last three years between US$2.55 in April 2011 and US$2.11 in July 2013, although the company stressed that individual markets showed a much wider variation. Of the twelve region-to-region markets shown monthly on its website, six showed a yield for January 2014 close to, or higher than, the yield for Jan 2008, which was a few months before the “big drop”.

Comparing H1-2011 with H1-2014, WorldACD noted the following: the worldwide drop in yields was 10%; 17 of the top 100 city pairs in the world, including 15 with Europe as origin, had higher yields in 2014 than 2011; the same was true for 137 of the top-500 country pairs (including 28 with the USA as origin); airlines from MESA lost only 6% in yield, but airlines from Asia Pacific lost 14%.

WorldACD also found that the only product category with a growing yield during this period was pharma, which showed an increase of 3.75% in H1 2014 compared with 2011. The company also noted that the prices paid by the world’s top 20 forwarders dropped by almost two percentage points more than the yields achieved by airlines from other forwarders.

According to Drewry’s latest East-West Air Freight Price Index, June air freight spot rates on the 21 main east-west trades recorded further year-over-year pricing gains. The index rose 2.4 points to 101.6, the third time this year that the monthly index has stood at more than 100.

The weighted index, which shows average air freight rates across 21 east-to-west trade lanes, has shown four straight months of year-over-year growth. June’s average spot rate was 7.7% higher than in June 2013, with spot rates in June rising 2.3% from May to average $3.30 per kilogramme.


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