Trading Update

Spreads widen for China- Europe August contracts at 2.48/2.52, losing 1 cent in value for the month down to 2.50 USD/KG, versus a rebounding spot rate of 2.44 (up by 2.10% over last weeks slump).

Conversely spreads narrow for China to US, retaining a value of 3.14USD/KG at 3.12/3.16. The forward market remains soft, reflective of flat physical trading.

Current trading interest is on a spot basis, covering for slack cargo volume damaging immediate forward revenue. The longer term market remains highly unpredictable given uncertainty in forward volumes and on-going trade disputes.

Market Comment

The big news of the week, political unrest in Hong Kong encroaching onto Hong Kong International Airport, has not had a noticeable affect on spot rates. Perhaps a blessing in disguise, disruption has come at the low point of the air freight slack season with the swell of freighter capacity providing adequate lift to cover any backlog. Market participants may have cause for greater concern should such disruption persist into Q4.

The risks of unrest remain as prevalent as ever, with a wider macro-economic impact linked to on-going US-China trade talks, threatening the stability of the wider logistics market.

On the run up to a persistently chaotic and clouded future between Britain and Europe, warehouse space is filling up rapidly. The loadstar reports on Ireland’s dwindling warehouse space as shippers front load inventory to manage supply chain risk. Market participants should rightly be concerned about this on-going development, and its pass-over to cross-border logistics markets.

Clouds loom as we approach the run-up to Q4, as the forward price remains highly uncertain. Participant bids/offers have continually softened the forward curve moving into December.

Basket USD/KG CHANGE CHANGE % MTD
CHINA - EUR 2.43 0.05 2.10% 2.44
CHINA - USA 3.16 0.00 0.00% 3.13
Blended USD/KG CHANGE CHANGE % MTD
PVG/EUR 2.30 0.10 4.55% 2.30
HKG/EUR 2.56 0.00 0.00% 2.57
PVG/US 3.14 0.10 3.29% 3.05
HKG/US 3.17 -0.11 -3.35% 3.21


Airfreight Route (AR) Description PREVIOUS USD/KG CHANGE
AGR 1 HKG to LAX & ORD & JFK 3.18 3.1 -2.52%
AGR 2 HKG to LHR & FRA & AMS 2.76 2.63 -4.71%
AGR 3 HKG to SIN & BKK & PVG 1.15 1.17 1.74%
AGR 4 PVG to AMS & FRA & LHR 2.23 2.38 6.73%


Forward Curve - Indicative Update
CHINA - EUROPE | USD/KG
BID ASK VALUE CHANGE
Aug-19 2.48 2.52 2.50 -0.01
Sep-19 2.45 2.57 2.51 0.00
Oct-19 2.63 2.69 2.66 0.00
Q4 19 2.85 2.89 2.87 0.00
Cal - 19 3.04 3.14 3.09 0.00
Cal - 20 3.44 3.54 3.49 0.00
Forward Curve - Indicative Update
CHINA - USA | USD/KG
BID ASK VALUE CHANGE
Aug-19 3.12 3.16 3.14 0.00
Sep-19 3.23 3.30 3.26 0.00
Oct-19 3.29 3.60 3.45 0.00
Q4 19 3.91 4.01 3.96 0.00
Cal - 19 3.91 4.01 3.96 0.00
Cal - 20 4.12 4.22 4.17 0.00