Trans-Pacific gets a boost as open market physical prices speedily react to reduced capacity, following the announcements that US Airlines (United, American Airlines) cancel their Hong Kong schedules following COVID-19 tests for crews. Another opportunity presents itself for businesses to lock-in rates on monthly blocks via Air FFAs.
Beyond this, for the most part, the drive remains downwards back to some form of normality. A poor view on the future of the market has started to impact the highly diversified time frames for BSA or long term contract renewals.
Although the near-term market will rely on how effectively businesses continue to react against the uncertain environment, the avenue is wide-open and the timing is right to implement contracts that can help provide consistent pricing whilst still absorbing the real fundamental impacts of price volatility.
Price Comment 13th July 2020
The two core routes diverge as price support for China to USA pushing the curve upwards on the back of revised offer prices.Air F FA offers for China to USA now range from a high of $5.00/kg in July 2020, to $4.00/kg through August to September. The trend of reducing Air FFA prices remains, however sudden reduction of trans-Pacific capacity has pushing the mid-values up around $0.30/kg. Conversely, China to Europe continues to slide, with minor corrections on the July 2020 Air FFA prices, down $0.07/kg only. This reduction carries through until Q4 2020 however the most part the mid-values do not change substantially. Chicago to Europe gains slight support this week, up $0.05/kg, whilst Frankfurt to USA continues to oscillate, this week down $0.02/kg only.
