Trading Update

China to Europe and China to US continue gaining on the previous week, reflecting a boost into a very sharp peak season price spike (up 13 and 9 cents). However price momentum slows earlier into Q4 2019 versus 2018, in which prices continued climbing with equal momentum up until the first week of December. 

China to Europe front month prices on the forward curve have spiked significantly (up 30 cents), lifting to reflect spiking spot rates, however growth along the China to US curve remains reasonably flat (albeit positive). Interestingly China to US forecast trades into 2020 have continued to drop off (down a further 16 cents), establishing a lower baseline for trans-pacific airfreight rates versus the very high rates seen in 2017 and 2018.

Market Comment 

Q4 peak pricing ex.Asia continues to hold on to its sharp and sudden gain, and in the words of Cathay Pacific's Frank Yau, "We anticipate the peak will last into early December". This may well be code for "we intend to attempt to hold up the price into early December". Carriers can certainly count their blessings with any sort of price increase on any high-volume lane given the slow and painful cash flow bleed throughout most of the year.

The spot figures support any assessment that peak season is here, and here to stay for at least the next few weeks. However the confused reaction to trade-war concessions and a 'stable' (if highly depressing) air cargo export market in Hong Kong, despite political unrest, has lent to an equally confused forward picture for market participants. The widely held consensus that the peak season will be flat is challenged (again) as freight businesses attempt to crudely transpose slack season volumes into some form of peak market projection. 

The de-escalation from pre-Brexit panic shipments has also started to reflect in an abnormal drop-off in air freight price into UK airports, as the very wide time frame for an agreed EU-UK deal extends well beyond the seasonal volume rush. The fundamentals for a Brexit-related price spike have been well and truly removed.

Whilst this might be positive news for some, the damage of the 2019 slack season has already been done. Considering the extent of aircraft groundings, and in certain cases job losses and aircraft mothballing more akin to a global market recession, we are reminded that the market has been 'out of business' for 9 months only. 

Basket USD/KG CHANGE CHANGE % MTD
CHINA - EUR 3.06 0.13 4.44% 3.06
CHINA - USA 3.65 0.09 2.53% 3.65
Blended USD/KG CHANGE CHANGE % MTD
PVG/EUR 2.91 0.12 4.30% 2.91
HKG/EUR 3.20 0.14 4.58% 3.20
PVG/US 3.55 0.08 2.31% 3.55
HKG/US 3.75 0.10 2.74% 3.75
Airfreight Route (AR) Description PREVIOUS USD/KG CHANGE
AGR 1 HKG to LAX & ORD & JFK 3.69 3.82 3.52%
AGR 2 HKG to LHR & FRA & AMS 3.17 3.15 -0.63%
AGR 3 HKG to SIN & BKK & PVG 1.09 1.13 3.67%
AGR 4 PVG to AMS & FRA & LHR 2.94 2.93 -0.34%

Forward Curve - Indicative Update

CHINA - EUROPE | USD/KG
  BID ASK VALUE CHANGE
Nov-19 3.01 3.15 3.08 0.30
Dec-19 2.86 3.14 3.00 0.22
Jan-20 2.77 2.89 2.83 0.00
Q4 19 3.05 3.15 3.10 0.34
Cal - 19 3.06 3.16 3.11 0.35
Cal - 20 3.07 3.17 3.12 0.00
CHINA - USA | USD/KG
  BID ASK VALUE CHANGE
Nov-19 3.66 3.70 3.68 0.07
Dec-19 3.35 3.44 3.40 0.01
Jan-20 3.32 3.45 3.38 0.00
Q4 19 3.46 3.54 3.50 0.02
Cal - 19 3.42 3.52 3.47 0.00
Cal - 20 3.55 3.65 3.60