With the busy holiday season upon shippers, rates were expected to strengthen, particularly on routes originating in Asia, but it hasn’t happened, according to the latest figures from Drewry Shipping Consultants. Average rates for airfreight fell for the first time in four months, according to the “Drewry Sea & Air Shipper Insight,” from US$3.31 per kilogram in October 2015 to $3.22 per kilogram in November 2015. This drove the Drewry East-West Air Freight Price Index down 2.8 points to 99.2 in November 2015.
Drewry said weak demand took a toll on an already depressed market. Compared to November 2014, when the average price rate was $3.92 per kilo, the index “is now a startling 22 points adrift, indicating the extent of underlying market weakness,” said Simon Heaney, senior manager of supply chain research at Drewry.
Drewry is forecasting “another year of flat-lining growth” for international airfreight in 2016, due to lackluster development in global trade. Capacity, however, is expected to grow as more passengers take to the air, increasing belly-hold cargo space. “The combination of zero growth and rising capacity will put further pressure on already depressed freight rate levels,” Heaney said.
The Drewry East-West Air Freight Price Index, is a weighted average of all-in air freight “buy rates” paid by forwarders to airlines for standard deferred airport-to-airport airfreight services on 21 important east-west routes for cargo weight more than 1,000 kilograms. These rates include fuel and security surcharges. The weak price of fuel added additional pressure on the price.