Declining Air Cargo Rates... What Is the Trend?

[Asia Economy Reporter Yoo Hyun-seok] The global air cargo freight rate index has declined for the first time in seven months. This is interpreted as being influenced by seasonal factors and base effects. However, there are many opinions on whether this is a trend decline. The current high level of air cargo rates reflects various complex factors including COVID-19.

According to the aviation industry on the 9th, the average air cargo freight rate for the Hong Kong-North America route in January, according to the global air cargo transport index TAC Index, was $10.90 per kilogram. This is $1.80 lower than $12.72 in December last year. Along with this, the Hong Kong-Europe route and Frankfurt-North America route also fell by $1.39 and $0.59 to $6.61 and $4.62 respectively.

The Hong Kong-North America route freight rate fell for the first time in seven months. The average freight rate, which was $7.89 in June, rose consecutively for six months recording $7.90 in July, $8.64 in August, $9.74 in September, $9.94 in October, $11.54 in November, and $12.72 in December.

There are various reasons for the rise in air cargo freight rates last year, but the biggest causes are considered to be the COVID-19 virus and port congestion. The ongoing pandemic situation caused by the continuous emergence of COVID-19 variants such as Delta and Omicron drove demand for the transportation of pharmaceuticals. In addition, congestion in the container ship market triggered at American ports also had the effect of raising air cargo freight rates.

The decline last month is analyzed by the industry as due to base effects and seasonal influences. The seasonal off-season ahead of China's Lunar New Year led to some completion of volume push-outs. Additionally, the overlap with the Beijing Olympics is explained as a factor that lowered freight rates.

However, it is expected that whether further declines will occur in the future remains to be seen. Since the recent rise in air cargo freight rates was influenced by multiple factors, the decline also needs to be examined in various contexts. An industry official said, "The rise in air cargo was influenced by various variables such as maritime transport and COVID-19," adding, "The future situation will be known by observing the trend."

On the other hand, there are also forecasts that air cargo freight rates may remain high this year. Baek Gi-yeon, a researcher at Meritz Securities, explained, "In 2022, freight rates may stabilize downward due to the calming of the pandemic," but added, "The shortage of self-diagnostic kits reminiscent of a second mask shortage and the inventory stocking demand of dining businesses due to the extension of social distancing are considered means that could support freight rates in the future."

This content was produced with the assistance of AI translation services.