Airfreight rates have increased significantly this month, driven by the growth of e-commerce and disruptions in the Red Sea region. According to a report by WorldACD, average global air freight rates rose by over 2% from April 1-7, reaching $2.54 per kg – a 41% increase compared to pre-Covid levels in April 2019.
However, the consecutive rate hikes have been deemed surprising by Niall van der Wouw, head of airfreight at Xeneta. He mentioned in the Loadstar Podcast that the demand increase in the first quarter was unexpected, with rates doubling in some regions like India, Sri Lanka, and Bangladesh.
Spot rate ‘hot spots’ from the Middle East and South Asia to Europe have contributed to the rise in rates, with significant increases seen in India to Europe and Bangladesh to Europe routes. Judah Levine from Freightos attributed the uptick in airfreight rates to liner network disruptions, especially in the Red Sea region.
The surge in rates from the Asia Pacific region can be linked to the booming e-commerce industry originating from China and Hong Kong. Despite the current pressures, Mr. Van der Wouw believes that capacity will increase in the market with the upcoming summer schedules of passenger airlines, providing relief in certain markets.
While the rise in rates is predominantly due to cross-border e-commerce and disruptions in the Red Sea region, an increase in jet fuel prices has also played a role. WorldACD reported a 4% rise in jet fuel prices in week 14, further impacting airfreight rates.
