AsteelFlash Transportation Market Update: Air & Sea Freight


Airfreight rates on major east-west trades continued to increase compared to a year ago in May despite analyst figures showing demand declines over the last few months.
The latest figures from the Baltic Exchange Airfreight Index (BAI) show that average rates from Hong Kong to North America in May increased by 21.7% year on year. From Hong Kong to Europe average rates for May increased by 34.2% year on year which is up 5.7% in April. The increases come as air cargo operations from Asia continue to face disruption.
The Shanghai Covid lockdown continued to impact production levels in May, with airlines responding by removing flights.

Meanwhile, cross-border trucking and freighter operations out of Hong Kong continued to be affected by Covid restrictions.

European operations were also affected by the closure of airspace due to war in Ukraine forcing carriers to implement longer routes while Russian carriers, such as Air Bridge Cargo and Atran, were effectively taken out of the market.

Jet fuel prices have also surged over recent months.
The forecasted surge in demand for US air cargo capacity will be largely driven by a lack of sailings with ocean suppliers, but air cargo forwarders must “learn to be adaptable” in the current climate of already constrained airfreight capacity.

In the USA, West to East coast cargo diversion and increased Trans-Atlantic leisure flights are driving “red hot” demand for airspace – shippers are likely to see higher air freight rates and further capacity shortages in the coming months.


Congestion in European ports causes a late return of containers to Asia, leading to additional delays and blank sailings. If container traffic out of Asia increases in the coming weeks – either from Shanghai reopening or from peak season volumes – congestion, delays, and rates are expected to increase.
Shanghai is China’s leading manufacturing center and the world’s largest container port. Their lingering lockdowns and strict COVID restrictions have quadrupled shipping delays between China and the major US and European ports, since late March 2022.

As a result, Chinese and worldwide shippers are experiencing palpable consequences:

Container handling volumes in Shanghai fell by ~25% in April 2022 to 100,00 TEU (20’ container equivalent).
Domestic fuel demand in China has dropped by 20%, the biggest drop since the beginning of the pandemic – an additional strain on the economy.
As of May 2022, 20% of global container vessels are stranded outside congested ports, a quarter of those waiting outside Chinese ports.
There is a 2.5x increase in freight costs along the Trans-Pacific route; shipping a single container from China to the U.S. now costs from $15K to $ 20K.


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