Airfreight spot rates continued to rise last week as weather conditions, volcanic activity and wars put capacity under pressure, with fears of a major eruption in Iceland growing - possibly within days.

With the airfreight sector preparing to benefit from a potential reduction in ocean shipping reliability next year, as the container shipping lines grapple with antitrust rule changes, current airfreight indexes show airfreight rates stabilising and rising on some routes, driven by demand and nature’s operating challenges.

The global Baltic Air Freight Index was up almost 5% last week compared with the previous seven days, with the increases led by China. 

According to the Baltic Index, prices out of Hong Kong increased by 11.5%, with outbound Shanghai spot rates increasing by 5.3%, and the massive demand to Europe recording a 25% increase on the Freightos air index.

Trans-Pacific rates from both Hong Kong and Shanghai to the US also increased and are now some way above where they were a year ago, driven largely by some big moves out of China.

Trans-Atlantic rates increased 9% last week to their highest level since June, marking a gradual 21% climb since early October, possibly on improved holiday season demand.

Airfreight rates have also been impacted in recent weeks by heavy snowfall in Anchorage which resulted in cancellations and price inflation, while ash clouds from Russia’s Klyuchevskoy Volcano forced flights from the US, China, Japan and South Korea to route further south, resulting in longer flight times and refuelling stops.

In 2010 European flights were suspended due to ash clouds from the Eyjafjallajцkull volcano eruption in Iceland and concerns are growing that the likelihood of another eruption in Iceland is high, possibly within just days, after more than 20,000 earthquakes struck the country’s southwest since late October.

However, any eruption of the Fagradalsfjall volcano would take place under very different circumstances to 2010, which significantly lower the chances of similar flight chaos. 

In the past three years, three eruptions have taken place in the same area, with no impact on air travel, and the European Aviation Safety Agency (EASA) is also better prepared for a major volcanic ash event. 

"In the event of an eruption and development of an ash cloud, the agency will work with other aviation actors to assess the impact for aviation and make recommendations accordingly" a statement on the EASA's website reads. 

At this time all flights are operating normally and no carrier has any plans to review.

While the Icelandic situation may not be as dire as 2010, ‘natural events’ are unpredictable, which may disrupt flights and there is a definite tightening in the market on many routes, which means it is critical that pending airfreight shipments are scheduled at the earliest opportunity, to secure space and the best available rate.

We have solutions for every critical shipment, with extremely competitive rates and really interesting service and route combinations. 

EMAIL Elliot Carlile, Operations Director, for insights, prices and advice.

Air freight spot rates have risen steadily since August on major Asia outbound lanes and while there is no significant peak season the market is definitely tighter, with global rates and tonnages stabilising after China’s Golden Week.

There is a perceptible uptick in air cargo rates, which is more pronounced than normal and while it may not suggest a major shift in the market, there is definite tightening from week-to-week and from lane-to-lane, particularly from Asia.

Market data for October shows a 2% increase in air cargo demand, which followed earlier increases that reversed the traditional drop triggered by China’s Golden Week holiday. The increase comes as cargo capacity growth slows, with global belly capacity returning to its pre-pandemic level.

Global air cargo spot market rates rose 2.9% in October and while rates were down 30%, on the year, they remain well above pre-Covid 2019 levels, supported by premium and special cargoes. 

China to Europe spot rates climbed 14% month-over-month in October, while Southeast Asia to Europe spot rates rose 9% and spot rates from Europe to the US were up 7%. The traditional decline in cargo capacity began last week, as seasonal passenger schedule adjustments remove belly-hold capacity from key trade-lanes.

Air cargo space from Asia to North America is under pressure as strong eCommerce demand outstrips the slow return of passenger flights and the essential belly cargo capacity they add. With spot rates from China to the US rising 10% in October and 15% from Southeast Asia.

Dynamic global load factors reached 59% in October, which is its second-highest level of the year, while Trans-Pacific load factors reached 89%. This is close to levels seen at the peak of the pandemic and means that any sudden increase in demand will see space squeezed very quickly. 

The major eCommerce companies in China are buying up space, with November online shopping promotions looming and much of any available air cargo space will go towards moving sales from Singles Day, Black Friday and Cyber Monday.

While there may be no clear sign of any significant fourth-quarter peak season, there is a definite tightening in the market, which means it is critical that pending air freight shipments are scheduled at the earliest opportunity, to secure space and the best available rate.

For valuable, special and time-sensitive cargoes there has never been a better time to use air freight, with extremely competitive rates and really interesting service and route combinations.

We have solutions for every critical shipment, please EMAIL Elliot Carlile for insights, prices and advice.