FIS Air Freight Report April 27, 2019

Hong Kong kicks into action after severe price disparity with mainland Chinese airports, primarily Shanghai. Hong Kong to Europe is up 65 cents, and Hong Kong to USA up $1.37. 

This is linked up with equally significant rate growth from Shanghai to USA, with individual origin-destination airport pairs climbing towards the $12/kg mark. As it stands the full market price reaches $9.10, up $1.51 this week.

Additional growth into the US has lifted China to USA up $1.44, up 22.29% from the previous week. China to Europe still climbs, however, a few price drops into Europe have helped to flatten continued rate growth ex.Shanghai. 

The forward curves price in a revised AFFA market, with May 2020 gaining 52 and 95 cents respectively. This is creating a plateau of forward pricing until June, where rates are lifted however still showing a decline. 

Market Comment 

The relatively 'cheaper' rates out of Hong Kong have appeared to attract trans-shipment volume, much of our explanation for the rate bump we have seen this week would be purely anecdotal. It wouldn't be too much of a stretch to suggest shippers moving non-medical goods might be using the spread between Hong Kong and Shanghai as a geographic arbitrage opportunity.

Shanghai's price rises remain meteoric however it remains quite clear that most of this is still atop the PPE price balloon. North America now sits relatively apart from the rest of the world in terms of virus cases, deaths and subsequently its relief effort.

In more normal news, Volkswagen's plant in Wolfsburg just reopened on the back of Germany's new quarantine-easing measures. And whilst workers battle with the new normal of face-masks, anti-septic and work-place distancing, automotive logistics procurement teams might have to battle with new normal of very high airfreight pricing.

Underlying all of this, and after the capitulation of US oil prices last week, WTI crude prices continue to bump around in the $10-20 range whilst demand is incredibly low. Virgin Atlantic seeks emergency funds, EasyJet faces a vote to oust key members of its board, and Airbus says its survival is at stake.

Basket	USD/KG	CHANGE	CHANGE %	MTD	VOL %
CHINA - EUR	7.12	0.39	5.79%	6.68	87.37%
CHINA - USA	7.90	1.44	22.29%	6.61	67.99%
Blended	USD/KG	CHANGE	CHANGE %	MTD	VOL %
PVG/EUR	8.93	0.14	1.59%	8.43	112.39%
HKG/EUR	5.31	0.65	13.95%	4.94	73.95%
PVG/US	9.10	1.51	19.89%	7.49	94.39%
HKG/US	6.71	1.37	25.66%	5.73	64.02%
Global	USD/KG	CHANGE	CHANGE %	MTD	VOL %
Air Index	5.29	0.57	9.88%	2.27	49.63%

Forward Curve - Indicative Update

FIS AFFA, CHINA - EUROPE | USD/KG
	BID	ASK	MID	CHANGE
Apr-20	5.50	7.13	6.32	0.16
May-20	5.50	7.20	6.35	0.52
Jun-20	4.00	6.00	5.00	0.45
Q2 20	4.80	6.80	5.80	0.31
Q3 20	2.70	4.00	3.35	0.20
Cal-20	2.60	3.20	2.90	0.00

FIS AFFA, CHINA - USA | USD/KG
	BID	ASK	MID	CHANGE
Apr-20	5.50	6.62	6.06	0.36
May-20	5.50	7.00	6.25	0.95
Jun-20	4.00	6.00	5.00	0.75
Q2 20	3.00	6.56	4.78	0.30
Q3 20	3.00	4.50	3.75	0.30
Cal-20	3.05	3.40	3.23	0.00