FIS Air Freight Report August 17, 2020

Market Comment

No change in terms of the lack of direction in the market this week, near term pricing remains unpredictable - however the general sense of constrained capacity and cargo growth in Q4 remains. There has been a follow-the-leader push to own capacity in the near-term, with a number of airlines and forwarders engaging in potentially rigid very long-term agreements.

In the background - we have noticed a substantial push for index-linked agreements, with Air FFAs being pursued as a means to manage the instability of rates. This has been joined by our efforts to on-board market makers to help facilitate Air FFA liquidity throughout the year. This is more indicative of suppliers reluctant to engage in short-term contracts that are not priced at a premium, and buyers equally reluctant to engage in anything long-term at inflated market rates.

Looking forward, it appears charters take precedent over any new schedules, with any form of relief of a capacity crunch coming from the passenger aircraft market. Much is tied to the fortunes of passenger traffic - ‘passenger-freighters’ continue to run despite the vastly lower yields.

Price Comment 17th AUGUST 2020

China to Europe and USA prices come off from previous August highs, down 15 cents into Europe and 2 cents only into USA. Price supp ort for USA comes from Hong Kong, with the route up 30 cents on the week. Both trans-atlantic routes remain somewhat supported, up 7 cents ORD-EUR, and up 9 cents FRA-EUR. The forward curve remains bullish, with a 3 cent correction for Aug 20 along China to Europe. The rest of the curve lifts, gaining 10 cents for Q4 2020. China to USA gains more, up 50 cents in September and 50 cents for Q4, and a further 25 cents for 2021 as the year-on-year average rates are forced upwards.

Airfreight Prices and Historic Assessments

Air FFA Forward Pricing Curves