Drewry: Air cargo rates remained depressed in July

   The cost of shipping a kilogram of air freight on an east-west route in July averaged out to $3.06, according to the Drewry East-West Air Freight Price Index.
   July’s result showed no growth from June’s average rate; the summer rates have been the lowest this year by at least $.09 per kilogram. Compared to July 2012, however, last month’s rate reflected an improvement of 7 cents.
   Each month, Drewry measures the average rate freight forwarders pay airlines for a kilogram of air cargo on 21 east-west routes. Rates do not include door delivery costs, but do include the base rate along with any surcharges.
   The 2013 high water mark remains February’s result of $3.32 per kilogram, and even this result is a far cry from the $3.64-per-kilogram rate Drewry measured in November 2012.
   Analysts partly blame the influx of large-belly passenger planes on the seasonal downtick in pricing.
   “Pricing was expected to remain depressed in July, given the onset of the high season in passenger demand, when airlines expand wide-bodied capacity, which tends to worsen cargo load factors. But July’s fall brought the index down to its lowest level since it was launched in May 2012,” according to Drewry Sea & Air Shipper Insight.
   Once the travel season passes, however, Drewry analysts expect to see rates increase, but this possibly won’t occur until the middle of September. As carriers reduce the availability of passenger belly capacity and freighter capacity stays tight, abundant cargo capacity will be reduced and become more expensive.
   To generate a bit more money from shippers during this down time in the air freight business, more carriers have started changing how they derive their surcharges. By changing their system to one based on chargeable weight instead of actual weight, some shippers could pay 10 percent to 20 percent more for the same cargo. Carriers have moved to this new method because surcharges are widely viewed to be non-negotiable, whereas there is commonly some haggling over base rates. – Jon Ross