Drewry: East-West rates rise in August as capacity tightens

   The cost of shipping air freight between Asia and the United States got a little more expensive in August, rising to $3.15 per kilogram from a rate of $3.06 per kilogram in July, according to Drewry.
   The Drewry East-West Air Freight Price Index, which averages the cost of a kilogram on 21 East-West routes, found that August’s rates are the highest since May. Compared to August 2012, rates have grown by $.08 per kilogram, but last month’s result is still a far cry from February’s pricing high of $3.32 per kilogram.
   In the past 12 months, the highest rates shippers paid for airfreight on the East-West lane occurred in November 2012, when a kilogram of air cargo was averaging $3.64.
   After pricing lows in June and July, Drewry’s measurement of improving demand has meant that continued growth of rates through, at least, October is likely. This growth in rates, the firm said, will be driven by new products and an uptick in cargo demand out of Asia to North America and Europe.
   “Some recovery in rates was anticipated — this despite continued expansion in capacity, driven by the high season in passenger demand, when airlines expand wide-bodied cargo space,” according to London-based Drewry.
   According to one forwarder based on the West Coast, cargo yields on most lanes are currently lackluster, and pricing has mostly shifted to the shippers’ favor, but capacity will tighten up for the remainder of the year due to the iPhone and PlayStation 4 launches (the new PlayStation should hit the United States in November). Capacity could free up next year, though, leading to a pricing benefit for shippers. The abundance of wide-body passenger planes, which feature expanded cargo capacity, expected to flood the market to replace aging fleets will bring even more cargo capacity into the market in 2014.