Drewry: Air rates skyrocket in October

   Air cargo rates on major east-west routes skyrocketed to $3.73 per kilo in October, jumping over September’s total of $3.24 per kilo, according to Drewry’s latest East-West Air Freight Price Index.
   The price increase is the largest Drewry has measured from month to month since it began its index in May 2012. Drewry’s index measures an average of the rates — including any surcharges —paid by forwarders on 21 east-west lanes.
   Drewry said the rates from Asia to Europe and North America propelled the price increase; it measured price increases of up to 41 percent between Shanghai and Frankfurt, and rates rose by 36 percent between Shanghai and London. Rates are expected to stay elevated through November, but to lower at the end of the year.
   “You’d normally expect to see a recovery in all air freight rates at this time of the year anyway,” Drewry’s Martin Dixon told American Shipper. “Compared to last year, the rate levels are pretty similar.”
   September 2012’s measured rate represented a $0.21 rise over the 2013 result, but for October, Drewry measured rise of nearly $0.30 more than it saw in October 2012.
   Dixon said that new electronic releases are propping up rates in the current market, creating a late peak season out of Asia. As demand falls after November, he said, cargo capacity will drive rates down. He noted that half of air cargo moves happen in the belly of passenger planes, and with passenger demand on the rise, this is creating a wealth of capacity that air cargo demand can’t absorb.
   “The recent recovery in rates has been driven more by what’s happening with capacity and the short term spikes in demand that we’re seeing with these new product launches… but after that, we expect freight levels to fall,” he said.