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Air & Sea Freight Between Bangladesh and the UK

Airfreight rates fall in July despite fuel price rises

Airfreight rates fell last month despite the restart of fighting in the Middle East pushing up jet fuel prices. The latest Baltic Air Freight Index (BAI00) calculated by TAC shows that average airfreight rates in July fell by 8.8% compared with June's levels. While prices were 16.8% up on last year's levels on 27 July - due to the Middle East conflict, higher fuel costs and the data centre boom - the rate of growth has narrowed from levels earlier in the year. The drop-off in rates also came despite jet fuel prices surging as a result of the escalation of fighting between the US and Iran. According to the IATA/Platts Jet Fuel Price Monitor, the average price of jet fuel in the last week of July was up 22.9% on June's levels and 76.4% ahead of last year. "Of course, jet fuel is not the only input into the running costs of an airline. There is also the very significant cost of acquiring or leasing the aircraft, as well as hiring the skilled personnel to run it, plus various other fixed costs," wrote TAC editor Neil Wilson in his monthly Baltic Exchange newsletter column. "But jet fuel is certainly a key input, typically accounting for one-third or more of a carrier's total expenses. "So why did air freight rates not rise in July as they had done so spectacularly in March after the US and Israel first launched air strikes against Iran? "Sources pointed to a number of factors, including the fact that we were now entering the summer or 'low season' when there is usually a lull in air cargo rates. "That often occurs when the summer holidays start, with more passenger traffic, which may increase demand for jet fuel. But it also adds extra bellyhold capacity, particularly on certain lanes, such as transatlantic routes." He added that carriers were also better prepared for fuel shocks this time round and had increased their use of hedging and had secured jet fuel supply further forward. Wilson added that the European Union's addition of a €3 customs duty on low-value parcels imported from outside the bloc had affected e-commerce demand into the EU. The development is reflected in a drop-off in prices on services from Hong Kong to Europe, where average rates - a combination of both spot and contract - declined to $4.76 per kg from $5.45 per kg in June. Compared with last year, rates on the trade were up 8.4% year on year, which is down on the 25% year-on-year improvement registered in June. By the end of the month, average rates on the trade lane were only 1.6% ahead of last year. The fall in rates to Europe came despite reductions in capacity on Asia-Europe lanes, sources suggested, with some freighters withdrawn for maintenance and others redeployed to other lanes, according to Wilson. Meanwhile, rates on services from Hong Kong to North America fell to $6.69 per kg in July from $7.71 per kg in June. Compared with last year, rates on the trade lane are up by 36.2% compared with a year ago.

Cosco returns to Red Sea sailings, despite threats from Houthis

Bookings are back on for Cosco Red Sea services, the Chinese carrier set to operate a Far East-Red Sea rotation that will see vessels cross the Bab el-Mandeb Strait, despite Iran-backed Yemeni rebel group the Houthis attacking ships in the strait. The decision by Cosco to commence Red Sea sailings continues what Vespucci Maritime CEO Lars Jensen described as "the slow normalisation of the Suez-route", on the back of CMA CGM, Hapag-Lloyd, and Maersk all adding capacity to the routing. Linerlytica's Monday Market Pulse noted: "Traffic on Bab el Mandeb continues to increase, with CMA CGM and Maersk pushing three more services back to the Suez route as they continue to defy the threat of Houthi attacks. "These moves are aimed at combating the shortage of vessels and container equipment made worse by protracted port congestion across North Asia and Europe," it added, noting Cosco already had more than 20 ships of 2,700-3,600 teu deployed on Mediterranean/Red Sea routes. And with yet another storm battering North Asia, Typhoon Dolphin, capacity is only expected to tighten, with more than 2.4m teu already stranded by the shutdown of port operations at Ningbo and Shanghai between 7 and 8 August, and the spread of congestion to Southern China. Best guess forecasts appear to indicate that clearing the backlog of vessels will take weeks, but given that Typhoon Dolphin is the third and strongest tropical storm to hit the region, seeing more than a million people evacuated, it could take longer. Sources told The Loadstar the decision to route through the Red Sea, particularly given renewed Houthi threats to strike commercial shipping in response to the US/Israeli war against Iran, was "risky". Acknowledging that the Houthis remain "the wildcard", Mr Jensen said: "It appears clear for now their embargo on Saudi shipping is focused on the oil tanker business," offering something of a respite for box ships that have largely been shut out of the waterway for three years. Meanwhile, Maersk and Hapag-Lloyd have upped their game, with their Gemini AE19/SE4 Asia-Mediterranean service switching to a Red Sea routing, joining the AE15/SE3, which switched in July. "This gradual normalisation is in addition to CMA CGM which already operates quite a few vessels on multiple services using the Suez routing, and Cosco/OOCL which will now begin a Far East-Red Sea service also crossing Bab el-Mandeb," Mr Jensen noted. "The CMA CGM services with some, or all, vessels operated on Asia-Europe via Suez are EPIC, FAL-1, FAL-3, OCR, MEDEX, MEX and BEX2, some of which are also Ocean Alliance services."

Wall Street can't agree on whether Expeditors' boom is the new baseline

Look: two banks looked at the same record airfreight quarter and reached opposite conclusions about what happens next: one has Expeditors' earnings power fading back toward $6 a share by 2028, the other has it climbing to $9.10. That gap, not the beat itself, is the real story. Expeditors (EXPD) posted second-quarter* adjusted earnings per share (EPS) of $2.03 earlier this week. (*Our first take was: 'Stellar delivery; overvalued; eyes on job cuts.) That EPS beat consensus estimates by ...