Rates on the China-Europe trade have shown signs of softening this week following the launch of Uni-Top’s new freighter service.
In its weekly market wrap-up, derivatives broker Freight Investor Services (FIS) pointed out that rates on services from Asia to Europe had weakened over the last week.
According to Tac Index data, rates on the trade lane declined by 1% week on week to $2.84 per kg.
FIS added that the forward curve for the fourth quarter has also shown signs of weakening with the mid-point for trades during the last three months dropping to $3.65 per kg from $3.70 per kg last week.
FIS air cargo business development manager Nicola Hughes said the weakening of rates was a reflection of the new Uni-top service.
“Additional capacity on the routes, including Uni-top Airlines new freighter which adds 330 tonnes per week to the market, eases up the previous capacity squeeze that looked to drive rates up,” Hughes said.
“Although this week has seen rates go down, they are still up compared with the same week in 2017 and 2016.
“Europe’s peak season usually comes two weeks after the transpacific and is likely to start in the lead up to China’s Golden Week at the start of October.”
A comparison of rate growth since the start of August also appears to show that rate growth has flattened out over recent weeks.
In 2016, rates increased by 9.4% between the start of August and second week of September, in 2017 that figure stood at 13.7% and this year the increase was just 2.2%.
The new Uni-top service operates between Liege and Wuhan three days a week utilising Boeing 747-400F capacity.
At present, European manufacturers of automobile parts, particularly from Germany and the UK are using the route to ship to China.
Similarly, Chinese companies specialising in electronics, fashion, and machine parts have been facilitated in shipping their products to Europe on the route.
While rates on the trade lane are showing signs of weakness, they do continue to track ahead of last year, up by 7.6% year on year according to the latest Tac Index update.
Also, although rates are generally on an upward curve at this time of year as the industry heads towards the peak season, it is not unusual for there to be some fluctuations from week to week and it is not until after Golden Week that prices really begin to spike for the peak season.
Read more air cargo data news