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Topic of the week:
While there is still a lot of uncertainty in Sea Freight with the Red Sea Crisis continuing to raise costs, Air Freight in the US could see a huge improvement after Joe Biden signed the Federal Aviation Administration (FAA) Reauthorisation Act.
This Act earmarks $105bn over the next four years to improve air traffic control, airport operations and infrastructure. Included in the package is $19.35bn for airport infrastructure improvement grants designed to tackle constraints that have impeded traffic development. The finding is also designed to make the system safer and better equipped to withstand growth and future disruptions.
“This is a major step forward in addressing the cargo congestion problem that has existed for quite some time at many airports across the country,” said Bob Imbriani, president of the Air forwarders Association (AfA). “Even though volumes have normalised, we’re still getting reports from members that they waited 2-1/2 hours,” he continued. “This legislation is music to our ears.”
The new legislation calls for the General Accountability Office to conduct a large-scale assessment of air freight in the US, which will take about twelve to eighteen months to complete. After this assessment, there should be a clear indication on how much money will be directed to air freight, however, it is estimated between $4bn to $6bn should be enough to make large and noticeable improvements.
One of the key objectives of the legislation is to remedy the overburdened air traffic control system. In a statement last summer IATA noted that US airlines had to reduce their schedules by 10% earlier in the year, as the number of traffic controllers was so far below the necessary level that it posed a challenge to maintaining the continuity of operations.
One further aspect of the legislation of relevance to freight is the green light for Boeing to extend production of its B767 freighter for another five years. This could not only help improve the carbon footprint of air freight but also the overall service.
Sea:
- Over the last two weeks China/East Asia to North America West Coast spot rates have increased by 27.29% from $3,404/FEU to $4,333/FEU according to Freightos data.
- China/East Asia to North America East Coast spot rates have risen over the last two weeks, increasing by 13.95% to $ 5,358/FEU.
- Global container spot prices have risen over the last two weeks, and are now sitting at $3107.8/FEU, a 21.39% increase over the last two weeks, but a 120.66% increase from spot rates this time in 2023 according to the Freightos Baltic Index (FBX)
- Shippers and box lines expect Asia-North Europe freight rates to stay elevated until at least October, as the traditional Q3 peak season approaches, indicated by high trading volume of China’s container shipping futures (CoFIF).
Air:
- Global Air Freight spot rates currently sit at $2.34, as rates level out according to the Freightos Air Freight Index (FAX)
- Europe to Northern America spot rates currently sit at $1.75 (100-3000kg), says FAX, decreasing by 1.12%
- Europe to Asia, Greater China spot rates currently sit at $1.31 (100-3000kg), says FAX decreasing by 1.5%
That’s all for this week’s update…
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