Date: Feb 06 2017
Title: Air Freight Market Update Report for Week 06

Demand for space was soft last week primarily because Chinese factories were closed in observance of the Lunar New Year holidays. Demand should begin to pick up this week as production resumes. This week marks the beginning of the traditional peak shipping season in India which will last through the end of April.

The International Air Transport Association (IATA) reported that the annual growth in freight ton kilometers (FTKs) increased to 9.8% in December, its fastest pace since February 2015 during the disruption at US west coast seaports. For all of 2016, FTKs grew by 3.8%, nearly double the five-year average of 2.0%.

Industry-wide freight capacity increased by 5.3% in 2016 compared to the previous year, and the load factor fell by 0.6 percentage points. The seasonally adjusted upward trend in capacity moderated in 2016 from that in recent years, and coupled with the rising trend in demand has driven a rebound in the industry-wide load factor. Load factors rose by three percentage points since a recent low in early-2016 which supported airline pricing during the second half of the year.

Following are highlights from around our Asian network.

China: Market demand for space at major air freight gateways is soft following the Chinese New Year holidays. Most factories were not open last week and rates trended downward.

Hong Kong: Demand for space picked up last week along with rates to major gateways in the US and Europe.

India: Major gateways report sufficient space to meet demand and stable rates. Bangalore reported that space was getting a little tight to the US and UK because of delays at transit hubs. Peak season for both air and sea will start pick up this week and last through the end of April.  

Korea: Demand for space by local and transit shippers remains soft following the Lunar New Year. Regardless, carriers have been holding the line on rates although OZ and KE will quote spot rates on a case-by-case basis.

Thailand: Airlines are expecting demand for space to increase this week as more factories resume production following the Lunar New Year holidays. 

Taiwan: Carriers increased airfreight rates as demand for space picked up. Space is tight to the US and Europe

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