Trading Update

Both spot and forwards markets showing some significant movement on the entry into Q4, however positive focus remains on everything heading into Europe. China to Europe continues its run by gaining 10 cents over last week. This is bolstered by the continuing climb of Shanghai to Europe (up 8 cents) and interestingly a resurgent Hong Kong to Europe rate, climbing out of its slack trend by gaining 13 cents (5.10%) in one week.

Conversely, China to US remains lacklustre, gaining 1 cent at the start of October, however this is weighted against a further volume and price shift on an almost 1-to-1 basis between Shanghai and Hong Kong (Shanghai to US, up 9 cents or 2.88%, whereas Hong Kong to US down 7 cents or 2.08%).

Both forward curves price in the level of uncertainty over Q4 and 2020, with China to US dramatically losing 20 cents on the front month. China to Europe however gains 2 cents, lifting the curve in line with positive market movement. Cal-20 loses 10 and 14 cents respectively, projecting a weaker than expected forecast off the back of decreased market momentum throughout 2019.

Market Comment 

The roller coaster of rates is at full speed as we climb, dive, or twirl into a highly uncertain peak season. Rate patterns continue to reflect something more akin to slack season as only a few lanes lift the hopes that one section of the market might be able to harness the effect (or lack of) political strife.

Although a prospective uptick in rates from Hong Kong to Europe might put a smile (or rather a grimace) on the faces of the likes of Cathay Pacific, HACTL, the major middle-eastern carriers and anyone with a significant hand in this market - everyone should remain glued to their incoming revenue statements to see whether this actually converts into quarter saving material.

All the while the long arm of Trump rubs the noses of the Europeans with fresh (and somewhat expected) trade tariffs on a peculiar selection of goods, perishables amongst them. One thing for sure, don't expect any major Airbus deals in the USA any time soon. In the meantime the promise of trade talks between China and USA has lifted Brent Crude by $1.01, in an apparent shift away from the highly damaging policy. As usual, when Trump speaks, markets move.

On the sea, Drewry has cut the container shipping forecast. Ontop of the cut forecast issued by IATA for airfreight 2019 looks to become a roundly glum year (if you needed me to tell you), and ripe for hedging opportunities that aim to lift freight businesses out of the quagmire of low rates and low volumes.

Basket USD/KG CHANGE CHANGE % MTD
CHINA - EUR 2.59 0.10 4.02% 2.59
CHINA - USA 3.26 0.01 0.31% 3.26
Blended USD/KG CHANGE CHANGE % MTD
PVG/EUR 2.51 0.08 3.29% 2.51
HKG/EUR 2.68 0.13 5.10% 2.68
PVG/US 3.22 0.09 2.88% 3.22
HKG/US 3.30 -0.07 -2.08% 3.30
Airfreight Route (AR) Description PREVIOUS USD/KG CHANGE
AGR 1 HKG to LAX & ORD & JFK 3.41 3.31 -2.93%
AGR 2 HKG to LHR & FRA & AMS 2.58 2.59 0.39%
AGR 3 HKG to SIN & BKK & PVG 1.1 1.12 1.82%
AGR 4 PVG to AMS & FRA & LHR 2.47 2.5 1.21%
Forward Curves
CHINA - EUROPE | USD/KG
  BID ASK VALUE CHANGE
Oct-19 2.50 2.57 2.53 0.02
Nov-19 2.60 2.72 2.66 0.04
Dec-19 2.67 2.75 2.71 0.00
Q4 19 2.65 2.75 2.70 -0.17
Cal - 19 2.70 2.80 2.75 0.00
Cal - 20 3.35 3.45 3.40 -0.14
CHINA - USA | USD/KG
  BID ASK VALUE CHANGE
Oct-19 3.26 3.44 3.35 -0.20
Nov-19 3.50 3.60 3.55 -0.06
Dec-19 3.25 3.45 3.35 0.00
Q4 19 3.38 3.58 3.48 -0.10
Cal - 19 3.35 3.45 3.40 -0.05
Cal - 20 3.90 4.10 4.00 -0.10