We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • SUBMISSIONS
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
  • STRATEGY
  • GLOBAL
  • LOGISTICS
  • MANUFACTURING
  • PROCUREMENT
  • VIDEO
    • News & Exclusives
    • Viewer Contributed
    • CSCMP EDGE 2022 Startup Alley
    • Upload your video
  • PODCAST ETC
    • Podcast
    • White Papers
    • Webcasts
    • Events
    • Blogs
      • Reflections
      • SCQ Forum
    • Mobile Apps
Home » International air freight to have tradable futures market
Forward Thinking

International air freight to have tradable futures market

May 31, 2018
Supply Chain Quarterly Staff
No Comments

The international airfreight industry is the next transportation mode that's about to have a tradable futures market.

A Hong Kong-based group called TAC Holdings said today that it will publicly disclose next Tuesday the existence of an international air freight futures market to correct the "historical" pricing inefficiencies in the $100 billion global air commerce industry. The platform actually became available about three to four months ago on Bloomberg and Reuters databases, according to Cameron Honarvar, CFO of TAC.

In a statement today, TAC said the lack of transparency of air freight services has resulted in chronic mispricing that imposes unnecessary costs on air freight users. It is unclear what financial exchange it will trade on.

Airfreight joins dry bulk and container shipping, and later this year, U.S. non-contract, or spot, truckload services, all of which have some type of futures market attached to them. With the truckload platform, initially called "TransRisk" but since re-branded as "Freightwaves," TAC hopes to establish a mechanism allowing participants to hedge the direction of spot rates and manage price risk. By doing so, they can protect their margins against sharp fluctuations in spot rates and the market's reaction to them, Honarvar said. Separately, the International Air Transport Association (IATA) said today that global freight demand in April rose 4.1 percent from the same period a year ago. This was up from the 1.8-percent growth rate in March, the weakest year-over-year growth in nearly two years. Freight demand is measured in freight ton-kilometers, defined as one ton of freight flown one mile.

Freight capacity, measured in available freight ton-kilometers (AFTKs), grew by 5.1 percent year on year in April 2018. This was the second time in 21 months that capacity growth outstripped demand growth. The last two years were notable in that demand generally outstripped capacity, reversing a trend that had been in place for years before that.

The weak demand figures in March gave credence to IATA projections that retail replenishment activity had slowed, and with it the surge in demand for airfreight that was behind last year's stellar numbers, the best in seven years. IATA pointed to the Institute for Supply Management's (ISM) monthly Purchasing Managers' Index (PMI) for manufacturing and export orders, which fell in April 2018 to its lowest level since 2016.

IATA Director-General Alexandre de Juniac said today that the airline trade group is cautiously optimistic that demand growth will be around 4 percent for the year. Risks to that forecast include higher oil prices, which may cut into consumers' discretionary spending, and rising protectionist rhetoric from various key governments.

The three major regions—Asia-Pacific, Europe, and North America—all reported volume growth of less than 4 percent, according to IATA data. Capacity exceeded demand in all 3 markets, the group reported.

Logistics Technology
    • Related Articles

      Global air freight market sees tight capacity as travelers stay home

      Investment group pays $5.2 billion to buy Amazon air freight contractor Atlas Air

      CMA CGM to buy 9% stake in Air France-KLM and operate combined air freight fleet

    Recent Articles by Supply Chain Quarterly Staff

    Cargo theft and fraud rose 41% in the first 20 weeks of 2023 over last year, CargoNet warns

    Gartner: Top supply chains of ’23 balance risk control, new growth channels

    OSHA, industrial safety experts to headline National Forklift Safety Day 2023

    You must login or register in order to post a comment.

    Report Abusive Comment

    Most Popular Articles

    • Report: Sagging freight stats show that trucking sector is returning to its historic mean

    • Survey: parcel delivery drivers are frustrated by using their own smartphones for work

    • Heavy transport across two continents

    • Survey: most Americans unaware that truckers face shortage of parking spaces

    • Supply chain executives not yet seeing expected results from technology investments

    Featured Video

    20221107korber large vs

    Enhancing Customer Experience with Your Supply Chain Strategy

    Viewer Contributed
    With the rise of e-commerce, many businesses have had to transform their warehouses to handle online orders in addition to regularly scheduled inventory shipments. This means warehouses need more information than ever before to ensure they can meet customers' needs. As a result, companies need to select warehouse...

    FEATURED WHITE PAPERS

    • Three layers of forklift safety: Promoting operating best practices

    • The Complete Guide to Automated Packaging

    • Five tips for parcel success in 2023

    • Guide to Pallet Rack Safety

    View More

    Subscribe to Supply Chain Quarterly

    Get Your Subscription
    • SUBSCRIBE
    • E-NEWSLETTERS
    • ADVERTISING
    • CUSTOMER CARE
    • CONTACT
    • ABOUT
    • STAFF
    • PRIVACY POLICY

    Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing