The Baltic Exchange and TAC Innovation have expanded their airfreight spot indices with the addition of three new routes out of Shanghai in response to increased market volatility.
The new indices will cover routes from Shanghai to Central Europe, the US west coast and the US mid-west> They join existing spot indices originating from Hong Kong, India and the Republic of Korea.
The BAI Spot offerings are used by airlines, freight forwarders and shippers to assess rate movements and benchmark contract negotiations, as well as forming the basis for hedging discussions and strategies.
The two partners said that the launch of the new routes comes in response to market demand for more origins in key Asian export hubs, with airfreight rate volatility increasing amid geopolitical disruption in the Middle East, heightened jet fuel costs, reduced belly-hold capacity and increased demand for time-sensitive goods.
They added that the increased volatility experienced in recent months means hedging discussions are developing rapidly into “demand for real and usable tools to manage price risk for air cargo”.
“BAI Spot rates have increased by as much as 80% in the last two months, and hedging instruments are essential to navigate these price movements,” they said, adding: “The development is also designed to capture the growing trade in high-value electronics and semiconductors, as well as pharmaceuticals and e-commerce goods, from China to the US.”
Plans are also underway to launch more routes, with origins ranging from Hanoi and Frankfurt, as well as North and South America within the next 12 months.
Mark Jackson, chief executive of Baltic Exchange, said: “Baltic Exchange and TAC Innovation continue to closely collaborate to build a transparent and data-driven framework for the global air cargo market during a time of globalvolatility in airfreight rates.”
John Peyton Burnett, founder and managing director of TAC Innovation, added: “The extension of BAI Spot to include routes out of Shanghai will provide much-needed transparency to an air cargo market that increasingly relies on data for developing routes out of key markets.
The new BAI Spot routes ensure that market participants can navigate the current volatility with greater confidence and use these solutions to solve critical pain points.”
The indices are designed for settling index-linked physical contracts (ILAs), price benchmarking, and risk management solutions, such as futures and derivatives.
Image: © TAC. Mark Jackson (L), Baltic Exchange, and John Peyton Burnett, TAC Innovation
