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Cargo

Forward thinking

A weekly air freight rate index, TAC, will soon be launched. Based on raw data from multinational forwarders, it will also be used to set in motion forward freight agreements, allowing all parties in the supply chain to hedge against spot market rate changes. But, discovers Alexandra Lennane, it has not been welcomed in all quarters
 

Within weeks of reading this article, a new air freight rate index will be up and running, charting the highs and lows of the spot market in air cargo.

 

This in itself is not so new. Consultancy and research company Drewry, using data from the WACO System of forwarders, already publishes monthly air freight rates for 21 key east-west trade lanes. WorldACD collates monthly data for all markets worldwide on volumes, shipments, revenues and yields. IATA’s CASS (cargo account settlement system) figures dominate market research – but they come at a high price.

 

However, the TAC Index, as it is to be called, has grown out of a different set of foundations. Its purpose is intended to be manifold and could signal the start of a significant change in the way air cargo capacity is sold.

 

In the making for some two years, the index has been carefully calibrated and statistically modelled, with an eye on ocean’s successful Shanghai Containerised Freight Index (SCFI). With some six of the top 20 forwarders signed up to participate and contribute raw data, the founders of TAC expect it to provide key information.

 

The data is to be made up of analysed house and master air waybills, over various trade lanes. The index will be available to subscribers and contributors and published every Monday at noon GMT. Initially it will focus on city pairs out of Hong Kong to European destinations such as Frankfurt and Amsterdam, expanding into US routes including Chicago, New York and Los Angeles. Each trade lane will be published only when the TAC team believes the data to be sufficiently strong, and when no one company can skew the figures.

 

“We will launch as soon as we know that the data is satisfactory,” explains founder member Peyton Burnett.

 

“It is getting sizeable now. We won’t publish every trade lane, but we could. The biggest difference with other indices is the quality of the raw data, which will be up-to-date rather than a month old.”

 

It will also, he adds, charge substantially cheaper subscriptions than those currently available in the market, as well as offering analysis of companies’ own data.

 

The team consists of business development director Robert Frei, former head of product and procurement for Panalpina; and managing director Peyton Burnett, the owner of Kong Team Logistics. TAC also employs experts specialising in indices, exchanges, finance, mathematics and programming. To allay any doubts a participating company may have, it has also worked with the US Department of Justice to ensure it does not contravene any antitrust laws, as well as with experts from the heavily regulated stock market sector.

 

So how could it change the way air capacity is bought? The aim is not merely to provide air cargo players with additional data; the index has been formed with an eye to the financial markets and Forward Freight Agreements (FFAs). >>


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