Daily Brief – Freight Arbitrage

Freight Arbitrage

The air cargo capacity to the Middle East has shrunk by a whopping 50% on an annualized basis according to WorldACD while air cargo rates from Vietnam to Europe have almost doubled to USD 6.27 per KG according to Flexport. The result is that some products are now being shipped to Los Angeles from Asia and from there air freighted to Europe. The simple reason for that is that air cargo rates between Los Angeles and Europe are only up by 8% due to airlines putting on more passenger flights due to increased demand and wanting to use up resulting surplus cargo capacity in those additional planes. The second reason that this new route is being used is that it is much quicker to ship to LA and then airfreight goods to Europe than sending those goods via ship around the Southernmost tip of Africa – and cheaper.

EUR/USD 1.1691.

Crypto Energy

A consequence of energy prices doubling in some areas is clear when it comes to air travel and shipping costs. Economist Steve Keen has identified the crypto market as currently being unaffected but that could very quickly change. Mining Bitcoin for example requires a lot of now very expensive and potentially limited energy. Bitcoin fans disagree, claiming that renewable energy is increasingly powering that bitcoin mining. Steve Keen however can see the potential for policymakers limiting energy intensive crypto currency operations and consequently he does not just see Bitcoin falling in price but falling to zero. Australian and free thinking Steve Keen has enjoyed a long career in the dismal science and has seen enough cycles as well as booms and busts to be worth listening to. According to his Wikipedia entry he is a “post-Keynesian, criticizing neoclassical economics as inconsistent, unscientific, and empirically unsupported.”

GBP/USD 1.3411.

M50

Irish readers will be familiar and maybe too familiar with this motorway outside Dublin which has been mostly blocked for the past few days by slow moving or stationary trucks and cars protesting at the price of fuel. The Irish government has sent in the army to sort it out, but it is not only Ireland that is seeing those protests with reports in France, Norway, and Denmark of demonstrations and political pressuring at the end of last week. Here in the UK, the farmers are mobilizing at the increased cost of their subsidised fuel which has already been used as a warning of higher food prices and inflation.

EUR/GBP 0.8718.

European Airport Delays

In 2025, the top 3 European airports when it comes to take off delays were Nice, Zurich, and Lisbon and for late arrivals were Lisbon, Athens, and Luxembourg according to Eurocontrol. At the other end of the scale the best for punctuality are the Scandinavians: Sweden, Norway, and Denmark. It may not come as a surprise to frequent flyers, but 30% of all flights take off late – and the market leader is Lisbon.

EUR/JPY 186.61.

A Whiter Shade of Pale

This day in 2009, Procul Harum’s 1967 hit A Whiter Shade of Pale after a tough competitive poll was named as the most played song of the previous 75 years having pipped Queen’s Bohemian Rhapsody at the post and ahead of Wet Wet Wet’s 1994 Love is All Around and Bryan Adams’ 1991 Everything I do (I do it for you).

We skipped the light fandango
Turned some cartwheels across the floor
I was feeling kind of seasick

When the crowd called out for more
The room was humming harder
And the ceiling flew away

When I called out for another drink
The waiter brought a tray

And so it was later
When the miller told this tale
That her face at first just ghostly
Turned a whiter shade of pale

She said, “There is no reason
And the truth is plain to see”
That I wandered through my playing cards

And could not let her be, no
One of 16 vestal virgins
Who was leaving for the coast

And although my eyes were open
They might just as well have been closed

Discussion and Analysis by Humphrey Percy, Chairman and Founder

Click Here to Subscribe to the SGM-FX Newsletter