Air Cargo

Airlines | Airports | Express | Special project | Temperature-controlled

High-flying air cargo market heading for strong peak season

By Greg Knowler

The traditional air cargo peak season that began late last year has now extended through the first half of 2024 , with demand continuing to outstrip global supply and little sign of any change in that dynamic .

Volumes , measured in chargeable weight , rose 13 % year over year in June , continuing an upward trend seen throughout the first half of 2024 , while capacity grew at its slowest pace so far this year , edging up 3 % compared with June 2023 , according to rate benchmarking platform Xeneta .

“ If you haven ’ t arranged your Q4 capacity by now , you could be in for quite a ride .”

The supply-demand imbalance is having a predictable impact on prices , according to Niall van der Wouw , Xeneta ’ s chief air freight officer , who warned shippers to prepare to pay even more in the fourth quarter .

“ The global machine is humming along nicely at this

Ex-China air cargo spot rates take off in Q2 2024

Outbound Shanghai air cargo spot rate index , with year-over-year change

Level of Index

4,500 4,000 3,500

-40 %

-60 %

3,000 -80%

L Oct Jan 2023 Apr Jul Oct Jan 202424 Mar , Apr24 Jul

Shanghai Year-over-year % change

Source : Baltic Air Freight Indices powered by TAC

Year-over-year % change

© 2024 S & P Global level , but this is likely the calm before the storm in terms of air freight rates ,” van de Wouw said in a July 5 market update , warning that airlines would likely begin charging peak season surcharges by the end of August .

“ We expect lower demand growth year over year in the second half of 2024 because of such a strong Q4 2023 comparison , but if you haven ’ t arranged your Q4 capacity by now , you could be in for quite a ride ,” he warned . “ There ’ s a consensus it will be a hot Q4 for air cargo in many Asian markets .”

On a corridor level , routes from Southeast Asia to Europe and the US saw the largest spot rate increases in June , growing 14 % from May to $ 3.65 per kilogram and $ 5.32 per kg , respectively , Xeneta data showed . Average pricing from Northeast Asia to Europe and the US ticked up 5 % sequentially to $ 4.26 per kg and 4 % to $ 4.00 per kg , respectively , for the month .

Shifting modes

Two main factors are driving the high-flying air freight markets : sustained demand for e-commerce in the US and Europe and modal shift from ocean as Red Sea attacks by Houthi militants disrupt container shipping and force cargo owners with urgent shipments into the air .

“ It doesn ’ t take much cargo moving over from container shipping to fill a freighter aircraft or the belly space on a passenger plane ,” Glyn Hughes , director general of The International Air Cargo Association , told the Journal of Commerce in early July .

Global air cargo volume recorded its sixth straight month of double-digit percentage year-over-year growth in June , Xeneta data shows , a trend that is expected to continue through July and August due to weak comparisons in the same months last year .

Netherlands-based air cargo analyst WorldACD said in a weekly market update that air freight tonnage from Asia-Pacific origins in the second quarter was up 18 % year over year , similar to the 20 % growth recorded in the first quarter of this year .

“ Global air freight demand and rates remain elevated year over year , driven by Asia – Europe and Asia – North America e-commerce demand and continuing mode-switching due to the Red Sea crisis ,” global consultancy AlixPartners noted in a June supply chain report . And if peak season in the fourth quarter continues to match demand through the first half , “ the air freight industry will see double-digit growth in 2024 .”

‘ A strange trajectory ’

However , capacity is not increasing at the same pace as demand , especially on the trans-Pacific trade , where passenger flights have not yet returned to pre-pandemic levels , restricting the amount of below deck belly cargo on long-haul routes . On top of the limited supply , shippers are also fighting for space with large Chinese e-commerce platforms like Temu and Shein .

Transport Intelligence analyst Thomas Cullen said the China – US route was on “ a strange trajectory ,” with passenger flight frequencies still well below 2019 levels .

26 Journal of Commerce | July 29 , 2024 www . joc . com