Weak summer demand saw air freight chargeable weight move down 1% and while the fall was minor, it is the fourth consecutive month of falls, which suggests that we may require another few quarters before we see more demand pick up on a global level.
According to the latest market analysis from Xeneta, shippers continue to benefit from the soft air freight market, but rising jet fuel prices could be a concern in an already contracted market, with prices for US Gulf Coast jet fuel jumping 21% month-over-month.
August saw global air cargo capacity rise +7% year-on-year, while global dynamic load factors, based on volume and weight perspectives of cargo flown and capacity available, climbed 1% over the previous month to 56%.
However, it is worth noting that the August global load factor continued to fall year-on-year, down 3% from last year’s level, due to soft demand and the capacity surge, driven by the summer’s passenger services.
The data from Xeneta dampens some industry reports of a slight spike in demand in August, and with it hopes of a rise in volumes going into the final quarter.
Like July, August was very quiet and we see no meaningful signals of any kind of peak arising this year and while there might be some early peak season charter requests in the market, they are not backed up any real demand and there are doubts about how serious they are.
The market does seem to have levelled out, but there is still a lot of uncertainty, and not just for air freight. There was also no peak for the ocean market, which typically precedes the air freight market by a couple of months, with blank sailings actually being scheduled ahead of the Golden Week period.
Despite the lacklustre situation we have seen some rates creeping up out of China, mainly due to eCommerce demand and it is likely that upward pressure will increase in the second half of October as capacity is taken out of the market, but the signals for the rest of the year are not good, without improvement in the macroeconomic outlook situation.
Of 10 major trade lanes assessed in the past month, only China-United States and Southeast Asia-United States recorded growth, with air cargo spot rates up 3% and 4% respectively on these corridors. This is attributed to a more resilient US economy and the delayed recovery of US-China passenger bellyhold capacity, which is growing at a much slower pace than Europe-China.
Even so, due to geopolitical capacity shortages, spot rates ex Northeast Asia to Middle East & Central Asia, Northeast Asia to Europe, China to the US and China to Europe remained highly elevated, and are still 55% above their pre-pandemic levels.
Going into the usually critical autumn and winter period, we will be looking to secure longer carrier commitments and rates that reflect the reality of today’s market and expectations moving into 2024.
For valuable, special and time-sensitive cargoes there has never been a better time to use air freight, with extremely competitive rates and really interesting service and route combinations.
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