Chargeable weight in November was down 8% on last year and capacity was reduced 1%, resulting in a dynamic load factor of 61%, on a par with October.
The load factor was well below last year’s extraordinary peak season with Europe to North America registering 74% in the week leading up to the Thanksgiving holiday, 12% below the same week last year.
Industry parties are taking a wait and see approach, choosing shorter-term deals as they wait to see how business trends unfold in the coming months.
Distribution of contract rates for shippers show commitments of contracts longer than 3 months are almost non-existent in Q4 this year.
Niall van de Wouw, Chief Airfreight Officer of Xeneta, says, “What we are seeing is a lot of uncertainty still. After such a big drop of -8% in air cargo demand in October, we saw a little stability return in November, so the market is not worsening, it’s just very hard to read longer-term. This is reflected in the rise in short-term contracts, with forwarders unwilling to commit to long-term deals.”
He says shippers should see benefits in their air and ocean budgets and falling rates may provide a glimmer of hope for cash-strapped consumers if shipping costs fall, making goods more affordable.
Rates for general air cargo fell for the third consecutive month, falling to levels last seen in October 2020 but average rates are still 85% above pre-pandemic levels despite spot rates falling across the top 3 corridors.
Average spot rates on the transpacific corridor were $5.82 per kg, down 32% on last year but 139% above 2019.
On the same corridor, ocean rates declined 79%, putting them 30% above pre-pandemic levels, which is likely to trigger a modal shift from air to ocean cargo as the market eases.
On the East Asia to Northern Europe corridor, average air cargo spot rates were $5.86 per kg, down 16% and ocean cargo were down even more with container freight rates falling 78%.
From Northern Europe to US East, air cargo spot rates were down 37% to $3.23 per kg but ocean freight rates climbed 10% year-on-year, putting them nearly 3.5 times the 2019 level, making it the only route where air cargo remains competitive.