The number of shippers committing to airfreight contracts of 6 months or more rose to 34% in the third quarter compared to 28% in the second quarter, says Xeneta, as the industry comes to terms with a new baseline for the general market.
Month-over-month, volumes were 6% in September due to traditional seasonality and the global general air cargo spot rate increased 2% to $2.23 per kg, a trend which continued in the week ending 1 October, when the average had increased 10% in 3 weeks.
September cargo volumes were level with 2022 and capacity grew at its slowest pace in the past 11 months, up 5% as belly capacity began leaving the market as summer travel in the Northern hemisphere cooled down.
Capacity demand and supply continued to rebalance with the dynamic load factor increasing 2 percentage points from August to September to 58%, 2 percentage points down on September last year.
Niall van de Wouw, Chief Airfreight Officer of Xeneta says this is not peak season but shows airlines, freight forwarders and shippers are finding more common ground to enter longer-term agreements as parties do not expect the market to go much higher or lower.
He says, “We see more longer-term contracts being signed and this only happens when people feel more comfortable about the now and the foreseeable future. It is easier to make a commitment now than when the market is on a sharp downward or upward trajectory. There is a firmer floor in place.”
Economic data from advanced economies remained weak with core Personal Consumption Expenditures (PCE) prices in the US excluding food and energy rising 0.1% month-over-month in August.
The overall PCE was 3.5% due to wage growth, commodity inflation and surging crude oil prices, hinting at an overheating US economy.
European annual inflation reduced to 5.2% in August and is expected to be 4.3% in September, while the European manufacturing purchasing managers’ index in September was 43.4, pointing to European manufacturing activities remaining in contraction.
Van de Wouw says the global air cargo market remains muted and the trends in September are likely to continue into October.
He says, “In my conversations with shippers, forwarders, and airlines, I still hear very little hope of demand growth before Q3 2024 and for that to happen, we still need to see stronger consumer confidence and economic activity.”
