Xeneta: Double-digit growth a possibility for 2024

Air cargo demand has grown at double-digit rates for the sixth consecutive month and double-digit growth for the year is possible, according to data analysis by Xeneta.

Picture credit: Xeneta

Demand in May was up 12% year-on-year, defying growth forecasts from the end of last year predicting low single-digit growth due to extraordinary regional demand for cargo capacity.

Global spot rates in May grew for the second consecutive month, up five percentage points month-on-month and 9% year-on-year to $2.58 per kg.

Niall van de Wouw, Chief Airfreight Officer of Xeneta, says, “In terms of growth data, analysts sometimes say ‘once is an incident, twice is a coincidence, and three-times is a pattern’. In the world of air cargo, there’s an undeniable pattern emerging. We can’t use the word ‘surprising’ anymore. When we take a mid-term view of the market, with these kinds of numbers, we might be on track for double-digit growth for the year. It is now a possible scenario.”

The highest spot rate increase was the 110% rise on the Middle East & Central Asia to Europe corridor to $3.21 per kg due to ongoing Red Sea disruption.

Southeast Asia and China to North America spot rates rose 65% to $4.64 per kg and 43% to $4.88 per kg respectively, and China to Europe spot rates were up 34% to $4.14 per kg.

Spot rates were down on some trade lanes with North America to Europe down 32% to $1.61 per kg and North America to China by 23% to $1.65 per kg.

Europe to North America declined 21% to $1.77 per kg and North America to Europe was down 16% to 1.08 per kg.

The dynamic load factor was unchanged month-on-month at 58% and up three percentage points year-on-year.

Van de Wouw says market indicators are positive heading into the second half of the year.

The outlook is good for the fourth quarter helped by a threefold increase in ocean container shipping spot rates from the Far East to northern Europe and the US West Coast due to port congestion and Red Sea disruption.

Xeneta says a major volume shift from ocean to airfreight is unlikely because current cost spikes are being driven by shippers frontloading imports ahead of the ocean peak season to eliminate impacts from supply chain disruptions.

Cargo heading from China to North America is strong due to the resilient US economy and strong e-commerce demand but the big question is what will happen following the US crackdown on e-commerce shipments out of China.

Van de Wouw says China’s e-commerce giants had a large impact on the air cargo market at the end of last year and everyone is waiting to see what happens this peak season because rising costs and increased transit times for e-commerce out of China could reduce US consumer spending.

He says, “If fewer freighters are required to carry e-commerce, they will enter the general air freight market (again) and produce a noticeable supply impact, putting downward pressure on rates. This possibility cannot go unnoticed.”