Xeneta: E-commerce boom disguises subdued market

Surging e-commerce volumes from Hong Kong and China gave November a boost but failed to disguise the underlying subdued nature of the market, according to the latest data from Xeneta.

Picture credit: Xeneta

Air cargo demand increased 5% year-on-year in November as US and European consumers bought low-cost products online with e-commerce giants Shein and Temu being credited with almost single-handedly increasing volumes and rates out of Hong Kong and China in a market lacking the traditional peak season.

Spot rates from China to the US climbed 11% month-over-month to $4.46 per kg and China to Europe was up 9% from October to $3.96 per kg.

Global air cargo spot rates increased 7% month-on-month to $2.45 per kg in November.

Demand outpaced supply pushing the global dynamic load factor to 60%, which is on par with a year ago but Niall van de Wouw, Chief Airfreight Officer of Xeneta says the market was not in a good shape in November 2022.

He says November’s data does not show a fundamental shift in the economy nor the outlook for 2024, saying, “Seasonality means volumes are up, admittedly slightly more than we expected, but the figures also look better than they really are because November last year was disappointing for airlines and forwarders alike. More than anything else, what we saw this November was air cargo’s growing dependency on e-commerce.”

Van de Wouw also says it is rare for two companies to have such an influence on the market, saying, “You rarely have a conversation with an airline or forwarder right now that doesn’t reference Shein or Temu because these two e-commerce behemoths seem to be upsetting the market by themselves, supposedly accounting for some 80% of airfreight volumes ex-Hong Kong on certain days.”

He asks how long this can last and that the results are not coming from shipments of higher value products, which is worrying for airlines and forwarders.

The general cargo market remains weak with spot rates staying below seasonal rates, with spot rates for outbound Asia markets growing at slower paces than in October and growth from south east Asia to both Europe and the US slowing down.

Global airfreight capacity is likely to continue to outpace market demand next year, says Xeneta, due to anticipated weak consumer spending in the first half of 2024 and belly capacity recovering boosted by improving passenger travel.