The latest market analysis says demand grew 10% year-on-year in November, fuelled by e-commerce, and capacity only grew 2%, which pushed up global air cargo spot rates to their highest level in nearly two years.
Spot rates are averaging $2.90 per kg, a sixth consecutive month of double-digit year-on-year growth.
Niall van de Wouw, Chief Airfreight Officer of Xeneta says the strong performance had led to hopes of a “peak of all peaks” in Q4 but the industry has done well to avoid it because this creates imbalances between winners and losers.
He says, “2024 had all the ingredients to see crazy peak season rates but the fact we haven’t seen this situation develop is another sign of the maturity we previously referenced in the global air cargo market. What we witnessed in 2023 was a mess and a valuable lesson. In 2024, we are seeing those lessons put into practice.”
The air cargo market is much more grown up than last year with a better allocation of resources and terms and conditions for all parties involved.
In comparison, van de Wouw says the 2023 peak season saw a shortage of capacity and unreasonable rates, all at the expense of shippers.
He says, “Why would we want to go back there again? The supply chain pressure of a peak of all peaks would have hurt consumers and put unnecessary restraints on relationships. It would have been opportunistic for short-term gains.”
Some observers have indicated a muted end of year but van de Wouw says this is not the case, saying the air cargo industry is firing on all cylinders, which is not out of control.
He says, “The closing months of 2024 could have been very messy again for shippers, but we are not hearing that. That’s not because the volumes are not there, or the flights are not full. It is because everything, overall, is being managed better. The industry should take a lot of credit for that.”
The supply-demand imbalance pushed the dynamic load factor to 63% in November, the highest level in over 30 months.
The demand has kept spot rates above seasonal rates since late November last year.
This year’s peak season has been less intense than last year on a month-on-month basis thanks to proactive capacity management.
Global air cargo spot rates increased 12% between early September and the week ending 1 December compared to 25% in the same period last year.
Carriers have shifted capacity to Asia to accommodate surging cargo demand, moderating spot rate rises from northeast Asia.
Spot rates to Europe rose by 13% month-on-month to $5.09 per kg and 5% to $5.20 per kg to North America.
Spot rates from southeast Asia were mixed with rates to Europe remaining flat at $4.15 per kg and North America declining 3% to $6.05 per kg.
The North American decline was driven by easing volumes following spot rates exceeding last year’s peak season since late May.
Transatlantic rates increased as cargo capacity moved elsewhere at the end of the summer passenger travel season.
Europe to North America spot rates increased 46% to $2.72 per kg compared to 9% month-on-month growth a year ago.
Spot rates from Europe to Latin America rose by 23% to $4.58 per kg.
In Brazil, a five-day embargo in November at Sao Paulo Guarulhos airport, coupled with ongoing nationwide digital customs delays caused by Brazilian Customs’ strike since 26 November, may push spot rates even higher in December as shippers are likely to resort to airfreight to avoid customs clearance delays.
Van de Wouw says, “Personally, I think the air cargo industry should be proud it has avoided a ‘peak of all peaks’ because this is the basis for greater market stability. I hope this will enable everyone to head into their well-earned Christmas and New Year holidays with a sense of satisfaction, and it enables them to relax and enjoy time with their families and friends.”