Picture credit: Xeneta
In August, global air cargo demand was up 11% year-on-year due to the Red Sea disruption and the growth of e-commerce, while capacity was only up 2%.
The global average spot rate was $2.68 per kg in August due to the continuing supply and demand imbalance.
The dynamic load factor measuring capacity utilisation based on volume and weight flown alongside available capacity increased four percentage points to 58%.
E-commerce continues to grow with data from Trade and Transport Group saying e-commerce and low-value export goods from China have grown 30% in the first seven months of 2024.
Shipments to Europe were up 38% and to the USA by 30%.
Niall van de Wouw, Chief Airfreight Officer of Xeneta says August typically follows July’s performance and this year there was no summer slack season due to the high demand and rates.
He says, “Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red hot peak season materialises.”
Global spot rates dropped 1% month-on-month in August due to the ocean-to-air shift cooling due to the frontloading of imports in ocean shipping.
North America inbound lanes had the largest month-on-month increases with Europe to North America spot rates up 7% to $1.77 per kg as the number of transhipments from Asia increased.
Rates from southeast Asia to North America were up 6% to $6.15 per kg and 4% from northeast Asia to $4.68 per kg.
Europe to the Middle East and Central Asia saw rates increase 2% to $1.58 per kg.
The summer break and respite from Red Sea disruption meant rates from Asia and the Middle East were down 1-2% month-on-month.
Inbound spot rates to northeast and southeast Asia from North America and Europe fell up to 4% due to the increased trade imbalance between fronthaul and backhaul trades.
The dynamic load factor from Asia Pacific to Europe was 86% and to North America was 87% but below 45% on the return legs.
Van de Wouw says the summer was a good indicator for the peak season, saying, “Freight forwarders are more prepared this year and, based on what we hear, are spending a lot of time with shippers on how to manage the unpredictable nature of these market conditions. We see financial and operational derisking going on but, if the heat is on, let’s see what happens with all the contracts that are being negotiated.”
Rates do not normally increase over the summer and we will have to wait and see how busy the peak season is.
“E-commerce demand will play a big role and with +30% growth already this year ex-China and a reported 37 million new downloads of just the TEMU app in July, the indicators already suggest strong demand for capacity and this will impact the entire market on major corridors,” says van de Wouw.
Shippers should be nervous about the peak season, according to van de Wouw, who says, “Especially out of Asia, we should not be surprised if the market really heats up again in Q4. We expect to see a seller’s market out of Asia and across the Atlantic due to the latter’s reduction in winter capacity. We’ve had a hot summer, and we may have an even hotter autumn ahead.”