Volumes in July were up 13% year-on-year due to strong e-commerce demand from Asia and comparatively low demand in July 2023.
Global average spot rates were $2.66 per kg in July, 20% higher than last year and supply grew 2%, pushing the global dynamic load factor up five percentage points to 59%.
Global air cargo demand slowed month-on-month in July as the summer holiday season started, which was echoed in the ocean container shipping market where container space has been easier to book and spot rates on major routes from the Far East to Europe and the US have declined or flattened.
The global IT outage on 19 July affecting Microsoft systems, which caused flight disruption with cancellations and delays for more than a week resulted in cargo backlogs, which mean cargo load factors on some impacted airlines increased up to four percentage points compared to the previous week, though load factors largely recovered by 28 July.
Short-term panic among shippers and forwarders pushed up the global average air cargo spot rate to $2.70 per kg in the last week of July, the highest level of the year.
August and September are likely to register strong growth from a low base and Red Sea disruption is likely to pose risks to supply chains due to longer container vessel sailing times and reduced schedule reliability in the second half of the year.
The situation may last until China’s Golden Week in October, says Xeneta, despite the container market’s early peak season.
Potential sea port strikes in Hamburg and the US east and Gulf coasts could coincide with airfreight’s much anticipated peak season and apply further upward pressure on air cargo rates.
Niall van de Wouw, Chief Airfreight Officer of Xeneta, says, “For the air cargo market, it’s now all eyes on late August for the first signs of a proper peak season, which would be the cherry on top of the cake for airlines after such unexpected volumes and demand growth in the first seven months of the year.”
If the global IT outage had been more disruptive, outcomes could have been different with van de Wouw continuing, “However, once again, air cargo showed resilience, after seeming to have dodged another major disruption. Going into the peak time of the year, airlines might just be starting to think their tailwinds will hold out.”
Regional spot rates have stayed high with average Middle East and Central Asia to Europe rates increasing 126% year-on-year to $3.16 per kg due to the ongoing Red Sea disruption while recent unrest in Bangladesh has led to port and airport backlogs, which will take weeks to clear and could further elevate cargo rates.
Rates out of south east Asia to North America and Europe have both more than doubled to $5.78 per kg and $3.85 per kg, respectively.
Spot rates out of north east Asia have been supported by strong e-commerce demand and general cargo volumes recovering, resulting in growth of around 30% to $4.39 per kg and $4.17 per kg, respectively, partly due to a high base last year.
Backhaul trade on the lanes and transatlantic trade saw year-on-year declines in cargo spot rates due to adequate capacity on the return leg and increased belly capacity on passenger flights to meet summer holiday season demand.