According to Xeneta’s analysis, in August, the air cargo sector demonstrated impressive resilience with double-digit demand growth, fueled by supply chain disruptions, e-commerce expansion, and shifts from ocean to air freight. The trends signal heightened anticipation for Q4, traditionally the busiest period for global logistics.
Summer’s double-digit demand growth
Throughout August 2024, global air cargo demand increased by 11% year-on-year (YoY), with average spot rates climbing 24% compared to the same period in 2023.
This growth, says Xeneta, was largely driven by supply chain imbalances, where supply grew at a meager 2% YoY, failing to keep pace with escalating demand. Meanwhile, global average spot rates rose to USD 2.68 per kilogram.
Xeneta states that e-commerce has been a key driver in this expansion, particularly exports of low-value goods from China.
The first seven months of 2024 saw China’s e-commerce exports rise by 30% YoY, with demand from Europe and the United States growing by 38% and 30%, respectively.
Regional performance insights
This supply-demand imbalance resulted in a dynamic load factor of 58% globally, a 4% increase from August 2023. However, regional disparities persisted across key trade corridors, particularly in transatlantic routes and Asia-North America traffic.
Europe-to-North America rates saw the largest month-on-month increase, rising by 7% to USD 1.77 per kilogram. Rates on Asia-to-North America routes also climbed, with Southeast and Northeast Asia showing increases of 6% and 4%, respectively.
Europe-Middle East air cargo rates also showed moderate growth of 2%. However, spot rates for return legs from Asia to Europe and North America dropped by 1-2%.
August spot rate dynamics
Despite overall demand growth, August 2024 did show signs of cooling in certain markets. Spot rates softened by 1% month-on-month, primarily due to a slowdown in the ocean-to-air freight shift, caused by frontloading of ocean shipping imports. For example, inbound air cargo rates to Europe from Asia and the Middle East were down 1-2%.
Conversely, dynamic load factors from Asia to both Europe and North America reached as high as 86-87% in August. On the return leg, however, these factors fell below 45%.
Q4 Outlook: anticipation is building
Xeneta’s Chief Airfreight Officer, Niall van de Wouw, remains cautiously optimistic about the upcoming Q4 peak season.
He emphasised that while the air cargo market has already seen atypical growth throughout the summer, September will serve as a bellwether for what to expect in Q4.
“Let’s see if the peak surcharges some carriers plan to implement will hold,” he said. “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.”
Niall van de Wouw added:
“We’ve seen rates increasing throughout the summer, which is not typically the case. Q4 will be busy in terms of volumes, but how busy? Ecommerce 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. I said to a shipper last week if you are not already a little bit nervous, I would recommend you get a little bit nervous for Q4 when you look at all the signals out there.”
Photo by Harald Hechler