The global air cargo market is experiencing significant growth, with projections indicating double-digit increases in volumes for 2024. According to the latest data analysis by Xeneta, the market saw a remarkable 12% year-on-year surge in demand in May, marking a trend that appears set to continue.
Factors Driving Airfreight Growth
Despite conservative forecasts at the end of last year predicting low single-digit industry growth, the reality has been far more optimistic. Over the past six months, there has been a consistent and extraordinary rise in regional demand for cargo capacity. This increased demand has been reflected in the global air cargo spot rate, which registered its second consecutive monthly growth in May, rising 9% year-on-year to $2.58 per kg, and up 5% month-on-month.
Several Factors Contribute to this Surge in Airfreight:
Regional Disruptions: The highest year-on-year rate increase in May was the 110% rise in the air cargo spot rate on the Middle East & Central Asia to Europe corridor, reaching $3.21 per kg. This spike is largely due to ongoing disruptions in the Red Sea.
Asia-North America and Asia-Europe Routes: Spot rates from Southeast Asia and China to North America increased by 65% and 43%, respectively, to $4.64 per kg and $4.88 per kg. Similarly, the China-Europe spot rate saw double-digit growth, up 34% year-on-year to $4.14 per kg.
Capacity Adjustments: The market has adjusted well to the 5% increase in airlines’ summer capacity, contributing to the overall rise in spot rates.
Declines in Certain Corridors
Not all regions are experiencing growth. Spot rates from North America and Europe to China fell 32% and 23% year-on-year in May to $1.61 and $1.65 per kg, respectively. The Transatlantic market also suffered, with the Europe-North America spot rate declining 21% to $1.77 per kg, and the North America-Europe corridor spot rate dropping 16% to $1.08 per kg.
These declines are attributed to increased belly capacity due to summer passenger travel, which has led to a decrease in air cargo spot rates for these routes.
Outlook for the Second Half of 2024
As we move into the second half of the year, there are several positive market indicators that suggest a bright outlook for Q4 2024. Last year’s end-of-year volumes were particularly strong, and a similar trend is expected this year. Additionally, a threefold increase in ocean container shipping spot rates from the Far East to North Europe and the US West Coast compared to the previous year is expected to reduce the cost gap for shippers or forwarders considering a shift to air cargo.
However, a major shift of volume from ocean to air is unlikely. Unlike the onset of the Red Sea crisis or the Covid pandemic, current cost spikes are more likely triggered by shippers frontloading imports ahead of the ocean peak season to mitigate the impacts of increased supply chain disruptions.
The airfreight market is undergoing significant changes, with rising demand and fluctuating spot rates across various regions. For businesses navigating this complex landscape, leveraging the expertise of a professional logistics provider like Australian Customs Brokers & Logistics can be invaluable. Our experienced team is well-versed in the intricacies of international freight and can provide tailored solutions to optimise your supply chain.
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Whether you need assistance with freight forwarding, customs clearance, or comprehensive logistics solutions, Australian Customs Brokers & Logistics is here to help. Visit our website here or call us at 1300 769 649 to learn more about how we can support your business needs.
Embrace the future of airfreight with confidence, knowing that you have a trusted partner to guide you through the challenges and opportunities of the evolving global cargo market.