Dive Brief:
- Shippers, forwarders and airlines have expressed little hope of demand growth before Q3 2024, with Xeneta's Chief Airfreight Officer Niall van de Wouw noting that “for that to happen, we still need to see stronger consumer confidence and economic activity.”
- Still, the number of shippers committing to long term air freight contracts of six or more months rose to 34% in Q3, up from 28% in the previous three months due to increasing confidence in a stabilizing global air cargo market, according to an emailed update from Xeneta’s Clive Data Services.
- Although the global air freight market remains muted, carriers, freight forwarders and shippers are finding common ground to enter longer-term agreements as “the market isn’t expected to go much higher or lower,” Clive reported.
Dive Insight:
Shippers are showing signs of confidence in the air freight market as global cargo volumes were roughly flat year over year and global air capacity grew at its slowest pace for the first time in 11 months, up 5% YoY, Clive reported. This was due to slowing summer passenger travel in the Northern hemisphere slowed down and belly capacity gradually was taken out of the market.
Rates saw a slight increase this month partially due to the low base point and spot prices slowly returning to pre-pandemic levels.
“We previously referenced no macro and market currents to support an expectation of a peak season, and this is still the case,” van de Wouw said. “We also said if there was to be an uptick in rates, we would expect this to be mainly driven by the supply side than the demand side, and this also still holds true.”
In September, the general air cargo spot rate increased 2% MoM to $2.23 per kilogram, with “growth especially accelerating towards the end of the month,” according to Clive. The trend continued into October, with the global average spot rate increasing 10% from three weeks ago in the week ending Oct. 1
Rates from the China to U.S. tradeline rose 9% MoM to $3.63 per kilogram, driven by demand ahead of the Golden Week holidays which began Oct. 1. Spot rates from Southeast Asia to the U.S. stood at $3.14 per kilogram, up 16% MoM, while Vietnam spot rates to the U.S. spiked 32% MoM to $3.70 per kilogram, Clive reported.
Transatlantic spot rates, however, continued to decline, falling 3% MoM to $1.73 per kilogram in September.
The slight uptick in air freight rates and slowing growth of available capacity showcase an air cargo market that is finally stabilizing. Whether industry players choose to pull back on their air cargo ambitions or push through with their expansion strategies, the air market landscape is stil buzzing with activity.
