Dive Brief:
- Ongoing Red Sea conflicts and e-commerce volumes pushed March air cargo demand up 11% year over year for the third consecutive month, according to an April 4 emailed report from Xeneta.
- Air freight growth was primarily driven by an uptick in volumes from the Middle East and South Asia as shippers shifted from ocean to air to avoid Red Sea delays and maintain resilience, said Niall van de Wouw, Xeneta’s chief airfreight officer.
- “The question is, should we be surprised by it, or should we get used to it? Although the market didn’t benefit immediately, the Red Sea disruption was clearly a factor in these latest figures,” he said in a statement.
Dive Insight:
March data shows that forwarders have continued to purchase a bigger share of spot market volumes to stay flexible and “keep their options open” pending the cooling of disruptions on the Red Sea and growing summer belly capacity.
In turn, more shippers opted to move away from longer-term global air cargo contracts in favor of short-term capacity commitments, according to Xeneta. In Q1, three-month contracts accounted for 41% of all newly negotiated contracts, up 18% percentage points from the previous quarter.
“The air cargo market has clearly enjoyed a stronger-than-anticipated start to the year, but there’s a different quarter coming along and more capacity coming in, so we do expect an overall downward pressure on load factor and rates, aside from selected corridors where the continuing rise of e-commerce and the residue of the Red Sea uncertainty will continue to boost rate levels,” said van de Wouw.
Despite Q1 featuring historically weaker months, demand outpaced growth in available capacity, Xeneta reported.
“While this latest monthly data should be balanced against the lower base recorded in the corresponding month of 2023, when we saw weakened global manufacturing activities, Q1 2024 has still seen a surprisingly busy airfreight market,” van de Wouw said in a statement.
The air cargo market has been stronger than anticipated for six consecutive months, said van de Wouw.
“When is it going to slow down?” he asked. “Only time will tell but, right now, airfreight demand is surprisingly resilient.”
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