Global Air Freight Industry 2024

A Comprehensive Look at the Global Air Freight Industry in the First Half of 2024

The global air freight industry has experienced a dynamic and robust first half of 2024, marked by significant growth in demand and nuanced shifts in various operational metrics. This period has been characterised by a strong recovery and expansion, influenced by several macroeconomic factors and regional developments.

Surge in Demand

In the first half of 2024, global air cargo demand, measured in chargeable weight, witnessed an impressive increase. According to Xeneta, demand rose by approximately 13% year-on-year in June, continuing the upward trend from earlier in the year. This double-digit growth reflects a consistent recovery trajectory following the weaker demand period in 2023.

Capacity and Load Factors

While demand surged, the growth in cargo supply was more modest, with a year-on-year increase of just 3% in June. This disparity between demand and supply has led to a higher dynamic load factor, which measures capacity utilisation. Xeneta reported a 4 percentage point increase in the global air cargo dynamic load factor compared to the previous year.

Regional Highlights

1. Asia-Pacific: The Asia-Pacific region, a critical player in global air freight, saw significant activity. Airlines in this region reported a 17.9% year-on-year growth in freight tonne kilometers (FTK) in May 2024, according to the Association of Asia Pacific Airlines (AAPA). This growth was largely driven by buoyant trade activity within the region and globally. The region’s international freight load factor also increased by 1.4 percentage points to 61.4%, following a 15.1% expansion in offered freight capacity.
2. North America: North American carriers experienced solid demand growth, supported by strong consumer spending and an improving economic outlook. The air cargo sector in this region benefited from disruptions in ocean freight services, which pushed more goods into the air freight channel. The specific growth percentages for this region have been aligned with the global average, showcasing resilience and adaptability.
3. Europe: European air cargo markets also saw positive trends, though with regional variances. The market from Southeast Asia to Europe experienced notable spot rate increases in June, growing by 14% to USD 3.65 per kg. In contrast, outbound rates from China to Europe showed a slight decline of 1%, reflecting regional economic shifts and changing trade dynamics.

Market Dynamics and Rate Fluctuations

The global air cargo market is preparing for what is anticipated to be a ‘hot Q4’. The first half of 2024 set the stage for potential rate increases as the year progresses. June alone saw a 17% year-on-year rise in air cargo spot rates, reaching USD 2.62 per kg, driven by e-commerce growth, ocean freight disruptions, and improved manufacturing activities.

Strategic Adjustments

Given the market conditions, shippers and forwarders have been adjusting their contract strategies. There has been a noticeable shift towards longer-term contracts to hedge against anticipated rate volatility during the peak season. In Q2 2024, contracts lasting more than six months became more prevalent, capturing 28% of the market share. This strategic move indicates a preference for stability amid expected market turbulence.

Outlook for the Second Half of 2024

Looking ahead, the air freight industry faces both opportunities and challenges. While the demand trajectory is expected to remain strong, driven by economic recovery and consumer demand, factors such as rising fuel costs, geopolitical tensions, and supply chain disruptions will continue to shape the landscape. The consensus among industry experts is that the latter half of 2024 will bring significant rate fluctuations and strategic realignments as the market navigates these complexities.

Conclusion

The first half of 2024 has been a period of robust recovery and growth for the global air freight industry. With significant increases in demand, strategic shifts in capacity management, and preparations for a potentially turbulent peak season, the industry is poised for a dynamic year ahead. The continued resilience and adaptability of air cargo players will be crucial in navigating the evolving market landscape.

Sources:

• Xeneta analysis
• Association of Asia Pacific Airlines (AAPA)
• AirCargoWeekly