Global Air Cargo Market Sees Surge in Demand

Global Air Cargo Market Sees Surge in Demand, Predicts ‘Hot Q4’

The global air cargo market is gearing up for a “hot Q4” of rate increases after six consecutive months of double-digit growth in June. According to Xeneta’s latest analysis, shippers and forwarders who are unprepared for this year’s peak season may find themselves at the mercy of the market.

In June, demand measured in chargeable weight rose by 13% year-on-year, continuing the positive trend observed in the first half of 2024. Meanwhile, cargo supply increased at its slowest pace of the year, edging up by just 3% year-on-year. Consequently, the global air cargo dynamic load factor—Xeneta’s measure of capacity utilisation—increased by 4 percentage points year-on-year.

Niall van de Wouw, Chief Airfreight Officer at Xeneta, stated, “June’s growth in demand was expected, and we anticipate continued double-digit year-on-year growth in July and August due to low demand in the same months last year. However, this may be the calm before the storm in terms of air freight rates.”

He added, “Certain airlines and forwarders are already considering a peak season surcharge by the end of August. There’s a consensus that it will be a hot Q4 for air cargo in many Asian markets.”

Market Conditions and Future Outlook

The e-commerce boom, ocean freight disruptions due to conflict in the Red Sea, and improvements in global manufacturing activities drove the largest increase in global air cargo spot rates this year. Rates climbed by 17% year-on-year to USD 2.62 per kg in June.

Month-on-month, the air cargo spot rate edged up by 2% as demand growth of 4% continued to outpace capacity supply. Southeast Asia to Europe and the US markets saw the largest increases in June, rising by 14% versus May to USD 3.65 per kg and USD 5.32 per kg, respectively.

Conversely, outbound China markets stalled with rates dipping by 1% to USD 4.09 per kg to Europe and USD 4.80 per kg to the US. The Europe to US spot rate fell by 4% to USD 1.69 per kg due to increased belly capacity from summer passenger flights.

Preparing for the Peak Season

With the potential for an air cargo rate boom in Q4, shippers are adjusting their contract strategies. In the second quarter of 2024, contracts lasting more than six months increased to 28% to avoid extreme rate fluctuations during the year-end peak season.

Freight forwarders are also procuring fewer cargo volumes in the spot market, with the proportion dropping to 42% of the total market in the second quarter of 2024, a 3 percentage point reduction from a year ago.

“As we head into the second half of the year, it might be now or never to consider longer-term contracts,” van de Wouw noted. “With a mix of ocean shipping chaos, an upturn in manufacturing activities, and fear-of-missing-out, a delicate balance of short and long-term contracts is on everyone’s mind. Only time will tell, but you’re going to be paying a lot more to ship goods from Asia Pacific once September comes.”

For more detailed insights and analysis, visit the full report by Air Cargo Weekly