Asian air freight stages US, Europe rate surge in November


The highest air cargo rates of the year from Asia to North America and Europe are riding not on demand, but on constrained capacity due to weather disruptions and too little belly capacity on the China-United States leg, according to Netherlands-based air freight analyst WorldACD. 

Asia-North America rates rose 7% even as volume dropped 2%, and the spot rate to Europe was up 7%, although with a 4% increase in tonnage, the analyst noted in its latest weekly update. 

“That Asia Pacific to North America rates are up significantly despite a fall in tonnages may reflect several factors, including operational disruptions caused by severe snow at Alaska’s Anchorage Airport and continuing limits on passenger belly hold capacity between China and the US,” the analyst said.

Air freight capacity on the trans-Pacific has yet to return at the same pace as on other corridors, largely because China only emerged from its lockdowns in January of 2023. Forwarders say booming e-commerce demand has seen Chinese online shopping platforms buying up as much as 70% of the available air freight capacity on China-US routes, and with passenger planes full as travel rebounds, cargo is competing with baggage for tight below-deck space in aircraft bellies. 

Closer analysis of WorldACD data showed even greater rate increases from certain Chinese origins over the past two weeks, with rates to North America up 11% and up 9% to Europe. Ex-Hong Kong rates to the US were up 7% since early November, and up 3% to Europe. 

The average spot rate from Shanghai to North America this week was at $5.94 per kilogram, a level not seen since Jan. 2, while the Shanghai-North Europe rate of $4.64/kg was the highest since Feb. 6, according to the Baltic Air Index. 

Still no sign of peak season 

But with high inflation in destination markets of the US and Europe, high mortgage rates and a steadily rising cost of living, there is little to suggest increasing rates mean air cargo is on course for its traditional last-quarter peak season. 

Niall van de Wouw, chief air freight officer at rate benchmarking platform Xeneta, said in a report Monday that the market has set a new rate baseline after the rollercoaster of the past three years and he expected seasonal demand patterns to emerge in 2024. 

“Yes, we will see a return of classic seasonality, but it will be muted seasonality,” van de Wouw noted in the Xeneta Air Freight Outlook 2024 that highlighted muted consumer spending as a key factor for the year ahead. Demand for air freight in 2023 remains down by 8% compared with pre-pandemic levels and is only predicted to grow by 1% to 2% in 2024, while capacity will grow by 2% to 4%. 

“The key indicators are not great from a demand point of view,” he added. “People and companies are a bit more conscious how they are spending their money and we will likely not see demand pick up in any meaningful way in 2024.”

Xeneta noted in a recent air freight market update that October data from the S&P Global Eurozone Manufacturing Purchasing Managers’ Index — regarded as a leading indicator of air freight — and high inflation in the US reinforced its view that there will be no peak season this year. 

“While spot rates will increase due to reduced belly capacity during winter, they will be impacted less by demand for air cargo,” Xeneta noted, adding that improving schedule reliability and lower rates in ocean freight shipping were also having an effect in drawing cargo out of the air.


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