News #64 - Brighter outlook, with air cargo on course for double-digit growth

09.06.2024

Air cargo is on a pathway to double-digit growth this year, according to Xenta’s latest analysis, but the US crackdown on Chinese ecommerce has the market hedging its bets.

“Despite conservative, low single-digit industry growth forecasts at the end of last year, expectations have been boosted by six consecutive months of quite extraordinary regional demand for cargo capacity,” Xeneta said.  

Global air cargo spot rates in May rose 9% year on year, to $2.58 per kg, the second consecutive month of growth, and demand was up 12% YoY.  

“In the world of air cargo, there’s an undeniable pattern emerging. We can’t use the word ‘surprising’ anymore,” said Xeneta’s chief airfreight officer, Niall van de Wouw.

“When we take a mid-term view of the market, with these kinds of numbers we might be on track for double-digit growth for the year. That is now a possible scenario.

The highest year-on-year rate increase for May was the 110% of air cargo spot rates on the Middle East & Central Asia to Europe corridor, due to continuing Red Sea disruption.

Indeed, in its European Market update today, Maersk said: “Tighter ocean capacity from Asia into Europe during peak season, combined with the continuing situation in the Red Sea, is leading to an upturn in demand and rates for air freight from Asia Pacific and the Middle East, including Maersk’s Sea-Air solution via Dubai, Muscat and Singapore.

“As such, air freight is being considered less of a ‘plan B’ solution, but rather a fundamental part of supply chain success.”

Xeneta noted a “threefold increase” in ocean shipping spot rates from Asia to Europe and the US, compared with the previous year, reduced the cost gap for shippers or forwarders contemplating modal shift to air cargo.

Cathay Cargo’s regional head of cargo Europe, Jansen Stafford, said: “The market has so far been healthy in 2024; in fact, stronger than I thought it was going to be.. Should it maintain these levels through the summer, we’ll probably be looking at a stronger back-half of the year.”

But, he warned: “This is crystal ball stuff, given the political headwinds from geopolitical and economic events.”

And, despite its “bright outlook” for Q4 24, Xeneta questioned what would happen following the US crackdown on Chinese ecommerce.

Digital freight marketplace Freightos commented: “B2C ecommerce volumes from platforms like Temu and Shein have been the main driver of strong demand, tight capacity and elevated rates from China to North America and Europe. But Temu will, reportedly, pull back from the US market, and now Shein is facing challenges there as well. “

Mr van de Wouw added: “If fewer freighters are required to carry ecommerce, they will enter the general air freight market (again) and produce a noticeable supply impact, putting downward pressure on rates.

“This possibility cannot go unnoticed,” he concluded. 


Source: https://theloadstar.com/bright-outlook-as-air-cargo-courses-for-double-digit-growth/

Other articles

Contact Us

Booking ALS expert's advice