Shifts in transport capacity have played a crucial role in shaping transatlantic air cargo rates, particularly against the backdrop of evolving global trade dynamics.
According to data from Xeneta, February saw a 7% month-over-month increase in spot air freight rates from Europe to the U.S., reaching $2.46 per kilogram. This represents a significant 23% year-over-year surge. Conversely, the Northeast Asia–U.S. route experienced a 14% decline in rates, reflecting strategic carrier adjustments and fluctuations in available capacity.
Key Factors Influencing Transport Capacity
Winter Belly Capacity Reductions
Airlines typically reduce cargo space in passenger aircraft during the winter season, with February marking the lowest capacity levels before an anticipated rebound in March.
Freighter Aircraft Shifts to Asia
To capitalize on the rapid growth of e-commerce in Asia, several carriers have reallocated freighter aircraft away from transatlantic routes to service Asian markets.
As a result of these capacity constraints, the Europe–U.S. route maintained a load factor of approximately 80% in February—comparable to peak year-end levels—enhancing the bargaining power of freight service providers.
Impact of Geopolitical and Global Trade Factors
Declining Transpacific Demand
A post-holiday slowdown in e-commerce shipments, factory closures for Lunar New Year, and potential policy changes—such as the removal of the de minimis exemption—have led to reduced demand for air cargo on Asia–U.S. routes. Further contractions in capacity on this route could slow rate increases on other lanes, including transatlantic routes.
Red Sea Shipping Disruptions
The potential ceasefire between Israel and Hamas could see container ships returning to the Red Sea, alleviating disruptions in ocean freight. If this materializes, shippers may revert to ocean transport, thereby decreasing dependency on air freight services.
Strategic Recommendations for Shippers and Freight Forwarders
Vigilant Monitoring of Geopolitical and Tariff Developments
Given the uncertainties surrounding trade policies, shippers must remain highly attentive to U.S. tariff adjustments, not only concerning Europe but also China and other key global markets, as these changes could significantly influence global trade competitiveness.
Deferring Long-Term Contract Negotiations
Considering the potential removal of the de minimis exemption, the likelihood of container ships returning to the Red Sea, and seasonal airline capacity adjustments, shippers may benefit from postponing long-term contract negotiations until the second quarter. This delay could enable them to secure more competitive rates should geopolitical and market conditions shift favorably.
Conclusion
In an increasingly volatile and complex global trade environment, shippers must adopt a cautious yet flexible approach to effectively navigate fluctuating air freight rates. Proactive adaptation to capacity shifts and geopolitical developments will be key to maintaining competitive shipping strategies.
Source: https://www.logisticsinsider.in/capacity-shifts-drive-transatlantic-air-cargo-rates-amid-evolving-global-trade-dynamics/
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