January 22, 2024 - By : admin
Increased geopolitical uncertainty and unpredictability may drive a surge in demand for air cargo services as shippers seek stability in their supply chains.
Data from Xeneta reveals a 9% year-on-year increase in air cargo demand in December, with spot rates reaching a nine-month high of $2.60 per kg and a 3% rise in the dynamic load factor to 59%.
Niall van de Wouw, Chief Airfreight Officer at Xeneta, suggests that this uptick in demand could signal the beginning of a new cycle for air cargo.
Shippers may find value in the market’s stability, enabling them to make more accurate predictions regarding transportation costs for their products. With ongoing disruptions in the ocean freight market, particularly due to incidents in the Red Sea, some shippers are turning to air cargo for predictability and to mitigate the impacts of current disruptions.
Van de Wouw notes that while the global supply chain still faces challenges and friction, air cargo appears to be in a more stable state. He emphasizes the importance for airlines and forwarders to focus on factors within their control, such as cost and reliability, to capitalize on emerging opportunities. The improved stability in the air cargo sector is reflected in a shift towards long-term, fixed-rate contracts. In the last quarter of 2023, contracts lasting more than six months accounted for 45% of total contracts signed, marking a notable increase from the previous quarter.
Analyzing December’s data, Van de Wouw acknowledges that the market was busier than expected, cautioning against drawing hasty conclusions due to the unique challenges posed by the holiday season. He points out that December 2022 had a low comparison base, as demand was muted a year ago.
Despite the seemingly positive performance in December, Van de Wouw maintains a steady outlook for 2024, forecasting a 1-2% growth in demand and a 2-4% increase in supply.
Xeneta’s figures indicate that air cargo spot rates from Europe to the US were at $2.42 per kg in December, reflecting a 21% month-over-month increase.
Reduced capacity contributed to rate increases on this lane. Spot rates from China and Southeast Asia to Europe also rose by 9% to $4.49 per kg and $2.91 per kg, respectively. E-commerce demand drove the China to US air spot rate up by 6% to $5.12 per kg.
Additionally, the airfreight spot rate ex Southeast Asia to the US climbed 14% to $4.50 per kg, as outbound shipments from Southeast Asia typically transit via other Asian countries before reaching the US.
Despite fluctuations, the overall trend in air cargo suggests resilience and adaptability in response to global economic conditions and disruptions in other transportation modes.
By Damian Brett
Source: Air Cargo News
