Global cargo market is heading towards a ‘hot Q4’ of rate increases following a sixth month in a row of double-digit cargo demand growth in June. Market players are strategising on ways and means to navigate financial challenges and opportunities, says Niall vande Wouw, Chief Airfreight Officer, Xeneta.
CT Bureau
Demand in June, measured in chargeable weight, increased by 13 per cent year-on-year, continuing the upward trajectory seen throughout the first half of this year. In contrast, air cargo supply increased at its slowest pace in 2024, edging up only 3 per cent year-on-year.
As a result, the global air cargo dynamic load factor —Xeneta’s measurement of capacity utilisation based on volume and weight of cargo flown alongside available capacity increased by 4 percentage points year-on-year. While June’s data must be balanced against the weak comparison seen in the corresponding months of 2023, market players are now busy strategising on the best ways to navigate the financial challenges and opportunities expected to present themselves in Q4. Given the market turbulence and the potential for an air cargo rate boom in Q4, shippers are once again adjusting their preferred contract lengths. “June’s growth in demand was not surprising and we would expect to see a continuation of double-digit year-on-year growth in July and August because of low demand in the same months last year. The global machine is humming along nicely at this level, but this is likely to be the lull before the storm in terms of air freight rates,” Niall van de Wouw, Chief Airfreight Officer, Xeneta, said. “I have heard that certain airlines and forwarders are thinking of implementing a peak season surcharge by August-end. There is a consensus it will be a ‘hot Q4’ for air cargo in many Asian markets,” he added. “We expect lower demand growth year-on-year in the second half of 2024 because of such a strong Q4 2023 comparison, but if you have not arranged your Q4 capacity by now, you could be in for quite a ride. Shippers will pay more throughout Q4, the question is how much more?” he added.
Looking at demand vs. supply for the last quarter of 2024, van de Wouw said, “The rules of the game are becoming clear and contain compliance conditions. Shippers and forwarders with capacity agreements in markets that are ‘tight’ already, based on fixed volumes and a peak surcharge, will have reduced risk, while those dependent of the spot markets can expect to pay a hefty premium.”
Southeast Asia to Europe and the USA markets saw the largest cargo spot rate increases in June, growing at 14 per cent versus May at US$3.65 per kg and US$5.32 per kg, respectively. Northeast Asia to Europe and the USA experienced modest spot rate increases, up by 5 per cent at US$4.26 per kg and US$4.00 per kg.
Outbound China markets were stalled as China to Europe and the USA air cargo rates decreased to minus 1 per cent at US$4.09 per kg and US$4.80 per kg.
