Classic seasonality to return to airfreight in 2024

The airfreight market will return to “classic seasonality” in 2024, following a year of low rates and demand , according to predictions by ocean and airfreight rate analytics platform Xeneta . On the heels of the uncertainty and market tumult during and following the pandemic, 2024 will be more predictable with traditional peak periods, Xeneta stated in its 2024 airfreight outlook, released today. However, Xeneta warns that “as with all rollercoasters, a wobbly feeling will remain for a good while after the ride has stopped.” Global air cargo spot rates fell an average 39% in the first nine months of 2023 compared with the same time frame in 2022. “2024 could be an opportunity for shippers to catch their breath after the volatility of the past few years,” Xeneta Chief Airfreight Officer Niall Van de Wouw said in a release. “The rapid rate decline, which started earlier this year, has calmed down in recent months. It seems to be the market has a new baseline, from which I expect classic seasonality patterns to emerge.” The cost of transporting goods by air shot up during the pandemic before falling during 2023, though airfreight costs are still 32% higher than pre-pandemic levels, according to Xeneta. The 2024 outlook predicts muted consumer spending to be a key factor, with airfreight demand expected to grow only 1% to 2%. Demand for airfreight in 2023 is 8% lower than pre-pandemic demand. At the same time, supply is expected grow 2% to 4% in 2024, according to Xeneta. “The key indicators are not great from a demand point of view,” Van de Wouw said. “It’s muted and there’s a lot of uncertainty in the world. 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. “Yes, we will see a return of classic seasonality, but it will be muted seasonality,” he said. The 2024 outlook expects the continued recovery of capacity, largely due to additional bellyhold capacity from the resumption of passenger flights post-pandemic, which puts downward pressure on rates. [caption id="attachment_57139295" align="alignnone" width="1024"] (Courtesy/Xeneta)[/caption] Longer contracts Xeneta data shows rising demand for longer term contracts, but Van de Wouw said this could create a “perilous situation” for freight forwarders in 2024. “There is fierce competition and I understand why freight forwarders want 12-month contracts to secure volumes and shippers want to lock in for a longer period to reduce their workload,” he said. “The problem is freight forwarders are selling long-term contracts but buying the majority of volume from carriers on the short-term spot market. If the rates go up, there is a serious issue. “We saw it recently out of Vietnam, where 70% of volume is bought on the spot market,” he continued. “Rates suddenly went crazy prior to Golden Week and freight forwarders told shippers they could not honor the contracted service. This could happen on any market and is a real risk for next year unless freight forwarders and airlines can find common ground on long-term rates.” [caption id="attachment_57139298" align="alignnone" width="1024"] (Courtesy/Xeneta)[/caption] Looking to ocean Van de Wouw stressed the importance of the airfreight industry keeping its eye on ocean shipping, as 97% of global containerized goods are transported by ocean. The Xeneta report also stressed that many shippers are turning to ocean to reduce carbon emissions . “Given the volumes involved, if the ocean industry messes things up, even to a small degree, then there is always money to be made in the air,” Van de Wouw said. “Reliability in ocean is improving, but it only takes one black swan event for the situation to change and rates to increase rapidly. No one has a crystal ball, but you only have to look at the drought in the Panama Canal, threat of volcanic eruptions in Iceland and conflict in the Middle East to understand how delicate and sensitive to world events the airfreight industry is. “If we do get a black swan event in 2024, then strap yourselves in for another ride on the rollercoaster,” he said. Join Air Cargo Next for the free webinar, “The future of AI in air cargo,” on Tuesday, Dec. 5, at 11 a.m. ET. More information about the webinar and registration is available here .

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