Air cargo rates hit lowest level since pre-pandemic

The global air cargo spot rate flattened to $2.19 per kilogram in August, its lowest level since the onset of the pandemic. As the air cargo market experienced another weak summer , chargeable weight fell 1% lower in August — a reduction for the fourth consecutive month, according to the latest market analysis from CLIVE Data Services , part of Xeneta . “While shippers and forwarders continue to benefit from the overall decline of general airfreight rates, rising jet fuel prices should concern an already contracted market, with the U.S. Gulf Coast jet fuel spot price jumping 21% month over month,” according to the data report released last week. Peak may not come Global air cargo capacity rose 7% year over year in August, while CLIVE’s global dynamic load factor analysis, which measures cargo load factor based on both volume and weight perspectives of cargo flown and capacity available, climbed 1 percentage point from July to 56%. Still, the August global load factor continued to fall YoY, down 3% from August last year. [caption id="attachment_57133507" align="alignright" width="300"] (Photo: CanStock/mariakraynova)[/caption] “The data dampens some industry reports of a slight spike in demand in August, leading to hopes of a rise in volumes going into the final four months of the year,” the CLIVE report stated. Softened global demand and the capacity surge were the main reasons behind this, according to CLIVE. “We are picking up signals that it could take another few quarters before we see more demand on a global level,” Xeneta Chief Airfreight Officer Niall van de Wouw said in the report. “August was very quiet, like July, and we see no meaningful signals from a qualitative or quantitative point of view of any kind of peak arising this year. There might be some early peak season charter requests floating around but they are backed up by very little demand.” Other data analysis has been more promising, with IATA noting last week that, while demand continues to fall, the rate of decline is slowing. Van de Wouw said the market appears to have leveled out, despite still showing a lot of uncertainty for air and sea freight. “There was also no peak for the ocean market, which typically precedes the airfreight market by a couple of months,” he said. “There are even blank sailings scheduled ahead of the Golden Week period .” Golden Week, Oct. 1-7, encompasses several East Asian holidays and is a time when nearly all factories in China are closed. This creates a quiet week for sea freight; however, maritime shippers often see a pre-Golden Week rush in September. “There is likely to be upward pressure on airfreight rates in the second half of October as capacity is taken out of the market, but it’s getting late in the game to positively impact the industry’s 2023 performance, and the signals for the rest of the year are not good given the macroeconomic outlook hasn’t improved,” van de Wouw said in the report. Spot rates up on U.S. lanes Average general airfreight rates dipped as low as $2.13 per kilogram in the first two weeks of August, according to CLIVE. Of 10 major trade lanes assessed in the past month, only China-United States and Southeast Asia-United States recorded growth, with air cargo spot rates up 3% and 4%, respectively, on these corridors. CLIVE attributes this to a more resilient U.S. economy with strong retail sales and to delayed recovery of U.S.-China passenger bellyhold capacity, which is growing at a much slower pace than Europe-China. “Even so, due to capacity shortage triggered by various geopolitical issues, airfreight spot rates ex-Northeast Asia to Middle East and Central Asia, Northeast Asia to Europe, China to the U.S. and China to Europe remained highly elevated, still up by around 55% from their pre-pandemic levels,” the report stated. Air cargo markets should expect muted operations in the coming quarter as the ocean freight container market has not shown meaningful peak season trends. “The air cargo industry is coming to terms with the market conditions and not even the current and planned restrictions we see on container ships moving through the Panama Canal are likely to provide a noticeable uptick to airfreight volumes,” van de Wouw said. “Whichever way you choose to look at it, demand growth simply does not exist in this current moment or for the foreseeable future. “Shippers will no doubt be tempted to fix more longer-term deals because the leveling of volumes and the imminent drop-off of some capacity means the market may not get any better than it is right now for capacity buyers,” he said. The clock is ticking! It is your last chance to join Air Cargo Next for its second annual Air Cargo Tech Summit on Sept. 18-19 in Brussels, sponsored by Unisys and Brussels Airport and featuring a fireside chat with Brian Hodges, managing director, American Airlines Cargo. For more details and to register, click here .

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