Air cargo volumes rise 5% in August, but spot rates fall 3%

Cargo volumes and capacity grew in August, but falling spot rates could indicate trouble ahead for the air cargo industry. Air cargo traffic in August grew 5% year over year and capacity grew 4% YoY, according to a report released today by ocean and airfreight rate analytics platform Xeneta. However, the average global spot rate fell for the fourth consecutive month, down 3% YoY to $2.55 per kilogram. “A surprise summer of growth in global air cargo volumes showed no sign of abating in August,” Xeneta’s industry analysts said in the release, “but falling spot rates are likely to be a more telling indicator of the market outlook as shippers, airlines and forwarders continue to battle against economic uncertainty.” [caption id="attachment_57291411" align="aligncenter" width="1920"] (Courtesy/Xeneta)[/caption] The decline in spot rates may be steeper than they appear, as all rates are converted into U.S. dollars, which have lost 4% against other currencies in the past year, according to Xeneta. “It is often said that airfreight is a bellwether for macroeconomics, but I don’t think it is at the moment. ... Right now, volumes are certainly not as bad as people feared, but also not as good as people hoped. — Niall van de Wouw, chief airfreight officer at Xeneta “In our April data, on the back of the U.S. administration’s ‘Liberation Day’ tariffs announcement , we asked how bad will it get for air cargo demand? We still cannot answer that question,” Xeneta Chief Airfreight Officer Niall van de Wouw said in the release. Relying on speed to evade uncertainties Many shippers that would typically use sea freight are turning to air cargo because it is faster, though more expensive. This segment of shippers is driving the upturn in airfreight demand this summer, van de Wouw said. “Air cargo’s higher demand remains the result of mode shift we saw in July, with a bit of support from e-commerce ,” he said. “It is not an indicator of increased economic activity. It’s just that airfreight is getting a bigger share. “Many shippers looking to lessen the impact of tariffs just do not know how the market will look in three to four weeks’ time because of the lack of clarity,” he said. “Consequently, I think more businesses are deciding to take a hit and move their products by air.” But, as with any uncertainty in the market, it is not clear if this trend will continue. Spot rates August outbound flows from Southeast Asia continued to fall, with air cargo spot rates to North America and Europe dropping by more than 20% YoY, to $4.80 per kilogram and $3.05 per kilogram, respectively, as capacity constraints eased, Xeneta reported. Spot rates on Northeast Asia-to-North America routes fell 8% YoY to $4.76 per kilogram and remained stable compared with July. Spot rates on Northeast Asia-to-Europe routes were stable YoY at $4.01 per kilogram, but down 4% from July. The trans-Atlantic market was “the only bright spot,” according to Xeneta, posting a 5% rise in spot rates YoY to $1.82 per kilogram. Nevertheless, it marks a sharp deceleration from July’s surge of nearly 20% YoY. [caption id="attachment_57291410" align="aligncenter" width="1920"] (Courtesy/Xeneta)[/caption] Looking ahead The United States ended de minimis exemptions globally on Aug. 29, leading several countries to suspend parcel service to the U.S. as they await clarity on requirements. The U.S. also implemented reciprocal tariffs on Aug. 7. “In terms of disruption to world trade, the uncertainly seems set to remain with so many questions unanswered,” van de Wouw said. “What has been formalized and what hasn’t? What will the removal of de minimis mean for cross-border e-commerce? “And the biggest question still: How bad is it going to get?” he said. “Because of all the uncertainly, the hurt for airfreight has been softened and delayed. But for how much longer is anyone’s guess.” Register here for Cargo Facts ’ upcoming free webinar, “Air cargo route networks: Strategies for improved results and greater efficiencies,” on Tuesday, Sept. 16, at 11 a.m. ET. Cargo Facts Symposium, the quintessential event for stakeholders and key leaders in the global freighter and air cargo industries, will take place Oct. 22-24 at the Grand Hyatt in Nashville . Learn more and register today to take advantage of the early-bird rate before Sept. 5.

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