Flexport projects high airfreight rates in H1

Airfreight rates may continue to be higher than pre-pandemic levels in the first half of 2024, despite some early predictions that rates would decrease, leaders at digital freight forwarder Flexport said during a European airfreight market webinar today. While IATA predicts 2024 will be a resurgent year for airfreight growth , with an 11% year-over-year increase in global trade and a 3.5% increase in cargo revenue compared with 2019, there are still some challenges ahead, Milena Milenkovic , regional airfreight manager at Flexport , said in the webinar. [caption id="attachment_69652" align="alignleft" width="491"] (Courtesy/Flexport)[/caption] “We thought that the rates would decrease due to usual seasonality as we used to know it, but the rates are staying on the same higher level,” Milenkovic said. “And this will most likely continue for the rest of the first half of 2024. So, having said this, we need to keep in mind that if the demand increases drastically, the airlines will prioritize more profitable shipments for them. This means that the lower-rate shipments will most likely stay in the queue.” From 2020 to 2023, weekly airfreight rates increased by 1% from Europe to North America and decreased by 8% from China to North America, according to the Freightos Air Index . Demand from Europe into western tradelines, specifically into the United States, is steady, Milenkovic said. With the Chinese New Year approaching on Feb. 10, the crisis in the Red Sea may begin to affect airfreight demand; however, this is not happening yet, Milenkovic said. The Red Sea situation, in which Houthi rebels have been firing upon ships, could “become interesting in case some companies decide to change their sourcing strategies,” she said. “Then we might see a little bit of increase in demand. Again, it is winter, we have to be on the lookout for the weather ... and we need to be careful and follow closely [any] strikes coming up because these are our usual disruptors ... in this period of the year.” Industry focus As 2024 gets underway, Flexport said the airfreight industry will increasingly focus on: Digitalization by furthering digital integration into operations; Sustainability by continuing carbon emission reductions tracking and reporting, as well as single-use plastic reductions; and Safety by developing safe, efficient transportation for lithium batteries in fire-resistant materials. An area that needs more attention, especially during this period of geopolitical conflict, is humanitarian cargo shipments , Milenkovic said. “There is one important thing that is not being mentioned for the airfreight industry and that is the importance of airfreight in delivering humanitarian aid,” she said. “In 2023, around 4,000 tonnes were moved to help people in need in more than 90 countries.” Humanitarian aid organization Airlink has delivered 5,443 tonnes of supplies to regions in need since it was founded in 2009, according to the company’s website. Airlink also delivered 3 tonnes of supplies to Israel since October. Resilient market Overall, the airfreight market is showing signs of recovery — a relief for airlines as well as forwarders , Milenkovic said. These trends include continued e-commerce growth headed into the year, higher demand for shorter delivery times and an increasing demand for high-value products such as pharmaceuticals, Milenkovic said. “We can be very positive about the financial strength and resilience of the airfreight industry today,” she said. “Going through the biggest crisis ever, the pandemic, in the past years we all learned how to solve things and look for alternatives much quicker, while also the flows were becoming much clearer along the way.”

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