Global air cargo volumes rise 10% in January

Global air cargo volumes rose 10% year over year in January, likely spurred by shippers’ concerns over violence in the Red Sea and the upcoming Lunar New Year. With ample available air cargo capacity in what is traditionally a quieter month for demand, however, fuller cargo holds did not translate into higher rates, ocean and airfreight rate analytics platform Xeneta said in a release today. January air cargo spot rates fell 12% month over month to an average of $2.27 per kilogram, consistent with the global dynamic load factor falling 3 percentage points MoM to 56%, according to Xeneta. January’s average spot rate fell 21% YoY, an improvement compared to the 38% YoY decline reported in January 2023. “We saw a relatively strong January from a volume perspective, but the market fundamentals have not changed,” Xeneta Chief Airfreight Officer Niall van de Wouw said in the release. “It is likely linked to Red Sea disruption as well as the upcoming Lunar New Year [on Feb. 10] and some indicators that the general cargo market is busier than expected. We don’t see this reflected in rates but that’s not surprising in January because there’s not the same pressure on capacity.” [caption id="attachment_57140064" align="alignnone" width="1024"] (Courtesy/Xeneta)[/caption] Geopolitical uncertainty Houthi rebels continue to fire missiles at ships traveling in the Red Sea enroute to the Suez Canal, making travel in the region risky. “The situation in the Red Sea has brought nervousness to many supply chains and possibly encouraged some shippers to have a knee-jerk reaction, shifting to airfreight , bringing volumes forward and securing capacity,” van de Wouw said. “However, the consensus seems to be that this will not produce a long-term positive effect on airfreight. “Once the initial nerves and uncertainty subsides, stability will return once shippers simply accept that ocean freight may just take two weeks longer, causing the need for airfreight to then dwindle,” he added. [caption id="attachment_57140065" align="alignnone" width="1024"] (Courtesy/Xeneta)[/caption] Lunar New Year Xeneta reported surges in air cargo volumes from China and Vietnam to Europe for three consecutive weeks in January. General cargo spot rates from Northeast Asia to Europe rebounded by 11% to $3.42 per kilogram in the week ending Jan. 28, after reaching their lowest point in the first week of January. Northeast Asia includes mainland China, Hong Kong, Japan, South Korea and Taiwan. Alternately, freight rates from Northeast Asia to the United States reached $3.28 per kilogram in the week ending Jan. 28, down 7% compared with three weeks prior. “This suggests that the demand growth on the Northeast Asia-to-Europe corridor is more of a spillover from ocean transport rather than actual growth in consumer spending,” Xeneta stated. “The market remains extremely difficult to predict,” van de Wouw said. “Let’s wait and see what happens in February when we might see air and ocean volumes, as well as rates, fall back if more stability returns to the market. But January was a strong, slow month and, after a difficult year, the air cargo industry will not be complaining about starting the year on a positive note.” Growing demand in APAC region Preliminary 2023 traffic figures show that air cargo demand grew strongly in the final months of the year, driven by an increase in e-commerce shipments, according to data released Jan. 31 by the Association of Asia Pacific Airlines (AAPA). “Air cargo markets entered 2023 weighed by multiple headwinds, including inflation, a strong U.S. dollar and government policy dampening trade activity, as well as household spending power,” according to the AAPA release. December air cargo demand grew 13.2% YoY in the region, reducing the 2023 YoY decline to 2.8%. Capacity rose by 6.4%, lowering the average international freight load factor to 60.7% for the year. “Whilst international air cargo demand declined by 2.8% for the full year, the last quarter of 2023 saw an 8.2% increase compared to the previous corresponding period,” AAPA Director General Subhas Menon said in the release. “2024 promises to be another good year for Asian airlines. ... However, there remain some uncertainties, including the potential erosion in business and consumer sentiment amid rising geopolitical risks.”

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