Report: Airfreight rates set to fall further

The airfreight market will continue to see strengthening supply and mediocre or weakening demand, and that will push rates down, especially when compared to the very high prices seen over the previous two years. The latest Air Freight Rate Tracker report, by research consultancy Transport Intelligence (Ti) states that “ short-term prices over the next two quarters will be weak and getting weaker. Out to Q4 2023 and into 2024 the market may be somewhat uncertain. However, there still appear to be few reasons why freight rates would rise appreciably.” In the case of a possible U.S . recession, it could “further depress prices with the only element of price support that belly freight availability may moderate.” Across major markets, air cargo rates have fallen by half or more from their peak. The market continues to contend with a growing capacity-demand imbalance, particularly a result of increased bellyhold space from passenger flights that have been ramped up for the summer. “ In regions such as Southeast Asia the over-supply of belly freight has been quite high in the past and, combined with the marked strength of passenger volumes in the region, may act to counter the strength of air freight demand, leading to weaker prices in the short-term than otherwise might be the case,” the report said. The balance of supply and demand is weakest on Asia-Europe routes, with most European markets and China experiencing mediocre demand in both freight and, to a lesser extent, passenger traffic, according to the report. “ Airlines have displayed some short-term discipline in terms of the speed of the re-introduction of passenger capacity and thus the availability of belly freight might not be as high as it could be,” the report said. “However, this will not lead to higher prices, rather it might just slow the fall in prices.” R eports that the African — and to a much lesser extent — the South American markets have exhibited less softness in price might have more to do with capacity coming onto the market, Ti stated. The Middle East, in contrast , is likely to experience marked softness despite strong domestic demand, due to the very high availability of the Gulf carriers’ belly freight. Ti also underlined that a key question for the supply side in air freight will be whether the return to normal market conditions will result in the withdrawal of some freighter capacity. “ A major factor in answering this question is the role of new entrants into the market, notably CMA-CGM but also Maersk and MSC,” the report said. “These container shipping lines have invested in their own freighter aircraft fleets which must make a considerable contribution to capacity in the market from now forward to the next two years. This would imply a continued high level of supply into the market for both the short and medium term.”

Report: Airfreight rates set to fall further

The growing capacity-demand imbalance continues

Complete the CF 2023 reader survey

FAA reauthorization bill formally introduced

Related Posts

August cargo traffic finishes summer with global growth

Airlink founder named CEO of Airforwarders Association

Retaliatory tariffs hit US imports into Canada

FAA reauthorization bill formally introduced

Cargo Facts Free Newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password