October air cargo demand was ‘sub-seasonal’

Though global air cargo volumes and spot rates rose marginally in October, overall demand remained stunted, further dampening hopes of a typical yearend industrywide revenue boost. Industry data shows a 2% month-over-month improvement in airfreight volumes in October, which was sub-seasonal compared to the previous five years, according to market analysis released by Xeneta on Wednesday. General air cargo spot rates rose 2% from September to $2.28 per kilogram, “rising above seasonal rates in the opening two weeks of October for the first time since mid-May 2023 before falling back to below the seasonal level,” Xeneta reported. [caption id="attachment_57138990" align="alignnone" width="1024"] (Photo/Xeneta)[/caption] The global air cargo spot rate in October, when compared to last year, declined 30%, its slowest month-to-month decline since last October. Xeneta attributes this to: An uptick in global cargo volumes; A slowdown of cargo capacity growth; and Global belly capacity generally returning to its pre-pandemic level. Global dynamic load factor, which measures volume and weight perspectives of cargo flown and capacity available, rose to 59% in October, but remained 2 points below the level in October 2022, according to Xeneta. “Across the first 10 months of 2023, load factors have performed below all the corresponding monthly levels of the last five years, pointing to a persistently weak global air cargo market,” Xeneta reported. [caption id="attachment_57138991" align="alignnone" width="1024"] (Photo/Xeneta)[/caption] Xeneta analysts said October’s performance was within their expectations. “It was a marginally busier month but not a cause for much optimism, nor pessimism,” Niall Van de Wouw , chief airfreight officer at Xeneta, said in the report. “Carriers and forwarders are not expecting the market situation to improve significantly until well into the second half of 2024. The ongoing situation in Ukraine and now the conflict in Israel and Gaza will only add to these concerns. “This is a volatile market,” he added. “Freight forwarders are still procuring capacity on a short-term basis but are selling more long-term. That’s a risk, but clearly forwarders are not willing to commit to capacity because of so much uncertainty.” Outperforming 2019 Global carriers reported declines in October revenues, down 26% year over year, according to Xeneta. However, last month’s revenues still outperformed October 2019’s pre-pandemic numbers by 21%. “One reason for the higher-than-2019 revenue is still widened freight rate spread,” Xeneta reported. “The market high rates for the transportation of premium and special cargoes remained elevated and not yet fully normalized, while the market low rates for general cargoes have nearly gone back to their pre-pandemic levels.” Xeneta noted rising operating costs in October, including: Elevated jet fuel costs , with the U.S. Gulf Coast jet fuel spot rates in the first three weeks of October 55% above their October 2019 levels; and Rising labor costs triggered by high inflation and labor shortages. Cargo spot rates from Europe to the United States were $1.85 per kilogram in October, up 7% from September, according to Xeneta. “This is because the market anticipates declines in cargo capacity as space availability on this corridor is highly influenced by carriers’ seasonal passenger schedule adjustments, which began on Oct. 29 this year,” Xeneta stated. “At the same time, volume measured in chargeable weight edged up 3% from a month ago. However, this represented a considerable 10% decline from the same period a year earlier.” Looking at the east-to-west trade lanes, October air cargo spot rates from China to Europe rose 14% MoM to $3.66 per kilogram, while Southeast Asia-to-Europe spot rates rose 9% to $2.51 per kilogram. Spot rates from China to the United States increased 10% from September to $4 per kilogram, while spot rates from Southeast Asia to the United States rose 15% to $3.61 per kilogram.

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