News / Air cargo's summer: traditionally slack, or Red Sea-induced demand?

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The gap between air cargo spot rates and ocean rates on the transpacific is shrinking: a phenomenon which, during the pandemic, led to a greater use of airfreight.

In the first week of this month, the average air cargo spot rate on the trade was around nine times higher than shipping by sea, said Xeneta analyst Wenwen Zhang on Friday.

At the start of December, air freight was some 22 times more expensive than sea freight.

Ms Zhang said the next few months would reveal whether air cargo would fall into the traditional slack summer season, or whether the disruption in sea freight would provide a boost.

In ocean freight, forwarders are reporting that a mix of capacity manipulation, transit delays “and good global PR by carriers”,was leading to a spike in rates, causing “turmoil” in the market. One forwarder commented: “Carriers are denying bookings.”

This could potentially boost air cargo, as shippers seek to protect supply chains. However, a UK forwarder said: “New schedules for summer flights are obviously more prevalent, so that adds capacity.

“In general, retailers have had their launches – spring/summer is out, so what’s needed is going to warehouses and stores, and the bulk ocean freight is following behind. There is a definite reduction in the retail sector demand for time-critical.

“Other industries continue with the ‘distressed ocean freight’ demand, but this has definitely reduced. So, although the air freight market has softened, capacity has increased with the summer scheduling, and the air freight market is in quite a healthy state, with a decent balance of supply versus demand, for the time of year.

“Personally, I think it will soften further over the coming weeks and summer months. From what I can see, there are no huge product launches, demand is stable and the past few weeks have actually seen the geopolitical situation stabilise (albeit with a very unstable level as the starting point), so there are no new shocks anticipated.”

Current issues – the Red Sea crisis – could mean Middle Eastern airlines are well-placed to pick up any extra business via sea-air routes. Emirates, while announcing its full-year results today, noted: “Building on Dubai’s geographical advantages and world-class multimodal infrastructure, Emirates SkyCargo and its strategic partners reinforced the sea-air product, harnessing the seas and skies to move over 11,000 tonnes.”

Its year ended on 31 March, revealing volumes were up 17.7% year on year, to 2.2m tonnes – although revenues were down 21% and yields fell 32%. Cargo accounted for 11% of the airline’s revenue. The carrier increased belly capacity, as well as chartering three 747Fs, which it used while waiting for its new 777Fs, and were deployed in Hong Kong, China and Europe, “on the back of increasing customer demand”.

It said: “Despite continued challenges in global logistics, our cargo division consistently outpaced the market, reporting a revenue of AED13.6bn ($3.7bn). This reflects the high customer demand for our specialist logistics solutions and the reach of our global network, Dubai’s world-class sea-air hub capabilities and the fruits of our ongoing investments in digital technology, infrastructure and products.”

The carrier will start to receive its five new 777Fs from around June.

It added that demand was “particularly strong for perishable goods from India, Pakistan and South Africa, primarily destined for Europe and the GCC countries”.

The forwarder added: “And then mango season is coming – and everyone around the world loves a mango, so that is all the Indian/Pakistan routes taken for a few weeks.”