News / Airfreight's forward planning prevents chaotic Q4 rate hikes

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Forward planning by shippers appears to have given the air cargo market a strong – but stable – fourth quarter.

Rates are creeping up, but not at a pace normally seen in Q4, and on different lanes from what was expected  – nevertheless, they are considerably higher than last year.

WorldACD said this morning that week 46, up to 17 November, saw a “sharp rise” in spot rates out of Europe, particularly to the Americas. Rates out of Europe rose 10% week on week, to $2.71 per kg, or 23% higher than last year. Asia Pacific has remained flat, however.

WorldACD noted that the biggest changes in the past few weeks had been on the westbound transatlantic, partly owing to a drop in capacity as airlines phased-in their winter timetables, and partly demand prior to Thanksgiving, with load factors already high.

Europe to the US has seen consecutive rate rises, of 16% and 17%, in weeks 45 and 46 – or 36% higher in the fortnight, while over a five-week period, rates rose 48%.

Europe-South America saw rates jump 36% from week 44 to week 46, to $4.32 per kg. Brazil saw the greatest rise, with a 57% leap, to $6.58, following congestion at GRU airport and a five-day cargo embargo.

But Asia Pacific remains relatively calm. While spot rates to Europe rose from China, Hong Kong, and South Korea – up 11%, 5% and 4% respectively, rates to the US fell 4%.

“Rates are currently about 20%+ higher than we saw last year. And last year we saw a remarkable strong Q4,” explained Niall van de Wouw, speaking on The Loadstar Podcast this week.

But, he added: “We warned our shippers in Q3 that if they didn’t prepare well together with their freight forwarders, we could see quite a storm approaching the market, and quite a messy Q4 again for the shippers.

“But that’s not what we’re seeing.

“We hear that shippers, freight forwarders and airlines have been much better prepared for Q4 this year than they were for last year. And although it’s very busy, it’s not crazy. We don’t see rates going through the roof. It seems to be solely busy.

“So it’s a busy Q4, but not, let’s say, the peak of all peaks that some parties, including ourselves, were expecting when we looked at the data in Q3.”

Mr van de Wouw said the market strength was likely to continue into next year, with rates currently at 20% to 25% higher than last year.

“It will continue. So we’ll enter Q1 25 on most lanes at a higher level than we entered Q1 24.”

Mr van we Wouw added that the market seemed “better organised”, with airlines shifting capacity into Asia – albeit at the expense of Africa and South America – and that shippers had been firmer.

“We’ve seen shippers agreeing much more specific terms and conditions with their freight forwarders, to be better prepared from a supply – but also a relationship – perspective.”

And what about January, where there could a perfect storm of a US port strike, new trade tariffs, the introduction of the Gemini network and Chinese New Year?

“The easy answer would be, who knows?” laughed Mr van we Wouw.

“I do get the impression, when I speak to our shipper community, that they’re not starting to front-load air freight shipments [to beat tariffs]. The Chinese New Year is typically a bit of a boost for air freight, but it’s very short … so I’m not sure how much of a peak that will give.

“The [previous] port strike, even though it was just three days, already had an impact on air freight. And people cannot wait until one starts, so in the second week of January, we’ll see a shift, I would say, from ocean to air.”

For more from this week’s Loadstar Podcast, including Mr van we Wouw’s views on ecommerce, click here