News / Expected strong peak season the 'cherry on the cake' for airlines

Resurgent demand for global airfreight continued in July,with rate rises across the board and putting “all eyes on late August”, in anticipation of a significant peak season.

Citing average spots of $2.66 per kg, Xeneta said rates had surged 20% year on year last month, amid a 13% bounce in volumes, which it and sources The Loadstar spoke with in the past week put down to “buoyant e-commerce [and the] comparatively low demand base [of July 2023]”.

Niall van de Wouw, chief airfreight officer at Xeneta, said: “Had the July IT outage taken longer to fix, we might have seen a slightly different outcome. However, once again, air cargo showed resilience after seeming to have dodged another major disruption.

“Going into the peak time of the year, airlines might just be starting to think their tailwinds will hold out.”

Regionally, Middle East-Europe and Central Asia-Europe were the star performers, with the spot rate in the last week of July surging 126% on the previous week, to $3.16 per kg, driven by Red Sea disruptions and unrest in Bangladesh.

One Chennai-based forwarder said that while demand out of South Asia had been stable, they expected a spike in demand for space on services out of India destined for the US and Europe – with carriers increasing rates in anticipation of this.

They added that the situation in the Red Sea had led to their converting ocean bound cargo to the US west coast to airfreight.

The Baltic Air Freight Index for the week to 29 July had rates to Europe and the US out of India also up, with WorldACD noting Europe-bound services from Bangladesh (at $4.59/kg), India ($3.54), and Sri Lanka ($3.20) up 178%, 161%, and 78%, year on year.

Xeneta’s July report noted that South-east Asia to Europe and North America spot rates also more than doubled compared with last year, at $3.85 and $5.78 per kg, respectively. But on the north-east Asia to Europe and North America trades it noted a more muted, albeit no less impressive, 30% year-on-year increase for average spots, of $4.17 and $4.39 per kg, respectively, which it said was “partly due to a high base last year”.

Mr van de Wouw said: “It’s now all eyes on late August for the first signs of a proper peak, the cherry on the cake for airlines after such unexpected first seven months of the year.”