News / Flying start to the year as airfreight benefits from shipping delays

© Andrii Yalanskyi

Air cargo has continued its strong start to 2024, with volumes and rates cruising at high altitude even after Chinese New Year (CNY).  

In its recent Analysis, Xeneta reported that February offered a second consecutive month of double-digit growth in demand, and an uptick in general freight spot rates.  

“Following January’s 11% growth in volumes, February saw a similarly welcome upward curve for airlines and freight forwarders, with demand increasing 11% year over year,” it said.  

According to Xeneta, the average global cargo spot rate in February rose 2% on the previous month, to $2.29 per kg – this is unusual, as demand typically declines post-CNY and the end-of-year peak season.  

Niall van de Wouw, chief airfreight officer at Xeneta, said: “It’s a surprising start to the year from a volume perspective, and not something people would have expected, with demand much higher than it was a year ago.

“Generally, we wouldn’t expect to see a rate uptick at this time of year.” 

The unseasonal uptick is likely due to the disruption in the Red Sea that has led to ocean shipping schedule reliability falling to just 39.4% in January – the lowest since October 2022, according to Sea Intelligence. 

Shippers have, therefore, been opting for sea-air or airfreight alternatives.  

Milena Milenkovic, regional head of airfreight at digital forwarder Flexport, said: “The Red Sea crisis is impacting global trade more and more, especially in China and HK where we see the beginning of ocean shipments being converted to air; so this might put some challenge on the supply side.” 

Red Sea disruption and e-commerce demand from China had even seen some operators impose short-term embargoes on import traffic last month to help clear backlogs caused by the sudden surge in air cargo volumes. 

Xeneta reported that demand growth outpaced that of global cargo supply, at 5% year on year, for the fourth consecutive month. 

Ms Milenkovic added that the demand increase could also be attributed to shippers prioritising financial deadlines, aiming to maximise shipments before the end of March so those numbers could be accounted in Q1. 

Mr Van de Wouw concluded: “We now wait to see what impact the airline’s summer schedules will have, as well as what happens next in the Red Sea. We would certainly expect downward pressure again on rates, once summer belly capacity returns in the western hemisphere, as well as in China, where the travel recovery is by no means yet done.” 

Flexport urged its customers to monitor inventory levels diligently to prevent the need for last-minute urgent shipments, for which, it said, it could be challenging to secure space, and often incurred high rates.