Ocean freight rates fall for third week – but USEC port strike a major threat
The downward trend of the Drewry World Container Index (WCI) continued this week, showing average ...
AMZN: APPEAL UPDATEDSV: PRESSURE BUILDS AAPL: OPENAI FUNDING INTERESTCHRW: ANOTHER INSIDER CASHES INHLAG: GRI DISCLOSUREMAERSK: HOVERING AROUND FOUR-MONTH LOWSTSLA: CHINA COMPETITIONDHL: BOLT-ON DEAL TALKAMZN: NEW ZEALAND PROJECTDHL: SURCHARGE RISKKNIN: LEGAL RISKF: 'DEI' HURDLESPLD: RATING UPDATEXOM: DISPOSALS
AMZN: APPEAL UPDATEDSV: PRESSURE BUILDS AAPL: OPENAI FUNDING INTERESTCHRW: ANOTHER INSIDER CASHES INHLAG: GRI DISCLOSUREMAERSK: HOVERING AROUND FOUR-MONTH LOWSTSLA: CHINA COMPETITIONDHL: BOLT-ON DEAL TALKAMZN: NEW ZEALAND PROJECTDHL: SURCHARGE RISKKNIN: LEGAL RISKF: 'DEI' HURDLESPLD: RATING UPDATEXOM: DISPOSALS
The global airfreight market is enjoying “spectacular health”, but the imbalance of capacity on front and backhaul routes from Asia Pacific poses cost concerns.
In yesterday’s airfreight update with The International Air Cargo Assocation (TIACA), Xeneta airfreight market analyst Wenwen Zhang said: “2024 has surprised many in the air cargo market.
“Global air cargo demand has been showing record strong growth throughout the first seven months of this year; it has been double-digit,” she explained.
Ms Zhang added that, on the other hand, air cargo capacity had been growing “in the low single digits”, due to its recovery last year, leaving “not much room for growth”.
This imbalance has seen capacity utilisation increase and July global air cargo rates showing 2024’s highest year-on-year growth, at 20%.
“It has been a surprisingly strong month over month development… currently we are in a flat season in the northern hemisphere summer, but the freight rate has been increasing towards the highest level, and is nearing 2023 peak season levels,” said Ms Zhang.
Director general of TIACA Glyn Hughes added: “If this was a medical health check, the doctor would be saying that the patient is doing incredibly well. All the vital signs are good. Eight months of double-digit growth in demand is a sign of spectacular health.”
And Niall van de Wouw, Xeneta’s chief airfreight officer, said: “I don’t think anybody out there a year ago would have thought the industry would look like this. I think the word ‘remarkable’ is at place here.”
However, despite the overall strength of the market, Ms Zhang highlighted that “different markets all behave very differently”.
Xeneta’s dynamic load factor data shows that for last month, capacity utilisation on Asia Pacific to Europe, to the Middle East and to North America was 86%, 86% and 88%, respectively – but on backhaul routes, it was 45%, 35% and 44%, respectively.
“It’s practically full coming out, and the imbalance is much more prevalent than we’ve seen in the past,” said Mr Hughes, and Mr van de Wouw explained it was largely due to colossal e-commerce volumes being exported from the Asia Pacific region.
“This then gives a subsequent challenge to aircraft and equipment utilisation. We know the market is there for the Asia Pacific, but it’s how to get the aircraft there in a cost-effective fashion,” warned Mr Hughes.
Xeneta noted that one particular trade that had “caught its attention” was Latin America-North America, where on the fronthaul, dynamic load factor in July was 76%, up 2.8% on last year; on the backhaul to Latin America, capacity utilisation was 71%, up 12%.
“This is potentially one of the most balanced markets at the moment,” noted Ms Zhang.
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