News / Shippers facing peak season surcharges as air cargo heads into a 'hot Q4'

05/07/2024

Air cargo players look set to introduce a peak season surcharge at the end of August, as capacity comes under pressure.

Xeneta today warned that air cargo capacity in Q4 could be expensive for shippers.

“I’ve heard already that certain airlines and forwarders are thinking of implementing a peak season surcharge by the end of August,” said chief airfreight officer Niall van we Wouw.

“There’s a consensus it will be a hot Q4 for air cargo in many Asian markets.

“We expect lower demand growth, year on year, in the second half of 2024 because of such a strong Q4 23 comparison – if you haven’t arranged your Q4 capacity by now, you could be in for quite a ride.

“Shippers will pay more throughout Q4, the question is how much more?” he added, and warned that shippers exposed to the Q4 spot market would face “hefty premiums”.

“Asset holders will be strategising how much capacity they are going to keep behind to sell at a premium when this happens. If you were in an airline’s shoes, you’d make sure you had a good chunk of capacity to sell at the premium likely to be paid on the short-term market,” said Mr van de Wouw.

The Loadstar has heard also of airlines keeping back capacity to ensure they receive a nice Q4 financial boost.

Demand in June was up 13% year on year, according to Xeneta figures, while supply grew at its slowest pace in the month, up just 3% year on year.

“Shippers with capacity agreements in place will be better prepared, but if they go above the agreed threshold, they will face paying market rates. On the short-term spot market, this could mean 50% increases in rates above what we see now, once the market really heats up,” explained Mr van de Wouw.

Xeneta added that increasing numbers of shippers had opted for contracts of six months or more in Q2.

“The decrease in three-month contracts suggests unease among shippers about renegotiating rates just before the year-end peak season,” it noted.

And Mr van de Wouw concluded: “As we head into the second half of the year, it might be now or never to consider longer-term contracts. With a mix of ocean shipping chaos, an upturn in manufacturing activities, and fear-of-missing-out, a delicate balance of short and long-term contracts is on everyone’s mind.

“Only time will tell, but whatever happens, you’re going to be paying a lot more to ship goods from Asia Pacific once September comes.”