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US Air Cargo Continues Strong Start, Xeneta

[ April 5, 2024   //   ]

Global air cargo continued its positive start to 2024 with a second consecutive month of double-digit growth in February, according to Xeneta’s weekly marketing analysis.
Air freight’s January’s 11 percent volume growth saw similar improvement in February for airlines and freight forwarders, with demand increasing more than 11 percent year-over-year.
The improved volumes, despite it being a slower time for air freight volumes, resulted in an average global spot rates rising 2 percent in February to US$2.29 per kilogram.
Xeneta said the increase is unusual compared to pre-pandemic trends during the same periods. Air cargo spot rates usually tend to decline following the year-end peak season in the previous year, and in the period immediately following the Lunar New Year, before rebuilding toward the year-end holiday season this year.
“It’s a surprising start to the year from a volume perspective, and not something people would have expected, ourselves included, with demand much higher than it was a year ago,” said Niall van de Wouw, chief airfreight officer for Xeneta. “Generally, we wouldn’t expect to see a rate uptick at this time of year. This is likely related to the Red Sea disruption, but this is not the only factor.
“Signals suggest inflation is not cooling because consumers are still spending. It’s not how much they are spending that’s boosting airfreight, it’s where they are spending. Trends indicate more consumers are buying on e-commerce platforms and the intercontinental nature of these businesses, as well as the speed with which they are expected to deliver, is benefiting air cargo. For some airlines, e-commerce now makes up over 50 percent of their revenue ex East Asia,” van de Wouw said.
Xeneta will monitor what impact the airline’s summer schedule will have, as well as what happens next in the Red Sea, he said. Rates are expected to decline once the summer belly capacity returns in the western hemisphere as well as China.
The increase in cargo spot rates and volumes are most likely driven by burgeoning demand caused by the Red Sea disruption and e-commerce demand from China. Some operators even imposed short-term embargoes on import traffic from Asia during February to help clear backlogs caused by the sudden surge in air cargo volumes as demand growth outpaced the growth of global cargo supply (more than 5 percent year-on-year) for the fourth consecutive month, Xeneta said.
The ongoing Red Sea conflict continues to impact ocean container shipping, producing a modal shift in favor of air cargo. Recent declines in ocean container spot rates were also impacted by a drop in ocean schedule reliability for Asia to Europe trades, which was recorded at 39.4 percent in January, the lowest level since October 2022, according to Sea Intelligence. This has further contributed to the strong increase in air cargo demand on this corridor for shippers willing and able to bear the higher cost of airfreight to maintain the resilience of their supply chains.

Air freight into the U.S. has seen a “surprising start