The global air cargo market is gearing up for higher rates in Q4 after strong growth in June
🎢 Market Dynamics:
- Global air cargo demand rose by 13% year-on-year in June, continuing a strong growth trend.
- Supply growth was slower at 3% year-on-year, tightening capacity and increasing the dynamic load factor by 4 percentage points.
🎄 Peak Season Preparations:
- Airlines and forwarders are considering implementing peak season surcharges by late August, anticipating high demand in Q4.
- Expectations are for continued double-digit growth in demand through July and August, driven by last year’s low base.
📈 Rate Trends:
- Spot rates for air cargo surged 17% year-on-year in June to USD 2.62 per kg, with month-on-month growth of 2%.
- Specific corridors like Southeast Asia to Europe and the US saw significant rate increases.
✒ Contract Strategies:
- Shippers are increasingly opting for longer-term contracts (over six months) to stabilize costs amidst expected rate volatility.
- This shift indicates a preference for stability in contract terms leading up to the year-end peak season.
🔦 Market Uncertainties:
- Uncertainties remain due to fluctuating manufacturing output and soft retail sales in major economies.
- Shippers and forwarders are cautious about short-term spot market procurements, with a reduction noted compared to previous years.
📻 Future Outlook:
- The market anticipates a potential boom in air cargo rates in Q4 2024, driven by capacity constraints and high seasonal demand.
- Ongoing adjustments in contract lengths and strategies reflect efforts to navigate market volatility and cost escalations effectively.
Source: Xeneta
