In the realm of international trade dynamics, heightened demand during the festive season propelled December air cargo rates to a noteworthy upswing. Despite the unexpected surge in activity, Xeneta’s Clive Data Services maintains a steadfast 2024 outlook, projecting a modest 1-2% surge in demand. The surge in demand orchestrated a commendable 6% month-over-month escalation in the general air cargo spot rate, reaching its pinnacle at $2.60 per kilogram — marking its zenith in a span of nine months, as per a Jan. 3 analysis communicated via email from Xeneta’s Clive Data Services.
While December proved busier than initial forecasts, the irregularities associated with the Christmas and New Year holidays render it a peculiar month, as noted by Niall van de Wouw, Chief Airfreight Officer at Xeneta. In his perspective, the 2024 market outlook remains unaltered with an envisaged 1-2% growth in demand and a parallel 2-4% ascent in supply.
Addressing the broader industry panorama, Van de Wouw articulated, “To say 2024 is a ‘new dawn’ is perhaps a [little] too optimistic, but I certainly think it’s the start of a new cycle for airlines and forwarders — and shippers are likely to also appreciate the stability returning to the market so they can more accurately predict the [transportation] costs for the products they are selling.”
However, this optimism may be short-lived, particularly in the China to U.S. tradelane, where air cargo spot rates were the lone route to witness rates surpassing those of the same period in 2022. Despite peaking in early December, spot rates on this corridor plummeted by 20% year-over-year by the month’s end, as reported by Clive.
Concurrently, the annual global air cargo capacity growth held a steady course at 6%, maintaining relative consistency with preceding months. The anticipation of market normalization gained momentum, evidenced by an increasing number of shippers committing to longer-term, fixed-rate contracts in Q4 2023. Clive highlighted that 45% of the total contracts inked extended beyond six months, a 5% increment from the prior quarter, with six-month contracts constituting 28% of the overall market. This stands in stark contrast to the pandemic era, where shippers grappled with one-month rate agreements.
In the face of ongoing challenges in ocean shipping, particularly disruptions in the Red Sea and the Suez Canal, air cargo rates have yet to be significantly influenced, according to van de Wouw. As he noted, “There’s still a lot of friction in the global supply chain market and that means there will be opportunities for some sectors.”
While the overarching supply chain outlook for 2024 remains clouded by market uncertainties, disruptions and challenges may serve as a catalyst for enhancing airfreight’s stake in the global trade arena.
