Air Cargo ‘Riding the Wave of Economic Uncertainty’ as August Records Another 5% Year-on-Year Growth in Demand

A surprise summer of growth in global air cargo volumes showed no sign of abating in August as demand rose 5% year on year for a second consecutive month, but falling spot rates are likely to be a more telling indicator of the market outlook as shippers, airlines and forwarders continue to battle against economic uncertainty, says industry analyst Xeneta.

Despite the rise in cargo volumes, alongside similar 4% year-on-year growth in capacity supply, the average global spot rate fell for a fourth month in a row, down 3% to US$2.55 per kg. And it’s these freight rates that may signal a challenging next few months for the air cargo market, according to Xeneta’s Chief Airfreight Officer, Niall van de Wouw.

The August decline in spot rates is likely even steeper once currency effects are considered: All rates are converted into dollars, which have lost 4% against other currencies over the past year. A shift in trade flows may be weighing on air cargo rates. Consider China-U.S. air cargo, for instance, which, in August, was priced at US$4.30 per kg. Many e-commerce shipments have been re-directed to the China-Europe corridor due to U.S. de minimis bans, where the rate was US$3.65 per kg. Such reallocation drags down the global average. A 7% drop in jet-fuel prices may have also helped keep airlines’ costs down, muting pressure on rates for now.

Read more in an article from the American Journal of Transportation.