PRESS RELEASE: Global air cargo market demand increased by 11% year-on-year in March for the third consecutive month, driven by robust e-commerce volumes and concerns over the impact of conflict in the Red Sea region on ocean freight services. This unexpected boost in the first quarter of the year provided a bonus for forwarders and airlines, according to the latest data from Xeneta.
Despite typically being weaker months for the airfreight industry, higher volumes in Q1 outpaced growth in capacity supply, leading to a 8% increase year-on-year. This resulted in a jump in the global dynamic load factor to 59% in the first three months of 2024, up by 2% from the previous year. March performance continued to show growth, reaching 61%.
Niall van de Wouw, Xeneta’s Chief Airfreight Officer, commented on the data, stating that while the market should be viewed in the context of a lower base in 2023, the first quarter of 2024 has shown a surprisingly busy airfreight market. The demand in the first quarter suggests that the market is not running out of steam.
The increase in airfreight growth was primarily driven by higher volumes from the Middle East and South Asia, as shippers shifted services from ocean to air to avoid delays in the Red Sea region. E-commerce growth also played a significant role in driving demand on key routes.
The average global airfreight spot rate in March rose by 7% from the previous month to USD 2.43 per kg. The Middle East and South Asia to Europe market saw the highest growth in air cargo rates in March, with a 46% increase over February’s level to USD 2.82 per kg. Rates on other key corridors also experienced fluctuations based on market trends.
As freight forwarders continued to purchase a larger share of volumes on the spot market, short-term capacity commitments increased in the first quarter of 2024 compared to longer-term contracts. Three-month contracts accounted for 41% of newly negotiated contracts, reflecting a shift in market dynamics.
Overall, the air cargo market is expected to face downward pressure on load factor and rates in the coming months as more capacity becomes available. However, the rise of e-commerce and ongoing uncertainties in certain regions are likely to continue impacting rate levels. Despite these challenges, airfreight demand remains resilient.
