In March, global air cargo market demand increased by 11% year on year for the third consecutive month. The growth was fueled by factors such as e-commerce and disruptions in Red Sea shipping. Xeneta’s latest analysis revealed that the higher volumes in the first quarter of the year outpaced capacity growth, leading to a rise in the global dynamic load factor. Load factor in the first quarter of 2024 increased by two percentage points compared to the previous year, reaching 59%. In March, the load factor climbed to 61%.
According to Niall van de Wouw, Xeneta’s chief airfreight officer, the strong demand seen in the first quarter of 2024 does not indicate a market running out of steam. The growth in airfreight was attributed to increased volumes from the Middle East and South Asia, driven by a shift from ocean to air shipping to avoid delays in the Red Sea. The continuous growth of e-commerce also played a significant role in driving air cargo demand.
Xeneta reported an average global airfreight spot rate of $2.43 per kg in March, marking a 7% increase from the previous month. The Middle East and South Asia to Europe market saw a significant increase in air cargo rates due to heightened demand caused by Red Sea concerns. Rates on this corridor were up 71% year on year. Similarly, the Middle East and South Asia to US market experienced a 51% year-on-year increase in spot rates.
The article also highlighted trends in other air cargo corridors, such as China to Europe and China to US, where spot rates were influenced by factors like e-commerce demand and modal shifts. The South America outbound market saw a decline in spot rates, particularly in the South America to US and South America to Europe corridors.
In addition, the article discussed the shift from longer-term air cargo contracts to short-term commitments in the first quarter of 2024. Freight forwarders were observed to be increasingly purchasing volumes on the spot market in anticipation of market normalization and imbalanced demand/supply ratios. There was a notable preference for three-month contracts over six-month contracts.
Overall, while the air cargo market has demonstrated strong performance in the first quarter, the influx of capacity in the coming months may lead to downward pressure on load factor and rates in certain corridors. However, factors like e-commerce growth and lingering uncertainties in the Red Sea region are expected to continue supporting rate levels. Despite this, airfreight demand remains resilient, with continued growth and resilience observed in the market.
