Air Cargo Demand on Track for Double-Digit Growth in 2024

Air cargo demand in 2024 continued to grow at an 11 percent year-on-year rate in October despite disruptions, including dock worker strikes at U.S. East and Gulf Coast ports. According to a report published by Xeneta on October 31, 2024, air cargo volume in October increased 11 percent compared to the previous year. The average air cargo spot price reached $2.68 per kilogram, recording a 19 percent increase on a year-on-year basis. The global dynamic load factor stood at 63 percent; this metric measures the volume and weight of cargo transported against available capacity.

Niall van de Wouw, Xeneta's Chief Airfreight Officer, noted that last month's market stability was the result of the sector's resilience and preparatory efforts. Van de Wouw said, "Market stability demonstrates the success of the sector's resilience and preparatory work. We are placing greater emphasis on maintaining relationships rather than squeezing every penny of revenue." He also added that even zero growth over the next two months would not prevent the unexpected double-digit demand surge in 2024.

In October, air cargo spot rates from Northeast Asia to North America remained flat month-on-month due to weather disruptions and stabilized activity following China's Golden Week holidays. Van de Wouw stated, "Market maturity is stemming from airlines being better prepared this year and clearer rules being established between shippers and forwarders, as well as between forwarders and airlines. This produces positive results for relationships and for consumers." He also noted that despite year-on-year rate increases, strong demand, rising load factors, and only marginal supply increases mean rates remained relatively stable and not excessively elevated. "Lessons have been learned and both sides are seeking healthy, reasonable rates," he added.

Spot rates from Europe to North America recorded the largest month-on-month increase at 11 percent, while the return route saw a 10 percent increase. Xeneta attributes these increases to preventive measures taken by shippers and forwarders to mitigate the impact of dock worker strikes at U.S. East and Gulf Coast ports. Experts who previously commented to Supply Chain Dive noted that air cargo demand returned to seasonally adjusted norms despite the three-day work stoppage. Since the strike was widely announced in advance, many companies moved preemptively to avoid logistics challenges. Many shippers shifted cargo from ocean to air transport to see how long the strike would last.

Xeneta reported that cargo rerouting led to increased air cargo volumes in October. However, the issue being resolved "faster than expected" caused the high volumes that peaked on October 20 to decline. Nevertheless, air cargo rates are expected to continue rising as winter-season passenger flight schedules reduce cargo capacity.

Van de Wouw stated that the next phase for the market would be "market maturity" and that shippers and forwarders would need to manage rate adjustments during contract periods. "Indexing would benefit all parties and build confidence in long-term contracts. This is a natural next step for a market seeing greater balance resulting from better preparedness," he said.

Key Takeaways:

• Global air cargo demand increased 11 percent in October 2024.

• Average spot price per kilogram reached $2.68, showing 19 percent year-on-year growth.

• Global dynamic load factor stands at 63 percent.

• Dock worker strikes at U.S. East and Gulf Coast ports affected cargo volumes.

• Spot rates between Europe and North America increased 11 percent.

• Air cargo rates are expected to continue rising due to winter-season passenger flight schedules.

• Market maturity and sector resilience were emphasized.

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News Link: https://www.supplychaindive.com/news/xeneta-air-cargo-demand-port-strike-2024-october/732091/

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