The global air cargo market entered its peak shipping season this week, with demand surging past available capacity, pushing rates on key trade lanes to new highs for 2024. Asian export routes and the trans-Atlantic corridor are experiencing particularly sharp rate increases, reflecting strong demand and limited supply.

Spot rates for Shanghai to North Europe reached $5.07 per kilogram, the highest in nearly two years, while rates for Shanghai to North America hit $6.61/kg, a 2024 peak. Trans-Atlantic westbound rates also climbed to $2.64/kg, their highest in 18 months, according to the Baltic Air Index (BAI).

“Global air freight rates rose strongly again last week as the market entered what is traditionally the highest point of peak season,” noted air freight pricing provider TAC Index.

Spot rate hikes have been driven by freight forwarders racing to secure capacity for customers amid fierce competition. Chinese e-commerce platforms have contracted capacity directly with airlines, leaving forwarders scrambling to find space for regular shipments.

The International Air Transport Association (IATA) reported exceptional international traffic in October, marking a 10.3% year-over-year increase. This growth reflects heightened e-commerce activity in the U.S. and Europe and ongoing disruptions in ocean shipping, including longer transit times around southern Africa.

Demand growth outpaced capacity on nearly all trade lanes, with Asia-Pacific airlines seeing a 13.4% year-over-year demand surge in October, accompanied by a 9.3% capacity increase. North American carriers recorded a 9.5% rise in demand, with capacity up 5.8%. European carriers experienced a 7.6% increase in demand, against a 3.9% capacity rise. Latin American airlines led growth, with demand soaring 18.5%, supported by a 5.8% increase in capacity.

Despite the current boom, IATA Director-General Willie Walsh cautioned that the industry faces challenges ahead. The incoming Trump administration’s proposed tariffs on key trading partners, including Canada, China, and Mexico, could disrupt global supply chains and dampen consumer confidence.

“While 2024 is shaping up to be a banner year for air cargo, we must approach 2025 with caution,” Walsh said.

Asia-Pacific markets have driven much of the global air cargo growth this year, contributing 56% of the worldwide 12% year-over-year tonnage increase through the first 10 months of 2024, according to WorldACD Market Data.

Hong Kong, the world’s busiest air cargo hub, remained the top growth market, with a 15% increase in outbound tonnage in October. The region recently commissioned a third runway at Hong Kong International Airport, set to increase capacity to 10 million tons annually over the next decade.

Other major growth markets include Miami, with a 31% tonnage increase, and Dubai, which saw a 45% surge in October tonnage.

Hong Kong-based carrier Cathay Pacific announced that by January, its pre-pandemic flight schedule will be fully restored, five years after the COVID-19 outbreak grounded much of its fleet.

As the industry continues to expand, the 2024 peak season underscores the resilience and adaptability of global air cargo, even as it faces geopolitical and economic challenges ahead.

 

Source: www.joc.com