Air Freight Market Update

Price War Keeps Air Cargo Rates Below Natural Level

• Air cargo volumes, load factors and rates have moved sideways in recent weeks after steadily declining 7% to 10% since March 2022 due to a slowing global economy, bloated inventories and improved ocean shipping reliability. The rate of decline began slowing in February and leveled off in May and June, bringing a sense of stability to the market.

• Airfreight market conditions vary by region. The Freightos Air Index for China to North America has been relatively stable for several weeks, mostly because of better e-commerce volumes, but recently dipped to $3.74/kg.

• Looking ahead, the summer months for the air cargo industry will likely remain muted in terms of growth, given the continuing uncertainties around the market. The possibility of no peak season in the ocean freight market could provide a boost to air cargo’s recovery later in the year if shippers need urgent shipments or consumer spending suddenly picks up. However, Xeneta expects any airfreight peak will be short-lived and not at the level seen previously.

Source: Freightwaves, Supply Chain Dive, Xeneta

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Ocean Freight Market Update

Trans-pacific Shipping Rates Rise As Carriers Make Capacity Cuts

• Spot rates have been on the rise for three straight weeks, rebounding to levels last seen in early 2023 and late 2022. U.S. import bookings remain above pre-COVID levels, and multiple analysts are now highlighting positive rate effects from reduced vessel capacity.

• Drewry attributed rising trans-Pacific spot rates to “capacity reductions due to an increase in blank [canceled] sailings,” fallout from labor disruptions in British Columbia and “a more optimistic outlook on cargo demand in North America.”

• “There is growing optimism for the Aug. 1 rate hike, especially on the trans-Pacific, where utilization has been very strong.” analysts commented.

• U.S. imports were up by single digits versus pre-pandemic levels during the first half of 2023. Data implies U.S. imports should remain at healthy levels through Aug and into the first half of Sept. If U.S. import volumes hold steady or increase in Aug and carriers reduce trans-Pacific via blank sailings, spot rates could continue to trend toward profitability.

Source: Freightwaves-1, Freightwaves-2