Market update

Freight Market Update: December 11, 2023

Shared by Tiffany • December 11, 2023

AIR FREIGHT

October air cargo demand sub-seasonal compared with past five years

Global air cargo volumes and spot rates edged up marginally in October, but overall demand remained muted, diminishing hope of a traditional year-end revenue boost for airlines and freight forwarders.

In comparison to last year, the global air cargo spot rate declined at its slowest pace of -30% in October. This is attributed to the slight uptick in global cargo volumes as well as a slowdown of cargo capacity growth in a month in which global belly capacity returned to its pre-pandemic level, albeit this recovery is varied across major lanes.

Market players said this current demand is driven by ecommerce rather than B2B general cargo.

Industry data shows a 2% month-over-month improvement in airfreight volumes in Oct, which was sub-seasonal compared to the previous five years, while general air cargo spot rates edged up 2% versus Sep to USD 2.28 per kg, rising above seasonal rates in the opening two weeks of Oct for the first time since mid-May 2023 before falling back to below the seasonal level.

Source: The Loadstar-1, The Loadstar-2 _____________________________________

OCEAN FREIGHT

Shipping braces for impact as Panama Canal slashes capacity

After its driest October on record, the Panama Canal will severely restrict transit capacity to conserve water. Shipping will feel the effects in the months ahead, with different vessel types facing different fallout. The Panama Canal Authority had previously reduced daily transit reservation slots from 36 to 32. On Tuesday (Oct 31), it announced that reservation slots will be limited to 25 as of Friday, 24 starting Nov. 8 and 22 on Dec. 1. The number of reservation slots will fall to 20 on Jan. 1, 2024, then 18 starting Feb. 1.

Trade patterns have already seen a major shift. Ship-position data from MarineTraffic shows that the majority of dry bulk vessels loaded with U.S. cargoes in that size category are now taking the Suez route and avoiding the Panama Canal. Any restrictions to Suez Canal transits due to an escalation of the Israel-Hamas war would lead to even more rerouting of U.S. agribulk exports, and even longer voyages via the Cape of Good Hope.

The sequential coastal shift average heavily favored the East/Gulf Coast ports from mid-2021 through this Aug, but has now reversed. In Sep, that difference flipped to the West Coast ports’ advantage of 8.2 percentage points. Long Beach posted its best Sep ever in terms of overall throughput, with imports up 19.3% y/y. Long Angeles’ imports rose 14.3% y/y.