Freight Market Update: September 9, 2024

AIR FREIGHT

Air cargo market will remain buoyant in second half of 2024

• According to Xeneta, global air cargo demand surged 12% year-over-year in the first seven months of 2024, exceeding earlier projections. This was driven by strong cross-border e-commerce from Asia, ocean shipping disruptions due to the Red Sea crisis, increased demand for high-tech semiconductors, and a low base from 2023.

• While air cargo supply grew only 4% during this period, the supply-demand imbalance caused spot rates to reach their highest levels in July 2024. Xeneta expects the air cargo market to remain buoyant in the near term, with spot rates staying above seasonal levels.

• Air cargo stakeholders have shown increased interest in longer-term contracts, from 41% in Q3 2023 to 54% in Q2 2024. Initially, this was driven by expectations of a calmer market. However, the rising e-commerce demand and Red Sea disruptions have since led freight buyers to lock in rates for the Q4 peak season, fearing further market escalation and capacity constraints.

Shippers and freight forwarders lean towards longer-term contracts

Source: stattimes

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OCEAN FREIGHT​

Capacity boost on trans-Pacific pushes carriers to compete for cargo

• Ocean carriers are offering more competitive rates from Asia to the US, with voyage-specific "bullet" rates and commodity-specific rates undercutting the listed spot and FAK rates, especially to the West Coast. These new rates, around $1,000/FEU lower than the listed rate, come as capacity to the West Coast exceeds current demand due to the 10 new or reinstated trans-Pacific services deployed in recent months.

• The Asia-US ocean rates down from early-July and carriers are competing aggressively with each other to fill their slots. The GRIs announced last week by most trans-Pacific carriers are helping to stabilize rates on the trade lane, though the GRIs did not actually push up the rates.

• Carriers plan to reduce trans-Pacific capacity, signaling increased competition as September's expected West Coast capacity of 1.41 million TEUs falls from August's 1.51 million TEUs, according to maritime intelligence provider eeSea.

• In July, US imports from Asia totaled 1.75 million TEUs, a 21.5% increase from July 2023, according to PIERS. US retailers expect another strong month for imports in August, forecasting a 19.2% year-over-year jump. The growing possibility of an ILA strike on the East and Gulf coasts is expected to drive strong West Coast imports.

Container rate from North Asia to US East and West coasts in USD/FEU

Source: JOC