Market update

Freight Market Update: October 9, 2024

Shared by Daniel • October 09, 2024

AIR FREIGHT

Air freight peak season surge amid tightening capacity

As the air freight market enters the peak season, both sources indicate a significant surge in demand coupled with tightening capacity and rising prices. According to Metro, spot rates from Asia-Pacific to Europe have seen considerable week-on-week increases, with rates from Thailand to Europe nearly doubling compared to the previous year. Similarly, The Loadstar notes that rates from Asia to North America have increased by 64% year-on-year.

The air charter market is also bracing for a very busy fourth quarter, with charter brokers warning of tight availability for widebody aircraft due to high demand. This surge is largely driven by the booming eCommerce sector, which is consuming a substantial amount of air cargo capacity. Major production centers in Asia, including China, Korea, and Taiwan, are experiencing congestion due to high shipping volumes. Capacity shortages are expected to escalate, particularly for shipments from India and China to the U.S. and Europe, leading to significant cost implications as demand continues to outstrip supply.

In response to these challenges, carriers are expanding their networks, adding more flights, and introducing additional transpacific services to better meet anticipated demand. Despite the pressures, there is cautious optimism in the industry as stakeholders work to manage the balance between capacity and demand during this critical period, particularly in the air charter market where brokers emphasize that capacity is available "for a price."

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Asia-US East Coast spot rates plummet amid strike threat cargo diversions

Spot container rates from Asia to the US East Coast have dropped over 40% in the past three weeks, now at $5,000 per FEU, down from $8,500 on September 4. This decline is attributed to cargo diversions in anticipation of a potential longshore strike and a waning peak season.

Many East Coast shippers imported holiday merchandise early to avoid disruptions, while West Coast ports experienced a surge in imports, rising about 25-30% year over year in August. In contrast, East Coast imports saw a modest increase of only 3%.

While containerized imports at East Coast ports fell to 1.07 million TEUs in August—a 4% decline from July—they were still up 9.1% from August 2023. Ports are preparing for possible strikes with extended operating hours and disruption surcharges.

Carriers plan to significantly reduce capacity, with around 13% of total capacity to the US East and Gulf coasts being blanked in October, marking the largest monthly blanking since February. Overall expected capacity will rise from 791,503 TEUs in September to 829,987 TEUs in October.

Total monthly TEU volume o FUSEC containerized imports, with yoy change

Source: JOC