As summer 2024 draws to a close, the global air cargo market has seen a sustained surge in demand, setting the stage for what could be a record-breaking fourth quarter (Q4). According to the latest analysis from Xeneta, the air cargo market’s double-digit growth in demand continued in August, with spot rates seeing their largest year-on-year increase of 24 percent. This sustained growth, coupled with an imbalance between supply and demand, has pushed the average air cargo spot rate to USD 2.68 per kg in August.

This summer’s performance has defied the usual seasonal expectations. Typically, air cargo markets experience a slowdown during the summer months. However, in 2024, the market bucked this trend, with August showing strong demand and rate growth, indicating that this year has been anything but typical. Niall van de Wouw, Xeneta’s Chief Airfreight Officer, commented, “This has been a busy summer, and now we’re at the threshold of Q4. It will be interesting to see if the anticipated red-hot peak season materialises.”

Supply-Demand Dynamics and Key Drivers

The persistent supply-demand imbalance continues to drive up prices. While global cargo supply grew by only 2% year-on-year in August, demand surged by 11%. This disparity between available capacity and demand for air cargo services has been further exacerbated by the ongoing ocean-to-air shift, largely triggered by disruptions in the Red Sea and the growing demand for e-commerce.

The booming e-commerce sector, especially from China, is one of the most significant factors contributing to the air cargo market’s growth. According to Trade and Transport Group, exports of e-commerce and low-value goods from China grew by 30% year-on-year in the first seven months of 2024, with shipments to Europe and the US rising by 38 percent and 30 percent, respectively. This growth reflects the continued expansion of online shopping and the increasing need for rapid, efficient delivery services, with air cargo emerging as a critical component of the supply chain.

Regional Highlights and Rate Trends

At the regional level, North America continues to be one of the most dynamic markets for air cargo. Inbound air cargo rates to North America saw some of the most significant increases in August. Europe to North America spot rates rose by 7 percent month-on-month, reaching USD 1.77 per kg. This growth is partly due to the surge in transhipments originating from Asia, reflecting the global interconnectedness of supply chains.

Similarly, Southeast and Northeast Asia to North America routes saw notable rate increases of 6 percent and 4 percent, respectively, driven by strong demand for consumer goods and manufacturing components. Europe to the Middle East and Central Asia also registered growth, with rates ticking up by 2 percent to USD 1.58 per kg.

However, the market has not been without its challenges. The dynamic load factor—a measurement of capacity utilization based on cargo volume and weight—remains imbalanced. For example, outbound cargo from the Asia-Pacific region to Europe and North America had a dynamic load factor of 86 percent and 87 percent, respectively, in August. Meanwhile, the return legs of these routes saw much lower utilisation, with load factors below 45 percent. This discrepancy underscores the complexities of managing cargo capacity efficiently in a global market.

Peak Season Outlook

As the industry prepares for the Q4 peak season, there is cautious optimism tempered with nervousness. September will serve as a key indicator of the intensity of the upcoming season, with many freight forwarders working closely with shippers to navigate the unpredictable market conditions. According to van de Wouw, “Freight forwarders are more prepared this year and… are spending a lot of time with shippers on how to manage the unpredictable nature of these market conditions.”

The signs point to a busy Q4, especially as e-commerce continues to grow. With a 30 percent increase in demand for capacity from China and a reported 37 million new downloads of the popular shopping app TEMU in July, the indicators suggest strong demand for air cargo services, particularly along major trade corridors such as Asia to North America and Europe.

A Seller’s Market?

As capacity becomes increasingly scarce, particularly in and out of Asia, industry experts are predicting a seller’s market for air cargo services. The reduction in winter capacity across the Atlantic could further tighten supply, pushing rates higher as shippers scramble to secure space for their goods. Van de Wouw warns, “We should not be surprised if the market really heats up again in Q4. We expect to see a seller’s market out of Asia and across the Atlantic.”

In conclusion, while the global air cargo market has enjoyed a hot summer, the anticipation for an even busier Q4 is palpable. The interplay of e-commerce demand, supply chain disruptions, and capacity constraints is likely to create a high-stakes environment for shippers, freight forwarders, and carriers alike. As the industry heads into the final quarter of the year, all eyes will be on how the market evolves and whether the much-anticipated peak season delivers on expectations.

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