Air Cargo Rates: Industry Opinions Split on Future
The air cargo market is experiencing significant fluctuations, fueled by a range of factors from new product launches to economic uncertainty. Recent data from the Baltic Air Index (BAI) shows a six-month high in spot rates from China to Europe and a three-month peak in trans-Pacific eastbound rates to the U.S. Despite these increases, the rates have not yet reached the highs seen in the last quarter of the previous year.Experts are divided on what the future holds for the air cargo industry. Jan Kleine-Lasthues, COO for air freight at Hellmann Worldwide Logistics, is optimistic, pointing to unexpected market activity before China’s Golden Week and new high-tech and fashion product launches as drivers for increased demand from Asia-Pacific. On the other hand, Niall van de Wouw, chief air freight officer at rate benchmarking platform Xeneta, and Glyn Hughes, director general of The International Air Cargo Association (TIACA), hold a more pessimistic view, forecasting no substantial improvement in demand until deep into 2024. They cite the need for stronger consumer confidence and economic activity for a revival in demand growth.Current spot rates indicate varying trends. Shanghai-North America spot rates this week rose to $5.02 per kilogram, while Shanghai-North Europe rates were at $3.98/kg. Though these represent a week-over-week increase of 1.6% and 2.5% respectively, they are down from the rates seen last year—16% lower for North America and 28% lower for North Europe. This suggests the market has not yet fully recovered, a sentiment echoed by Kleine-Lasthues. He notes a lack of full recovery in capacity on the China-to-U.S. corridor, despite rising demand on trans-Pacific routes.The situation in Europe also appears fluid. Europe’s air cargo imports from China, the continent’s largest source of air freight, now have 51% of their volume traded on the spot market. This is a significant increase from the pre-pandemic level of 38%. Similarly, Southeast Asia to Europe spot rates rose 22% month-over-month to $2.29/kg, while rates to the U.S. were up 16% to $3.14/kg.In summary, the air cargo market is in a state of flux, shaped by a range of variables including product launches, consumer confidence, and economic factors. Different industry leaders have varying predictions about what the rest of the year and the near future will hold, offering no clear consensus on the market’s direction.Multiple sources, including the Baltic Air Index, the Journal of Commerce, and Xeneta’s market updates, were referenced to gather data and expert opinions for this article.