A surprise summer of growth in global air cargo volumes showed no sign of abating in August as demand rose +5% year-on-year for a second consecutive month, but falling spot rates are likely to be a more telling indicator of the market outlook as shippers, airlines, and forwarders continue to battle against economic uncertainty, say industry analysts, Xeneta.
Despite the rise in cargo volumes, alongside a similar +4% year-on-year growth in capacity supply, the average global spot rate fell for a fourth month in a row, down -3% to USD 2.55 per kg. And it’s these freight rates which may signal a challenging next few months for the air cargo market, according to Xeneta’s Chief Airfreight Officer, Niall van de Wouw.
The August decline in spot rates is likely even steeper once currency effects are considered: all rates are converted into dollars, which have lost -4% against other currencies over the past year. Shift in trade flows may be weighing on air cargo rates. Consider China-U.S. air cargo, for instance, which, in August, was priced at USD 4.30 per kg. Many e-commerce shipments have been re-directed to the China-Europe corridor due to U.S. de minimis bans, where the rate was USD 3.65 per kg. Such reallocation drags down the global average. A -7% drop in jet-fuel prices may have also helped keep airlines’ costs down, muting pressure on rates for now. (....)