Air cargo demand continues to rise in February
Date：03-11 188 Belong to：News Information
The air cargo market saw another double-digit percentage increase in demand in February, continuing the "unexpectedly strong" momentum at the beginning of the year, with e-commerce driving demand levels.
The latest data from data provider Xeneta shows that air cargo demand in February increased by 11% year-on-year, while dynamic load factor increased by 4 percentage points from the same period last year to 60%.
Prices were 14% lower than a year ago, at $2.29 per kilogram, but were "unusually" 2% higher than January levels.
Xeneta explained that air freight spot prices tend to fall during the previous year's year-end peak season and for a period after the Lunar New Year, and then rebound during this year's year-end holiday season.
The data provider said the increase was likely driven by growing e-commerce demand and some ocean spillovers caused by the Red Sea shipping crisis, and even some sea and air hubs adding short-term bans to clear backlogs.
"It has been an amazing start to the year from a volume perspective, and against everyone's expectations, including our own, demand is much higher than a year ago," said Niall van de Wouw, Xeneta's chief air cargo officer.
"Generally we wouldn't expect to see rates rise at this time of year. This may be related to the disruptions in the Red Sea, but it is not the only factor."
"There are signs that inflation has not cooled as consumers are still spending. It is not how much they spend that boosts air cargo, but where they spend it. Trends show that more consumers are shopping on e-commerce platforms, the intercontinental nature of these businesses, and the speed of delivery they expect are all working in favor of air cargo. For some airlines, e-commerce now accounts for more than 50% of their revenues outside East Asia.
"We now wait to see what the impact will be on the airline's summer schedule and what happens next in the Red Sea region. We certainly expect rates to come under downward pressure again once summer belly capacity returns in the Western Hemisphere and China, where the recovery in tourism is far from over. ”
According to Sea Intelligence, Xeneta said ocean freight schedule reliability on the Asia to Europe trade fell to 39.4% in January, the lowest level since October 2022.
“This has further contributed to the strong growth in air freight demand on this corridor as shippers are willing and able to bear higher air freight costs to maintain the resilience of their supply chains,” Xeneta explained.
The South Asia to Europe market led the month-on-month spot rate increase in February, as conditions on the Red Sea led to an 18% month-on-month increase in air freight demand on this trade.
As a result, the average spot rate from South Asia to Europe in February was up 34% month-on-month to $2.15 per kg.
"At a country level, general cargo spot rates increased significantly in India, Bangladesh and Sri Lanka, with strong demand for apparel products in these markets increasing by 81%, 40% and 55% respectively in the week ending March 3 compared to four weeks earlier.
"Similar to the South Asian export market, the average spot rate from China to Europe in February increased by 11% month-on-month to $3.67 per kg, but the week-long Lunar New Year holiday caused the spot rate to fall by 9% to $3.47 per kg in the week ending March 3."
The spot rate from China to the United States was up 15% from January, but the rate fell slightly as the month drew to a close.
Meanwhile, van de Wouw reports that shippers are looking to avoid the big e-commerce hubs to avoid getting stuck with any backlogs.
“Our conversations with shippers indicate that many are looking to avoid the hubs currently dominated by the e-commerce giants, thereby exposing their supply chains to risk,” he says.
For shippers, it comes down to simple math. If you’re a clothing retailer, with spring arriving in Europe, you want your seasonal products on the shelves at peak demand.
“If you miss out by being stuck in an ocean container because of long lead times, the resulting reduction in product costs could be greater than the cost of switching from ocean to air freight. This is impacting the market, but we also know that the market could surprise us again in the coming weeks.”
The latest data from data provider Xeneta shows that air cargo demand in February increased by 11% year-on-year, while dynamic load factor increased by 4 percentage points from the same period last year to 60%.
Prices were 14% lower than a year ago, at $2.29 per kilogram, but were "unusually" 2% higher than January levels.
Xeneta explained that air freight spot prices tend to fall during the previous year's year-end peak season and for a period after the Lunar New Year, and then rebound during this year's year-end holiday season.
The data provider said the increase was likely driven by growing e-commerce demand and some ocean spillovers caused by the Red Sea shipping crisis, and even some sea and air hubs adding short-term bans to clear backlogs.
"It has been an amazing start to the year from a volume perspective, and against everyone's expectations, including our own, demand is much higher than a year ago," said Niall van de Wouw, Xeneta's chief air cargo officer.
"Generally we wouldn't expect to see rates rise at this time of year. This may be related to the disruptions in the Red Sea, but it is not the only factor."
"There are signs that inflation has not cooled as consumers are still spending. It is not how much they spend that boosts air cargo, but where they spend it. Trends show that more consumers are shopping on e-commerce platforms, the intercontinental nature of these businesses, and the speed of delivery they expect are all working in favor of air cargo. For some airlines, e-commerce now accounts for more than 50% of their revenues outside East Asia.
"We now wait to see what the impact will be on the airline's summer schedule and what happens next in the Red Sea region. We certainly expect rates to come under downward pressure again once summer belly capacity returns in the Western Hemisphere and China, where the recovery in tourism is far from over. ”
According to Sea Intelligence, Xeneta said ocean freight schedule reliability on the Asia to Europe trade fell to 39.4% in January, the lowest level since October 2022.
“This has further contributed to the strong growth in air freight demand on this corridor as shippers are willing and able to bear higher air freight costs to maintain the resilience of their supply chains,” Xeneta explained.
The South Asia to Europe market led the month-on-month spot rate increase in February, as conditions on the Red Sea led to an 18% month-on-month increase in air freight demand on this trade.
As a result, the average spot rate from South Asia to Europe in February was up 34% month-on-month to $2.15 per kg.
"At a country level, general cargo spot rates increased significantly in India, Bangladesh and Sri Lanka, with strong demand for apparel products in these markets increasing by 81%, 40% and 55% respectively in the week ending March 3 compared to four weeks earlier.
"Similar to the South Asian export market, the average spot rate from China to Europe in February increased by 11% month-on-month to $3.67 per kg, but the week-long Lunar New Year holiday caused the spot rate to fall by 9% to $3.47 per kg in the week ending March 3."
The spot rate from China to the United States was up 15% from January, but the rate fell slightly as the month drew to a close.
Meanwhile, van de Wouw reports that shippers are looking to avoid the big e-commerce hubs to avoid getting stuck with any backlogs.
“Our conversations with shippers indicate that many are looking to avoid the hubs currently dominated by the e-commerce giants, thereby exposing their supply chains to risk,” he says.
For shippers, it comes down to simple math. If you’re a clothing retailer, with spring arriving in Europe, you want your seasonal products on the shelves at peak demand.
“If you miss out by being stuck in an ocean container because of long lead times, the resulting reduction in product costs could be greater than the cost of switching from ocean to air freight. This is impacting the market, but we also know that the market could surprise us again in the coming weeks.”
