The air cargo market continued to return to 18-month record growth in October as the global economy slowed and consumers tightened their wallets while spending on services increased.
The airline industry has entered a typical peak season, yet there are few signs of increased shipping activity, demand and freight rates that should normally be rising are falling.
Last week, the market intelligence firm Xeneta reported that cargo volumes in the airfreight market fell 8% in October from a year earlier, marking the eighth straight month of declining demand. The downward trend has intensified since September, with freight volumes down 5% year-on-year and 0.3% lower than three years ago.
The record levels by last year were unsustainable due to material shortages and supply chain disruptions, with demand in October also down 3% from 2019 levels, a weak year for air cargo.
Capacity recovery has also stalled. According to Xeneta, available belly and cargo space is still 7% below pre-existing levels, which is one reason freight rates remain relatively high.
The extra air capacity from the reintroduction of more passenger flights in the summer, combined with a drop in demand, means that aircraft are both less fully loaded and less profitable. Global spot air freight rates in October were lower than last year's levels for the second month in a row. Xeneta said the slight increase in the second half was due to higher rates for special cargo, while rates for general cargo continued to decline.
Asia-Pacific exports to Europe and North America strengthened slightly in late October, which may have more to do with a rebound from China's Golden Week holiday, when factories shut down without shipments, rather than a surge late in the peak season.
Global air freight rates fell by two-thirds, down about 25% from a year earlier, to $3.15/kg. But it was still almost double 2019 levels as capacity shortages, as well as airline and airport labor shortages, limited flight and warehouse productivity. The drop in air freight rates is not as dramatic as in ocean freight rates.
The Freightos Global Aviation Index as of October 31 shows the average spot price at $3.15/kg / Source: Xeneta
Post time: Nov-08-2022