Global air freight demand showed no signs of slowing down in November as volumes hit 13y The consecutive month of double-digit growth and load factors reached their highest level since April 2022, according to the latest market analysis by Xeneta.
Demand rose 10% year-on-year in November, driven by the ongoing boom in e-commerce. This, combined with only marginal +2% growth in air freight capacity, has contributed to global air freight rates (valid for one month) reaching an almost two-year high of US$2.90 per kilo, marking the sixth consecutive month in which they have doubled. Air freight price. – Growth numbers on an annual basis.
The strong monthly performance of the air cargo market in 2024 has led to hopes of a “peak of all peaks” in the fourth quarter from some market segments. However, Niall van de Woo, chief air cargo officer at Xeneta, says the industry has done a good job of avoiding this.
“Peaking all peaks should not be a goal. It should be avoided because of the imbalance it creates between winners and losers. 2024 had all the makings of seeing crazy peak season rates but the fact that we have not seen this develop is another sign of the maturity we alluded to earlier.” In the global air freight market, what we witnessed in 2023 was chaos and a valuable lesson, and in 2024, we are seeing these lessons put into practice.
“People should not be disappointed. We are seeing a more growing air cargo market that depends on better resource allocation and better terms and conditions between all parties involved. The peak in 2023 saw, by comparison, capacity shortages, crazy prices, all of that,” Van de Woo added. At the expense of shipping companies. “Why would we want to go back there again? The supply chain pressure at the peak of all peaks would have hurt consumers and placed unnecessary constraints on relationships. It would have been opportunistic for short-term gain.
Van de Woo said the final months of the year saw the air cargo industry take control of its destiny.
While some observers pointed to weakness in the air cargo market at the end of the year, Van de Woo called for perspective.
“This air cargo industry is currently running at full steam, but it is not out of control,” he said. November data shows a market where trading volumes were 10% higher than last year’s very busy peak month, and rates were also up.
“The final months of 2024 could have been very chaotic again for shippers, but we’re not hearing that. It’s not because volumes aren’t there, or flights aren’t full. It’s because, in general, everything is better managed.” The industry should get a lot of credit for this.
Global air freight spot rates remain above seasonal averages
This persistent supply-demand imbalance for 2024 pushed November’s dynamic load factor to 63% – its highest level in more than 30 months. Dynamic load factor is a Xeneta measurement Capacity utilization is based on the volume and weight of cargo transported by air along with available capacity.
This level of demand has strengthened the negotiating position of airlines and has seen global air freight spot rates remain above seasonal rates (valid for more than one month) since late November 2023.
In terms of monthly trends, this year’s peak season was less intense than last year. Thanks to proactive airline capacity management, the spot price for global air freight rose just +12% between early September (the start of peak season) and the week ending December 1, compared to a +25% increase during the same period last year.
This trend is particularly evident in the Asian outbound market. As carriers shift their capacity to accommodate increased demand for goods, November spot rates from Northeast Asia saw moderate growth. Spot prices to Europe rose +13% month-on-month to US$5.09 per kilogram, while spot prices to North America rose +5% to US$5.20 per kilogram.
In addition, spot prices from Southeast Asia showed mixed results, with Europe spot prices remaining flat at US$4.15 per kg, and North America falling by -3% to US$6.05 per kg. The latter’s decline was driven by lower volumes, after spot prices have surpassed last year’s peak season levels since late May 2024.
Meanwhile, the transatlantic market has seen significant increases in freight rates as freight capacity shifts elsewhere at the end of the summer passenger travel season. Spot prices from Europe to North America rose +46% from the previous month to US$2.72 per kilogram, which contrasts with monthly growth of only +9% during the same period last year.
Likewise, prices from Europe to Latin America increased by +23% to US$4.58 per kilogram. In Brazil, a five-day ban imposed in early November at São Paulo, South America’s largest cargo airport, coupled with ongoing nationwide digital customs delays due to a Brazilian customs strike since November 26, may push spot air freight rates to Highest in December. Shippers will likely resort to air freight to avoid delays in customs clearance.
“Personally, I think the air cargo industry should be proud that it has avoided the ‘Peak of All Peaks’ as this is the basis for greater market stability. I hope this will enable everyone to head into the Christmas and New Year holidays they deserve,” Van de Woo said. “With a sense of satisfaction, they can relax and enjoy time with their family and friends.”
“In 2024, the industry has shown its maturity. We will have to wait and see if this holds up when the market goes down, but I don’t see that happening yet.”
