Blog

Geopolitical uncertainty and unpredictability could fuel demand for air cargo as shippers move to benefit from the stability of services.

Figures from data provider Xeneta show that air cargo demand increased by 9% year on year in December – although this is partly a reflection of a weak end to 2022 – while spot rates reached their highest level in nine months of $2.60 per kg and the dynamic load factor increased by 3% to reach 59%.

A perfect storm of disruption in shipping, plus the early February start to Chinese New Year, is expected to push air freight rates up – but it has not happened yet – rail demand from Asia-Europe has increased, however.

The TAC Index noted that the overall Baltic Air Freight Index “suddenly fell 20.5% over the two weeks to 1 January”.

While Maersk has achieved success with its integrated sea-air services, it appears that similar services from shipping giants MSC and CMA CGM have not materialized. However, there is a recent increase in sea-air activities, and advancements in technology are facilitating smoother modal switches.

The fourth quarter of 2023 was the first to show a volume improvement on 2022 levels, according to end-of-year figures from WorldACD.

Figures from the data provider show that air cargo volumes increased by 3% in the fourth quarter, compared with a 3% decline in the third quarter, a drop of 8% in the second quarter and a fall of 11% in the first three months.

Airfreight demand is rising as a result of the Red Sea conflict impact on Suez Canal shipping, according to Bolloré Logistics.

The international transport and logistics company said that the “volatile” situation, which has resulted in higher rates, increased transit times and supply chain delays, will squeeze airfreight capacity.

The soft airfreight market has seen small and medium-sized forwarders gaining market share, but they will need to improve in some areas to retain that share.

WorldACD data for September showed smaller forwarders had a 15.6% share of the market, up 14.9% from the previous year, while large forwarders, while still claiming a 27.1% majority share, saw a 1.3% decline from the previous year.

Despite heavy marketing by some carriers and forwarders, standards in pharmaceutical logistics are not always as good as are billed, and should be further standardised, according to one pharma shipper.

Yulia Ceretaria, head of logistics for Early Health Group, should know: she was global pharma director for Volga-Dnepr Group and AirBridgeCargo before making the rare move to become a shipper.

The market may be challenging; the mood for 2024 muted – but there is a breath of fresh air running through the air cargo industry.

The new ACE event, held this week in Abu Dhabi, was rare for an air cargo conference: it attracted forwarders – the missing but crucial link from most shows – and focused heavily on networking.

‘Speed-dating’ sessions ensured delegates enjoyed a series of pre-booked face-to-face meetings. More conferences should do this; picking up new contacts, and welcoming old ones, is infinitely more useful than yet another sponsored, hand-wringing speech about digitisation.

IATA is expecting air cargo demand to increase by 4.5% next year while pressure on rates is expected to bring down revenues for the sector.

The airline association said the projection of a cargo tonne km increase next year comes on the back of the International Monetary Fund’s prediction of a 3.5% increase in trade and follows an estimated fall of 3.8% in airfreight demand this year.