Dive Brief:
- Peak season is probably going to completely miss the air cargo market as the demand for freight fell in October for the ninth consecutive month.
- According to Clive on November 2, volumes fell 8% YoY in October and are still 3% below 2019 levels. In October, spot rates decreased by 20% year over year, yet they are still 94% higher than in 2019.
- Christmas is six weeks away, and Niall van de Wouw, chief airfreight officer of Clive’s parent company Xeneta, stated in a statement that there is no sign of a peak, “We are six weeks away from Christmas and there is no indication there will be a peak.
Dive Insight:
As the air freight sector continues to experience deteriorating conditions with no signs of a recovery, the anticipated winter peak for this year has failed to materialize.
Van de Wouw highlighted that even though macroeconomic issues like inflation and low export orders continue to have an impact on total air activity, a recovery in ocean capacity will have an even greater impact on the demand for air cargo as more shippers turn to maritime transport.
“Airfreight received a boost in the last two years because of the incredible mess on the ocean side, but shippers are now likely to feel more comfortable moving back to ocean from a reliability point of view,” he said. “With these factors combined, I don’t see where a lot of general freight growth demand drivers will come from.”
In Q3, carriers and freight forwarders reported a decline in air demand. Overall air volumes at DSV’s Air & Sea segment fell 10% YoY in the third quarter, and CEO Jens Bjrn Andersen warned that ocean and air volumes could decrease by 15% the next year during an earnings call.
According to Clive, October’s air freight capacity increased YoY by 3% but down 7% from 2019 levels. Dynamic load factors, which compare the amount of cargo flown with the capacity that is available, were muted in October at 61%, down 7 percentage points year over year and 1 point from 2019 levels.
According to van de Wouw, the air market is still unstable despite the decreases, and shippers could not benefit in the long run from lower air fares. The only change that may stop the rate reduction would be an increase in the labor supply on the ground.
In his words, “if airlines and cargo handling firms continue to struggle to hire workers and stay understaffed, then the bottlenecks will produce an upward pressure on rates since it will be challenging to get your goods through the value chain.
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