Air Cargo Enters 2024 with Cautious Optimism
2024 may herald the start of a new economic growth cycle for the global air cargo industry after last year ended with a +9% year-on-year rise in demand and the general air cargo spot rate reached its highest level in nine months, suggests the latest weekly market data analysis by Xeneta.
While the geopolitical environment and cost of living pressures continue to present significant hurdles to global trade, the predictability of air cargo means the industry stands to benefit from escalating international disruption, albeit producing only modest gains in volumes,
Niall van de Wouw, Xeneta’s Chief Airfreight Officer said: “To say 2024 is a ‘new dawn’ is perhaps a litte too optimistic, but I certainly think it’s the start of a new cycle for airlines and forwarders – and shippers are likely to also appreciate the stability returning to the market so they can more accurately predict the transporation costs for the products they are selling.”
Weekly market data for December shows the global average air cargo spot rate peaking at US$2.60 per kg, up +6% on its November level, boosted by a +9% annual growth in demand.
The general air cargo spot rate, however, continued to record a double-digit year-on-year fall of -18%. This compares to a growth ratio of -25% in November compared to the previous year.
Wouv said: “December 2023 data shows the market was slightly busier than anticipated, but we shouldn’t be tempted to draw too many conclusions from what happens in the final month of the year because the Christmas and New Year holidays make it an odd month.
“We also need to factor in that December 2022 provided a low comparison base given the very muted demand seen 12 months ago.
"This latest data appears to reflect stronger but temporary local market performance on key lanes as opposed to signaling a global economy that is doing much better.
"Our market outlook forecast for 2024 remains unchanged with an anticipated +1-2% growth in demand, and a +2-4% rise in supply."
As the heightened cost of living permeates advanced economies, consumers opted for more discounted e-commerce shopping to fulfil their Christmas shopping lists, adding to export volumes especially from Asia.
However, it is worth noting that general retail sales outside of e-commerce remained subdued, especially when adjusted for inflation.
Looking at market supply, December global air cargo capacity stayed at a similar level to previous months, climbing +6% year-over-year versus the global supply still under recovery in 2022.
The global dynamic load factor, Xeneta’s market performance indicator which measures air cargo capacity utilization by considering both cargo volume and weight perspectives of cargo flown and capacity available, dropped to 59% in December.
This was 1 percentage point down from its November level, but 3 percentage points higher than in December 2022 as year-on-year demand growth outperformed the increase in cargo capacity.