H2 2024: The Outlook for Air Freight

During the pandemic, analysts observed a clear link between ocean disruption and increased air freight demand, with shippers seeking certainty once-again by opting for air freight.

As ocean freight rates nearing pandemic levels again, shipping reliability has been improving, despite localised port congestion, with data showing that shipping lines are, relatively speaking, adhering to schedules.

Sea-Intelligence reported a 4% improvement in reliability in May compared to April, reaching 56%, the highest figure this year. However, this is still 11% below May 2023, with average vessel delays now exceeding five days—closer to pandemic highs than pre-pandemic norms.

However, air freight demand is on an upward trend, independent of ocean reliability. February saw a notable decline in ocean performance, coinciding with a slight dip in air freight demand.

The air cargo industry has now seen six consecutive months of double-digit year-on-year growth, driven by trade growth, eCommerce, and ocean freight capacity constraints.

In May, total demand for air cargo, measured in cargo tonne-kilometers (CTKs), rose by 14.7% compared to May 2023, with a 5.3% month-on-month increase. This surge spanned all regions, fuelled by trade growth, booming e-commerce, and maritime shipping capacity constraints.

The outlook for air freight remains positive, with purchasing managers forecasting future growth. However, further issues in the Red Sea could significantly impact air freight demand.

The air freight market is poised for a turbulent summer, especially if the situation in the Red Sea continues as it is, and capacity is further strained during the ocean peak season in Q3. As a result, more importers may shift urgent shipments to air freight.

This trend is already emerging, reminiscent of the Covid pandemic, particularly impacting Middle East & South Asia (MESA) origin markets due to disruptions in container shipping this year.

Average spot rates from MESA to Europe in week 25 have more than doubled (126%) their level this time last year, with rates from Bangladesh to Europe up 165%, India to Europe up 160%, Colombo to Europe up 125%, and Dubai to Europe 84% higher.

Air freight demand is driven not only by shippers seeking certainty amid sea freight uncertainties but also by the continuous rise of eCommerce, which is diverting disappointed shipping line customers to air freight.

Air capacity is expected to be in high demand in the second half of the year, with Chinese eCommerce platforms estimated to account for 30% of space on some ex-Asia routes.

Protecting your time-sensitive supply chain
Shippers need to prepare now and are urged to share their forecasts to secure space for later.

For valuable, special and urgent shipments we have a range of air freight and sea/air solutions, with extremely competitive rates and service combinations, to meet every deadline and budget requirement.

EMAIL Matt Fullard, for insights, prices and guidance.