Global Turmoil and E-commerce Drive September Air Cargo Volumes Up
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Extreme weather and labor disputes are testing shippers and freight forwarders, making October a “whole new battlefield,” says Niall van de Wouw of Xeneta.
Published on October 16, 2024
### Key Highlights:
* According to Xeneta’s report released on October 2nd, air cargo demand grew by 9% year-over-year. This growth was driven by container shipping disruptions, typhoons, ongoing e-commerce demands, and a surge in freight before China’s National Day Golden Week holiday.
* However, October could become “a whole new battlefield” as supply chains are expected to take four to six weeks to recover from a three-day strike at US ports, extending into November, which is the busiest month for air cargo volumes, says Chief Air Freight Officer Niall van de Wouw.
* In October, freight rates on certain trade routes may rise sharply due to “fear of missing out” (FOMO effect) and reduced airfreight capacity in winter, van de Wouw notes. Escalating tensions in the Middle East could further disrupt maritime shipping in the Red Sea region, he adds.
### In-Depth Analysis:
Global events are testing preparations for the 2024 peak season in air cargo, says van de Wouw. However, despite market volatility, companies this year are better prepared to handle uncertainties during the peak period, he explains.
“There are now more precise agreements on how to navigate through the storms that the market might enter,” he said. “There are agreements on freight rates, surcharges, and their applicable timeframes, but there will be a delicate balance between maintaining relationships and being tempted by short-term gains created by these market conditions.”
However, the macroeconomic outlook for 2025 is not optimistic, he mentions, which might prompt carriers to capitalize on opportunities to raise rates. He also notes that signals are beginning to emerge that peak season surcharges are being accepted by freight forwarders and shippers.
According to Xeneta data, spot rates from Asia to North America in September “led the pack mid-month,” exceeding other global routes at over $2 per kg. Meanwhile, transatlantic rates remained relatively stable on a month-over-month basis, but could spike if labor disputes at US East Coast, Gulf of Mexico, and Canadian ports remain unresolved.
Signed contracts have reduced the space for significant rate hikes during peak season, says van de Wouw. “But we do see parts of the market ‘paying to play,’ which could become a potential ‘wild west.’ Shippers or freight forwarders might find themselves there due to unexpected demand, and that could be an expensive game,” he said.
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Source: Supply Chain Dive
