1. Air Freight Market

Global air cargo volumes in August slightly increased compared to the previous month and remained higher than the same period last year.

Factors driving sustained demand growth include the boom in e-commerce, disruptions in sea freight, increased demand for general cargo driven by high-tech semiconductor needs, and a low base from the previous year.

Despite mixed economic signals, high demand is expected to continue until 2025 and beyond.

Due to supply chain issues and conversion limitations, the delivery speed of wide-body aircraft has slowed. Combined with modest capacity growth and rising demand, this has led to an increase in global dynamic load factors.

With cross-border e-commerce demand and geopolitical tensions, air cargo capacity is expected to remain tight in the second half of 2024.

Regarding air cargo carriers:

Qatar Airways is shifting its focus to intra-Asia routes, adjusting its freighter schedule, suspending its Mexico route to the EU from September 2024, and halting operations between major EU and US/Latin American airports.

Air France-KLM, Lufthansa, and Cargolux will divert capacity from transatlantic routes to Asia starting in September 2024.

Atlas Air leased three Boeing 747-8 freighters to meet growing demand, primarily serving major Chinese e-commerce giants.

Global air freight rates, defying seasonal trends, reached their highest levels this year due to supply and demand imbalances. The industry anticipates strong holiday demand, putting further pressure on capacity and driving rates higher.

Global international air cargo capacity grew 8% year-on-year, especially from Mainland China and Hong Kong.

Airlines increased capacity on the Northeast Asia-EU route, shifting freighters from Latin American routes, which has pushed up rates on the EU-Latin American routes.

Lower-value goods exports from Mainland China and Hong Kong have led to a shortage of air cargo capacity. Modest capacity growth combined with increasing demand has elevated global dynamic load factors.

Amid the e-commerce boom and sea freight constraints, global air transport continues to experience significant growth. Demand for low-value cross-border e-commerce has surged to 10 times pre-pandemic levels.

High-value goods, including technology products, pharmaceuticals, and perishables, are the main areas of growth in air trade. Driven by holiday peak demand, air freight is expected to see strong growth by the end of the year, which could lead to capacity strain.

Demand growth in Europe remains stable, with slight increases in shipments to Northern Europe and Latin America.

Air cargo demand in the Asia-Pacific region continues to grow strongly year-on-year, driven by sustained e-commerce volumes from Mainland China and Hong Kong.

The Americas market remains stable overall, with certain routes experiencing demand surges, while aircraft are being shifted to trans-Pacific routes, posing challenges for intra-Americas routes.

Expectations for Global Air Cargo in Q4 2024:

Demand: Despite mixed economic signals, demand is expected to remain high, with limited freighter capacity pushing up rates. As peak season approaches, interest in air freight charters between China and the US is growing due to its reliability and cost-effectiveness as a sea freight alternative.

Capacity: With over 80% of capacity contracted by e-commerce companies, tight capacity is expected across all Asian markets in Q3 and Q4. Imbalances between demand and capacity in India are likely to persist in Q3/Q4.

Rates: Air freight prices are expected to remain elevated due to demand outpacing capacity growth, mainly driven by the Asia-Pacific region. Significant increases in peak season surcharges and spot prices are expected toward the end of Q3.

Economic Growth: Economic indicators point to continued stability in global manufacturing. Amid ongoing geopolitical uncertainties, global growth is expected to remain stable but slow until 2025. As supply and demand rebalances, consumer inflation is expected to gradually ease throughout 2024.

Service Disruptions: Political unrest in the Middle East and Ukraine, combined with potential strikes at US East Coast and Gulf Coast ports, may affect trade routes and air freight prices through the end of 2024. Geopolitical factors, including US protectionism, may prompt businesses to expedite imports before potential new tariffs are introduced.

2. Sea Freight Market

In the first half of 2024, despite a 10.4% increase in container ship supply, global capacity utilization rose by only 2% compared to 2023.

Container port volumes grew strongly, with total volumes at the top 10 ports increasing by 7.4%. Port congestion and the use of the Cape of Good Hope as an alternative route limited capacity growth.

Spot rate fluctuations impacted long-term rates. Rates on Oceania routes surged rapidly due to limited capacity. The Shanghai Containerized Freight Index (SCFI) remains significantly higher than the same period last year, up 206% year-on-year.

The global container market continued to recover in the first half of 2024, particularly in imports along the Asia-Latin America, intra-Asia, and North America-Northern Europe routes.

However, maintaining high growth in global container trade for the remainder of the year may be challenging, as economic indicators do not show clear signs of strong demand from the US and Europe.

Mid-term prospects remain more uncertain than the current market situation suggests.

High demand in Asia is expected to continue throughout Q3. Equipment conditions are improving, though shortages remain in regions like Brazil and India. DHL recommends customers book 4 to 6 weeks in advance, as strong demand for Asian routes is expected to persist through Q3.

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