Air cargo demand climbs, but analysts warn falling rates signal turbulence ahead

Global air cargo demand rose for the second straight month in August, but industry analysts warn falling spot rates may better reflect the uncertain outlook facing shippers, airlines and forwarders.

Xeneta, a market analytics firm, reported a five per cent year-over-year increase in cargo volumes in August, alongside a four per cent rise in capacity. Despite that growth, the average global spot rate dropped three per cent to US$2.55 per kilogram, the fourth consecutive monthly decline.

“The August decline in spot rates is likely even steeper once currency effects are considered,” the company noted, pointing to the U.S. dollar’s four per cent depreciation over the past year. Shifts in trade flows and a seven per cent drop in jet-fuel prices also contributed to downward pressure on rates.

Niall van de Wouw, Xeneta’s chief airfreight officer, said volumes alone are not a reliable indicator of the market.

“It is often said that airfreight is a bellwether for macroeconomics, but I don’t think it is at the moment,” he said. “We’ve now reported over five per cent growth in demand for July and August and it would be easy to take some comfort from these volumes were it not for the current market conditions. Right now, volumes are certainly not as bad as people feared, but also not as good as people hoped.”

Van de Wouw said shippers now fall largely into three groups: those who never use airfreight, those who always rely on it and a growing middle segment that shifts between ocean and air depending on circumstances. “It is this segment of the market which is driving the upturn in airfreight demand we are seeing,” he said.

Still, he cautioned the growth stems mainly from mode shift and e-commerce, not stronger economic activity. “Overall, it’s hard to see where strong, sustainable airfreight growth will come from,” he said.

Regional corridors show mixed results. Southeast Asia outbound rates to North America and Europe fell more than 20 per cent year-over-year, while transatlantic traffic posted a five per cent gain, though down sharply from July’s near 20 per cent surge.

Looking ahead, van de Wouw flagged the impact of new U.S. de minimis rules eliminating duty-free thresholds for cross-border shipments.

“The biggest question still – how bad is it going to get?” he said. “The predictions are concerning but, because of all the uncertainly, the hurt for airfreight has been softened and delayed. But, for how much longer is anyone’s guess.”