Short-term spot rates chosen as air freight market declines

The latest statistics from Xeneta-owned CLIVE Data Services show that in November, air freight volumes fell 8% year-on-year and fell 2% in October, while the dynamic load factor – based on weight and space – fell 5 percentage points year-on-year at 61%.

This is the ninth consecutive month of falling demand.

Average rates for the month have fallen 27% from a year ago, but are still 85% higher than 2019 levels.

CLIVE said that the drop has resulted in forwarders taking a 'wait-and-see' approach before committing to long-term deals in the event prices continue to fall.

In total, only 2% of contracts are longer than six months, CLIVE data shows.

"What we are seeing is a lot of uncertainty still. After such a big drop of -8% in air cargo demand in October, we saw a little stability return in November, so the market is not worsening, it’s just very hard to read longer term," said Xeneta's chief airfreight officer, Niall van de Wouw. 

“This is reflected in the rise in short-term contracts, with forwarders unwilling to commit to long-term deals.”

“Shippers should see some benefit from this in terms of their air and ocean budgets, and falling rates may provide one glimmer of hope for cash-strapped consumers that potentially lower shipping costs in 2023 will make some goods more affordable."

“There are still so many influencing factors to consider, including the depreciation of the US dollar and its impact on trade.”

CLIVE added that falling sea freight rates could spur a shift back to ocean.

The average air freight spot price in November on the Trans-Pacific corridor was $5.82/kg, down 32% year-on-year, but still 139% higher than 2019 levels.

CLIVE says sea freight rates have fallen 79 percent year-on-year, just 30 percent higher than 2019 levels, which will "likely trigger further modal shift from air cargo to ocean as the sea freight market chaos eases.”

On the route from East Asia to Northern Europe, November's average air spot price was $5.86/kg.

“Impacted by the persistent war in Ukraine, this represented a 16% year-over-year decline. Again, the ocean market witnessed a far greater fall as container freight rates fell 78% over the last year,” said CLIVE.

“Lastly, the air cargo spot rate from North Europe to US East stood at $3.23 per kg in November, down 37% from last year’s level."

“In contrast, ocean freight rates climbed 10% from the same period of 2021, nearly 3.5 times the 2019 level, making this the only routing among the top three volume corridors where the air cargo market remains somewhat competitive.”

Source: Phaata.com (According to AirCargoNews)

Phaata - Vietnam's First Global Logistics Marketplace
► Find Better Freight Rates & Logistics Services