Key air freight market trends and developments
In September, the air cargo market usually transitions from the quieter summer period into the peak season. Historically, air freight rates tend to climb during this time due to events such as back-to-school shopping, major tech product launches, and increased general cargo activity. However, unlike previous years, the expected slack season did not materialize, and a surge in demand has been evident since late August.
This year, the rate is already 30 cents above the seasonal norm, signaling a strong market outlook. Northeast Asia is the key driver of this rate growth, with routes to both Europe and North America seeing significant jumps in freight rates, largely fueled by Chinese Golden Week preparations and the Mid-Autumn Festival. Europe to North America also experienced a rise in demand.
Beyond market-driven rate hikes, regulatory changes are adding complexity. The U.S. Transportation Security Administration (TSA) and Transport Canada have both introduced emergency amendments aimed at tightening air cargo security. These measures, which came into effect in mid-August, focus on shipments originating from Europe and the CIS region. The heightened security protocols have raised concerns within the industry, particularly for small and medium-sized enterprises (SMEs), as the increased inspections could limit competition and complicate logistics, especially for lower-volume shippers.
The U.S. East and Gulf Coast port strike on October 1 further contributed to uncertainty, although it had limited immediate impact. Ocean freight rates had already risen in anticipation of potential disruptions, and many businesses were preparing to shift cargo to air freight. Though the strike was paused quickly, the temporary resolution leaves a short 100-day window for negotiations, with the final deadline set for January 15.
Looking ahead, the air cargo market is anticipated to experience a challenging year-end peak season. Since Q4 2023, demand has been fueled by events such as the Red Sea Crisis and e-commerce growth, which caught many shippers by surprise. Freight rates in Asian corridors have been climbing steadily, and the global dynamic load factor is already higher than last year. As the peak season approaches, there are growing concerns over whether air supply chains will be able to cope with the expected surge in demand.
Global air freight market from September to November
General
- Northeast Asia to Europe routes are showing the strongest rate growth.
- Holidays in China, like the Mid-Austumn Festival and Golden week, fueled demand in September and October.
- Unlike previous years, the typical September slack season has not materialized.
- The U.S. port strike on the East and Gulf Coasts was quickly resolved, causing minimal disruptions.
MAIN REASONS FOR BOTTLENECKS
- New security mandates from the U.S. TSA and Transport Canada are creating logistical challenges, particularly for SMEs.
- Anticipation of potential U.S. East and Gulf Coast labor strikes contributed to uncertainty in the industry.
- Increased demand due to the Chinese Golden Week and increased e-commerce has intensified pressure on air cargo routes from Northeast Asia-Europe and North America.
Impact on air freight rates
- Global air cargo rates rose by 3% in September.
- Freight rates from Northeast Asia to Europe spiked by 11%, largely due to holiday-driven demand.
- Rates from Northeast Asia to North America and Europe to North America climbed 5% in September.
- Freight rates for U.S. East and Gulf Coast routes briefly increased due to the port strike.
OUTLOOK
- Air freight rates are expected to continue rising into the final quarter of 2024.
- Stricter security protocols and U.S. de minimis reforms could further complicate the market, particularly affecting smaller shippers and low-value shipments.
- The air freight market is expected to experience an extremely challenging year-end peak season.
- Despite the temporary resolution of the U.S. port strike, uncertainty remains as the new deadline on January 15 approaches, raising concerns about potential future disruptions.
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Customer advice
Considering the ever-changing market conditions and forces, please:
- Think ahead and book well in advance. Try to plan for 6 months ++.
- Consider that the market can change significantly. Further disruptions can happen anytime.
- Identify contract options that enable flexibility and resilience for your business.
However, it is our job at Bertling to keep global supply moving and do all we can and apply our knowledge, network and expertise to protect our clients’ while taking the latest market developments into account. We are there to find the best solutions to ensure cargo flows.
