Air cargo demand and rates are showing no signs of slowing down after a brief dip following the Lunar New Year. While the Middle East and South Asia (MESA) region saw a slight decrease in demand over the past two weeks, it remains significantly higher year-over-year (+17%). Additionally, average rates continue to climb, up a substantial +23% compared to last year. This upward trend could be attributed to a recent decline in air cargo capacity coinciding with the start of Ramadan. However, the full impact of Ramadan on air cargo movement is typically felt closer to the holiday period.
A major factor driving the surge in air cargo demand is the ongoing disruptions in sea freight. Since the beginning of the year, Asia has seen exceptionally high air cargo volumes heading to Europe. This can be largely attributed to recent attacks on vessels in the Red Sea, which have significantly impacted container shipping routes. Dubai, a key air-sea hub for Asia-Europe trade, exemplifies this trend with a staggering +165% increase in air cargo to Europe compared to the same period last year.
The Asia Pacific region is another key player in the air cargo boom. Disruptions in container shipping coupled with robust e-commerce activity continue to fuel demand and rates. Combined export tonnages from the region have risen by 8% in the past two weeks and a healthy 10% year-over-year. This growth is further reflected in a rise in average rates (+8% over the past two weeks). Routes connecting Asia Pacific to Europe have experienced the most significant increase in both tonnages (+15%) and rates (+8%). This can be attributed to the combined effects of sea freight disruptions and the ever-growing e-commerce sector.
Looking at the broader global picture, air cargo tonnages have remained relatively flat compared to the previous week and the same period last year. However, average rates continue their upward trajectory, rising by 3% in the last week to reach $2.37 per kilo. While down 12% year-over-year, these rates remain significantly higher than pre-pandemic levels, sitting at a healthy +32% compared to March 2019. Overall air cargo capacity also shows a positive year-over-year increase, with notable growth in Asia Pacific (+19%) and Central & South America (+12%).
Industry experts are predicting continued high air freight rates, particularly on Asia-Europe routes, due to the ongoing Suez Canal crisis. Additionally, US freight forwarder CH Robinson anticipates peak pressure on Trans-Pacific routes in late March or early April.
While some regional fluctuations exist, the air cargo market continues to demonstrate robust growth. Disruptions in sea freight and a thriving e-commerce sector are key drivers of this trend, with air cargo playing a vital role in keeping global supply chains moving.
