Analysts report a jump in air cargo spot rates

GLOBAL air cargo spot rates rose 41% in May but industry analysts Xeneta say some relief may be on the way for shippers.

May’s average global spot rate of USD 3.40 a kilo was said to be driven by market fundamentals as global air cargo demand stayed resilient – slightly ahead of expectations - and outpaced supply, which continued to recover from disruption caused by the Middle East conflict.

While acknowledging most shippers’ understood that rates increased during global events like the war in West Asia, Xeneta’s chief airfreight officer, Niall van de Wouw, said some relief was likely in June.

“A lot of the air cargo market statements we made in April hold true,” he said.

“Shippers clearly have a sense of ‘here we go again’ in terms of rates volatility, but they are adjusting and buying time by temporarily accepting the surcharges that come with extending existing capacity contracts.

“This is because they’re not ready to make a longer-term commitment until there are clear signs the market is normalising.”

Mr van de Wouw said it was “a waiting game” not all shippers were ready or able to play, with frontloading already occurring in the ocean freight market and could become a leading indicator of the action some shippers might follow with their airfreight volumes.  

“On the ocean side, we see some frontloading. In many cases, the shippers doing this are acting now because they expect energy to become more costly, so they are producing now in anticipation of higher costs later, as well as to avoid traditional peak season surges in rates,” he said.

“But they then must move and sell their goods, and this is at a time of higher transportation costs.”

Despite the overall rise in the global spot rate in May, the month did show some signs of air freight rates easing.

Further easing of spot rate growth is expected to be driven by the northern hemisphere summer months, typically a slack season for air freight.

Meanwhile China’s low-value and e-commerce exports fell -11% year-on-year in April, their fifth consecutive monthly decline.

The pullback is uneven by destination: shipments to the United States collapsed -33%, while volumes to Europe (-6%) and Asia Pacific (-1%) held up far better.