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Air cargo spot rates and demand perk up in October

The U-Freight Group, which has a strong presence in the expedited international airfreight business, notes that air cargo rates saw a month-over-month (MOM) increase in October to USD2.28 per kg, according to Xeneta's Clive Data Services.That marked the first time since mid-May rates rose above seasonal levels in the first two weeks of the month, according to the company's November report.Transpacific rates from China and Southeast Asia to the USA saw MoM increases of 10% and 15%, respectively, to USD4.0 and USD3.61 per kg.Spot prices from Europe to the USA also saw an uptick in October, up 7% MoM to USD1.85 per kg because of expected declines in available capacity.“October’s market performance is what we expected to see,” said Niall van de Wouw, chief airfreight officer at Xeneta. “It was a marginally busier month but not a cause for much optimism, nor pessimism. Carriers and forwarders are not expecting the market situation to improve significantly until well into the second half of 2024.”Meanwhile, global air cargo markets data for October 2023 released by IATA indicates the third consecutive month of stronger year-on-year demand.Willie Walsh, IATA’s director general, said: “Demand for air cargo was up 3.8% in October. That marks three consecutive months of year-on-year growth, placing air cargo on course to end 2023 on a much stronger footing than it began the year.”The IATA data shows that global demand, measured in cargo tonne-kilometres (CTKs), increased by 3.8% compared to October 2022. For international operations, the demand growth lagged slightly at 3.5%.Capacity, measured in available cargo tonne-kilometres (ACTKs), was up 13.1% compared to October 2022 (11.1% for international operations). IATA states this was largely related to the growth in belly capacity. International belly capacity, for example, rose 30.5% year-on-year on the strength of passenger markets.IATA reports there are several factors influencing the operating environment.For instance, global trade reversed its downward trajectory and stabilised in September. Although below its 2022 peak, global cross-border trade is more than 5.0% above pre-pandemic levels.Furthermore, after a continuous 17-month decline, cargo yields ticked-up in September and continued into October with a 2.6% month-on-month gain, remaining well-above pre-pandemic levels.Walsh added: “Recovering demand, slightly stronger yields and the uptick in trade are all good news. But with demand still 2.4% below pre-pandemic levels, and much uncertainty remaining over the trajectory of the global economy, optimism must be balanced with caution.“Nonetheless, a continued strong peak year-end season will certainly help the sector to manage through whatever turns the global economy might take in 2024.”For more information about the U-Freight Group's global air freight forwarding and logistics services, please contact your local U-Freight office.