Ocean, air, and road freight sectors are responding to unique regional and operational pressures, as well as ongoing capacity and rate adjustments.
OCEAN
The ocean freight market is cautiously optimistic, with inflationary pressures easing and signs of gradual economic recovery. Demand is subdued overall but showed resilience following Golden Week, particularly across key Asian trade lanes. While a record 2.5 million TEU of new container ship capacity entered the market this year, an additional 0.5 million TEU is planned, hinting at a potential oversupply.
Golden Week saw a slight increase in idle fleet capacity, yet levels remain low compared to seasonal norms. Freight rates, which peaked in July, have since softened but show a post-Golden Week recovery as carriers announced rate hikes for November. However, sustaining these rates may prove challenging with demand fluctuating, though a 15-18% capacity cut is expected in November, with ten void sailings announced so far, which could impact supply.
In September, global schedule reliability continued its downward trend since May’s peak to 51.4%, but remained within the 50%-55% range, providing some predictability. Average delays for rose to 5.67 days, with all top-13 carriers declining in reliability YoY.
Labour stability was restored following the US East Coast port strike at the start of October, though further disruptions remain possible if negotiations on automation and other issues are not resolved by January 2025.
AIR
Air cargo demand remained strong in September, albeit with a slight deceleration in year-on-year growth.
Demand from Europe to North America surged by 11% month-on-month, reflecting pre-emptive measures against recent US port strikes. Despite high demand, rates are rising more moderately, with a global average spot rate increase of 5% in late October, driven by supply constraints and rising load factors.
According to IATA, September air cargo demand grew by 9.4% year-on-year, with a 6.4% increase in capacity and a slight improvement in the load factor. Much of this capacity increase is linked to the sustained growth in belly-hold capacity on international routes, marking 41 consecutive months of double-digit growth.
Performance varied by region: Hong Kong-Europe tonnages increased by 25% year-on-year, while rates from Asia-Pacific to Europe saw steep year-on-year gains from locations like Thailand and Vietnam. Conversely, volumes on China-USA routes moved down, partly due to tighter US Customs checks, although rates rose by 3% week-on-week. Preliminary data for October suggests a 7% year-on-year volume rise, a marked slowdown from earlier double-digit growth but still indicative of robust seasonal demand.
ROAD
In the road freight sector, the UK and US markets are experiencing distinct but comparable trends, shaped by fluctuating consumer confidence and economic conditions.
In the UK, consumer confidence dipped in October, with the GfK Consumer Confidence Index falling to -21 amid concerns leading up to the autumn Budget. While economic indicators such as interest rates and inflation remain stable, low discretionary spending has contributed to a drop in the TEG Road Transport Index by 1.32% month-on-month. Haulage specifically declined 1.57% in October, although year-on-year figures show growth, with the index up 9.14% compared to October 2023. The Budget’s fuel duty freeze, coupled with a 14% year-on-year reduction in diesel prices, brings financial relief to UK hauliers as they prepare for the high-demand Black Friday and Christmas seasons, which could help offset recent declines.
In the US, road freight is also contending with moderate demand and cautious consumer spending. However, carriers are pushing for higher contract rates, especially in the less-than-truckload (LTL) sector, where rates have risen since the collapse of Yellow in 2023 reduced capacity. Although overall LTL volumes remain below 2021 peaks, the LTL producer price index (PPI) is up over 6% from its April 2023 low, reflecting carriers’ efforts to secure revenue amid softer demand. Interest rates stabilising could support a gradual increase in demand across retail and manufacturing, presenting growth opportunities as the sector heads into 2025. With peak season approaching in both markets, road freight providers are positioned to benefit from a potential uptick in consumer-driven logistics, despite current economic uncertainties.
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