Air cargo demand surged again in July, and shippers should plan and book space early to avoid disruptions during the upcoming peak season.
According to IATA’s lates figures, global air cargo demand increased by 14% year-on-year, driven by ongoing eCommerce growth and disruptions like the Red Sea diversions.
This marks the eighth consecutive month of double-digit growth in cargo tonne kilometres, with demand reaching levels not seen since the Covid-driven surge in 2021. However, capacity only rose by 8%, pushing load factors up by 2% to 44%.
With peak season starting in September, air cargo demand is expected to remain strong, especially in regions like Asia Pacific, which saw an 18% year-on-year increase. North American carriers recorded 8.7% growth, despite disruptions from Hurricane Beryl. The Asia-North America trade lane grew by 11%, while the North America-Europe route saw a more modest 5% increase.
Shippers need to secure space now, as the air cargo market is already facing capacity shortages out of some Asian markets during the peak season.
In what would traditionally be a quieter point of the year, air freight capacity is already tight and the situation is expected to get tighter during the peak, particularly as the cost differential between air and sea is currently 4 times, compared with 10 times the cost of ocean pre-COVID.
In addition, the potential US east and Gulf coast port strikes could see even more shippers switch to air cargo.
Flights are already full on many lanes, which is why we continue to see elevated rates and if we consider the potential impact of strikes, combined with the reduction of belly capacity towards the end of the fourth quarter and you have a toxic mix of the market overheating towards the end Q4.
We are taking steps to mitigate any impact on our customers, including longer term deals with our primary carriers, blocking space and planning for different eventualities.
From an operational side, we have contingencies to avoid hubs that could be worst hit by a surge in eCommerce demand, together with alternate routes to market.
Many customers are already discussing the situation with us and we would urge you to contact us without delay, if you are going to have time-sensitive consignments over the next four months.
EMAIL Andy Costara, for insights, prices and guidance.
