Recent developments in the air cargo industry have showcased a notable decline in both tonnages and rates after enjoying a peak in the fourth quarter. WorldACD Market Data has shed light on this downward trend experienced particularly in the second full week of December, a situation strongly affecting Asia-Pacific origins.
Fluctuation in Spot Rates
Drop in Asia-Pacific Rates
In the second week of December, average spot rates from Asia-Pacific origins experienced a 4% drop compared to the prior week, bringing rates to $4.57 per kilo. This marked decline was particularly significant as these regions had seen several weeks of rising rates. However, Asia-Pacific’s drop in rates was somewhat offset by increases observed in other regions. A notable rise of 6% in rates from North America and 5% from the Middle East & South Asia (MESA) origins contributed to a global week-on-week decrease of 1% in spot rates.
When compared to the same period last year, average global spot rates for week 50 were up 16%, driven largely by a significant 60% year-on-year increase from MESA, as well as smaller increases from other regions including Asia-Pacific, Europe, North America, Africa, and Central & South America. This year-on-year growth highlights that despite recent fluctuations, the industry has been experiencing overall positive changes over a more extended period. It brings to attention the dynamic nature of the air cargo market, which constantly evolves, influenced by seasonal, economic, and geopolitical factors.
Impact on Global Air Cargo
Globally, the impact of these rate changes was reflected through minor week-on-week decreases in tonnages – a 1% decline to be precise. While Asia-Pacific and MESA origins faced larger drops of 2% and 7%, respectively, this was counterbalanced by increases in tonnages from Africa and Central & South America. These regions saw rises driven by seasonal perishable shipments heading north, underlining the influence of seasonal demand on tonnage trends.
Spot rates for certain key routes also showed unique patterns. Notably, from Asia Pacific to the USA, and China to the USA, rates edged up slightly. However, the overall chargeable weight for these routes was down, suggesting a complex interplay between rates and shipment volumes. Compared to last year, there were still increases observed in tonnage to the USA from the Asia-Pacific and China at rates of 5% and 1%, respectively. This data offers valuable insights into regional performance and market demands impacting the air cargo transport sector.
Changes in Contract Rates
Minor Decrease in Worldwide Contract Rates
Average worldwide contract rates also saw a minor week-on-week decrease of 1%, leading to an overall air cargo price dip to $2.78 per kilo. Despite this decrease, the contract rate remained 6% higher year-on-year, indicating enduring strength. This year-on-year increase can be attributed to multiple contributing factors such as increased demand and adjusted capacities following the high peak seasons. The data, now derived from over 500,000 weekly transactions owing to new air cargo airline participants, revealed stable worldwide air cargo capacity for week 50.
A balance between a slight drop in freighter capacity and an increase in passenger belly capacity maintained the overall capacity. The balance between these capacities highlights airlines’ ability to adapt and ensure the consistent availability of cargo space, responding to different market conditions. This adaptiveness is crucial in maintaining service levels and accommodating varying cargo volumes across regions.
Regional Variation in Tonnages
Global air cargo tonnages revealed a nuanced picture during this period. Examination of specific regions showed that while Asia-Pacific and MESA origins experienced declines, this was mitigated by increases from Africa and Central & South America. A closer look at key Asian markets such as Vietnam, Thailand, Hong Kong, China, and Japan, uncovered notable week-on-week drops in tonnage to Europe. Despite these drops, the year-on-year comparisons showcased considerable tonnage growth from these regions.
This contradictory yet comprehensible pattern highlights the importance of measuring trends over various timeframes to gain a holistic understanding of the market. The nuanced interplay of week-to-week changes and year-long trends demonstrates how volatile and unpredictable certain market segments can be, driven by numerous internal and external factors.
Assessing the Current Trends
Analysis of Price and Weight
Specific analysis of spot rates from Asia Pacific to Europe, and from Taiwan, Japan, and China, indicated notable weekly declines. Nonetheless, spot rates from Hong Kong to Europe held stable, suggesting some regions maintained consistent pricing. Year-on-year, these spot prices from major Asian markets to Europe exhibited significant growth, especially from Thailand, Taiwan, Vietnam, Japan, and China.
The pricing analysis implies that while some markets experienced downturns, others have shown resilience and even growth. Different regional dynamics such as local supply chain conditions, production levels, and specific regional demand could explain these variations. It accentuates the diverse and multi-faceted nature of the global air cargo market.
Key Insights from Recent Data
Recent developments in the air cargo industry have indicated a significant drop in both tonnage and rates following a peak during the fourth quarter of the previous year. WorldACD Market Data has brought attention to this downward trend that became particularly evident during the second full week of December. This decline has been especially impactful for origins in the Asia-Pacific region.
The air cargo sector had seen a robust period toward the end of the year, driven by holiday demand and increased shipping activities. However, as the festive season concluded, a noticeable dip in cargo volumes and pricing ensued. Factors such as changes in consumer behavior, global economic uncertainties, and supply chain disruptions have all contributed to this decline.
Asia-Pacific, a critical hub in global trade and air cargo operations, has experienced a sharper drop compared to other regions. This is due to various factors, including reduced manufacturing output, stricter COVID-19-related restrictions, and fluctuating demand from international markets. As the industry navigates these challenges, stakeholders are closely monitoring trends and adjusting strategies to adapt to the evolving landscape.
