As the global air cargo sector enters the slower summer months, tensions are mounting. According to the research, worldwide airfreight spot rates have dropped by 40% year on year, reaching a three-year low of USD 2.41 per kg. These findings come only days after the International Air Transport Association (IATA) forecasted a significant decline in airline cargo revenues and yields for 2023.
While global air cargo demand experienced a milder decline of 1 percent in chargeable weight in May, the influx of belly capacity for the peak summer leisureravel season exerted further downward pressure on rates. Notably, global air cargocapacity increased by 14 percent year-on-year in May.
This decline reflects the delicate balance between dwindling demand and increasing capacity in the market. Major fronthaul lanes experienced a year-on-year decline in freight rates, with Southeast Asia witnessing the largest fall. Rates for air cargo from Southeast Asia tothe US and Europe dropped by 68 percent and 62 percent, respectively, in May.
Similarly, cargo rates from Northeast Asia (excluding mainland China) to the US slumped by 60 percent compared to a year ago. However, the China-US corridorperformed relatively better, recording a decline of only 31 percent below the industry average. The air cargo market’s temporary upturn in May was attributed to factors such as dockworker absences and weight restrictions are expected to have a limited global impact as ocean freight demand remains aligned with air cargo trends.
Industry players, including airlines and freight forwarders, are now facing a critical decision amidst dwindling hopes for a peak-season recovery. They must determine whether to adopt short-term volume acquisition strategies or maintain their current course. The overall market sentiment indicates growing nervousness as more industry players accept the challenges ahead.