Xeneta Predicts Robust Growth for Air Cargo Despite China’s E-commerce Crackdown

Air cargo is set for double-digit growth this year, despite the looming uncertainties due to China’s e-commerce “crackdown,”  suggests the latest analysis by Xeneta. 

“Despite conservative, low single-digit industry growth forecasts at the end of last year, expectations have been boosted by six consecutive months of extraordinary regional demand for cargo capacity,” Xeneta stated.

In May, global air cargo spot rates rose 9% year-on-year to $2.58 per kg, marking the second consecutive month of growth, with demand up by 12% year-on-year.

“In the world of air cargo, there’s an undeniable pattern emerging. We can’t use the word ‘surprising’ anymore. With these numbers, double-digit growth for the year is now a possible scenario,” said Niall van de Wouw, Xeneta’s chief airfreight officer.

The most significant year-on-year rate increase for May was an 110% rise in the air cargo spot rate on the Middle East and Central Asia to Europe corridor, driven by ongoing Red Sea disruptions.

Maersk’s European Market update echoed this sentiment: “Tighter ocean capacity from Asia into Europe during peak season combined with the ongoing Red Sea situation is leading to increased demand and rates for air freight from Asia Pacific and the Middle East, including Maersk’s Sea-Air solution via Dubai, Muscat, and Singapore. As such, air freight is becoming a fundamental part of supply chain success rather than just a ‘plan B’ solution.”

Xeneta also noted that a “threefold increase” in ocean shipping spot rates from Asia to Europe and the US compared to the previous year has narrowed the cost gap, prompting shippers or forwarders to consider shifting to air cargo.

Jansen Stafford, Cathay Cargo’s regional head of cargo Europe, said, “The market has been healthier in 2024 than expected. If these levels are maintained through the summer, we could see a stronger back half of the year.” However, he cautioned, “This is crystal ball stuff given the political headwinds from geopolitical and economic events.”

Despite the positive outlook for Q4 2024, Xeneta expressed concerns about the impact of the US crackdown on Chinese e-commerce.

Freightos, a digital freight marketplace, commented: “B2C e-commerce volumes from platforms like Temu and Shein have driven strong demand, tight capacity, and elevated rates from China to North America and Europe. But with Temu reportedly pulling back from the US market and Shein facing challenges, the future is uncertain.”

Mr. van de Wouw added, “If fewer freighters are required for e-commerce, they will enter the general air freight market, increasing supply and potentially putting downward pressure on rates. This possibility cannot go unnoticed.”

Source: Loadstar

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