Rates continue to soften

Image source: Shutterstock

A muted peak season has seen air cargo rates continue to soften in the fourth quarter, crossing below 2020 peak season levels in some cases, but a late season surge in volume is still possible.

October air cargo yields saw continued “sequential deceleration from mid-year levels and perhaps even faster than we expected,” said Bruce Chan, senior analyst at investment bank Stifel, in the latest Baltic Exchange newsletter.

Chan added: “On the other side of the capacity equation, we are seeing the effects of increased supply. The increase is coming from multiple vectors, including lower deck belly space from the gradual return of long haul passenger flights.”

He said that a reduction in port congestion and more fluid overall supply chains are reducing the need for highly-elastic expedited modes and are allowing shippers to convert back to cheaper ocean or overland options where practical and available.

“And while rates have already come down meaningfully, they’re certainly not at recessionary levels. They haven’t even returned to pre-pandemic normal levels. So, there’s more potential downside.

“But the path forward is not certain and it probably won’t be smooth. So shippers that still prioritize supply-chain service and latency may be reluctant to let go of current practices, and that may help support contract rates relative to spot.”

Fuel prices will probably remain volatile.

Looking to year end, Chan said: If elevated inventories and a muted peak are mostly a result of early (over) ordering, and if certain retail inventory clearing events in consumer end markets had a substantial enough effect, we could see a late season surge in volume.

“While these events don’t necessarily factor into our base case, we mention them to underscore some of the potential known unknowns that could affect rate levels in subsequent months.”

Share this story

Related Topics

Latest airfreight rates news

Etihad Cargo sees revenues decline in 2023 as market rates cooled

Etihad Cargo registered a decline in its cargo revenues last year as the wider air cargo market cooled following the…

Read More

Share this story

Airfreight rates on major trades remain down on 2023 levels in February

Air cargo rates continued to register declines on major east-west trades in February compared with last year as the timing…

Read More

Share this story

Awery reports Red Sea-related rates rise

There are conflicting opinions about the extent to which the Red Sea shipping crisis is impacting airfreight, but airfreight rates…

Read More

Share this story

Air Cargo News

Air Cargo News
Established in 1983, Air Cargo News is the leading source of news, information, interviews, analyses and reports to the global airfreight industry. Our leading portfolio includes print, digital and events that give businesses in the airfreight industry the ability to connect with decision-makers in this sector.