DHL points to a difficult Q4 as more figures confirm a bumper August for air cargo
10 / 09 / 2024
Source: Supakitswn/ shutterstock.com
DHL Global Forwarding’s latest market outlook has highlighted a difficult end to the year, while figures from WorldACD show buoyant market conditions continued in August.
The forwarder’s State of the Industry report looks at the potential impact of demand, capacity, rates, economic growth and service disruption in the fourth quarter.
The report said that unrest in the Middle East and Ukraine, coupled with possible strikes at US East and Gulf Coast ports, are likely to affect trade routes and help drive up air cargo rates through the end of 2024.
Meanwhile, geopolitical factors, including further potential US protectionism, could drive a rush to import goods ahead of possible new tariffs.
Reliability in the ocean market has also suffered this year due to the Red Sea shipping crisis and changes to several major shipping alliances, which could also affect the market.
“Despite mixed economic signals, demand is expected to remain high, with constrained freighter capacity pushing rates up,” the report stated.
“Interest in China-to-US air cargo charters [is surging] as a reliable and cost-effective alternative to ocean freight with the peak season approaching.”
On the capacity front, DHL said e-commerce players had secured much of the charter space available on the market.
“Capacity constraints expected across all Asian markets in Q3 and Q4, as airlines have contracted over 80% of their capacity to e-commerce companies. [India’s] continued demand vs capacity
imbalance [is] expected to remain in Q3/Q4.”
For rates, DHL said it expects prices to stay higher than usual, mainly from Asia Pacific, as demand outpaces capacity growth, with peak season surcharges and major increases in spot prices expected already by the end of the third quarter.
The forwarder also pointed out that economic indicators signal continued stability in the global manufacturing economy, while economic growth is projected to continue to be stable but slow until 2025, amid ongoing geopolitical uncertainties.
Inflation is expected to continue to slowly decrease, DHL added.
Other forwarders have also been predicting a difficult end to the year, with DSV and Dimerco market outlooks both pointing to constrained capacity in the fourth quarter.
Bumper August
Meanwhile, the latest figures from WorldACD show that in August air cargo demand and pricing “stayed strong”, with tonnages up 10%, year on year and rates 12% above last year’s levels.
“The relatively robust performance of the market throughout the summer in the northern hemisphere will leave air cargo stakeholders anticipating a busy fourth quarter (Q4) peak season, likely to be characterized by high and rising prices that reflect high load factors and shortages of available capacity on certain head-haul lanes, especially from Asia,” WorldACD said.
“In addition to the usual rise in seasonal demand in the final months of the year, air cargo looks set to experience an additional seasonal spike from e-commerce shipments, especially from China and Hong Kong, as it has in the last two cycles.”
WorldACD also highlighted the potential impact of industrial action at US East Coast and Gulf container ports, which could lead to further conversion of sea to air cargo in addition to that already occurring due to the disruptions to Red Sea shipping.
