Arabian Post Staff -Dubai
Despite traditionally being a slower period for the industry, global air cargo rates are defying expectations and holding steady. This resilience is primarily driven by robust demand and high spot rates originating from Asia and the Middle East, according to recent data and analysis by WorldACD Market Data.
While total global tonnages dipped slightly by 2% during the week of June 10th to 16th (week 24), the average rate per kilo remained relatively stable at $2. 51. This figure represents an 8% increase year-over-year and sits significantly higher than pre-pandemic levels, hovering 42% above June 2019 rates.
Looking deeper into the data, the strength in Asia and the Middle East becomes even more apparent. Compared to the same week last year, tonnages originating from these regions have witnessed significant growth:16% from Asia Pacific and a staggering 52% from the Middle East & South Asia (MESA) region. Rates have also climbed alongside tonnages, with Asia Pacific experiencing a 17% rise and MESA a remarkable 52% increase.
Experts point to several factors contributing to the ongoing demand. One key driver is the ongoing disruption to ocean freight services. With ocean shipping facing challenges, businesses are turning to air cargo as a more reliable, albeit pricier, alternative to move their goods. This shift in preference, particularly from high-value or time-sensitive products, has put upward pressure on air cargo rates.
Another factor is the continued growth of e-commerce. The burgeoning online retail sector relies heavily on air cargo to deliver products quickly and efficiently. This trend, particularly strong in Asia, is contributing to the sustained demand for airfreight services.
However, the picture isn’t entirely rosy. While rates remain elevated, there are indications that tonnages might be starting to cool down. The slight decline in total global tonnages during week 24 suggests a potential softening in demand, which could eventually lead to a correction in rates. Additionally, some analysts warn that the ongoing geopolitical tensions and potential economic slowdown could dampen future demand for air cargo.
Despite these potential headwinds, the current data paints a clear picture:air cargo rates are showing surprising resilience thanks in large part to the continued strength of Asian and Middle Eastern markets. Whether this trend can continue in the face of economic uncertainties remains to be seen, but for now, air cargo operators in these regions can expect to benefit from the ongoing demand boom.
Also published on Medium.
