As rapid rise in Trans-Pacific spot rates slows, global air cargo market speeds toward “hot Q4”

Analysts are looking for indications of a “normalization phase” in spot rates, carrier profits, and port activity in the second half of 2024, following a surge in trans-Pacific shipping volume in the first half of the year. Total U.S. containerized imports grew by an average of 23% in the first quarter, but slowed to an average 5.8% in April and May, according to the Journal of Commerce. 

Meanwhile, the global air cargo market has seen double-digit growth in rates for the sixth straight month, suggesting that a peak season surcharge may need to be implemented in response to increased demand in a “hot Q4,” according to analysts at Xeneta.

The shipping volume surge in the first-half of the year may be a result of logistics considerations, including importers preparing for a possible work stoppage along the American East Coast in the fall. 

For those looking to ship by air in the coming months, Niall van de Wouw, chief airfreight officer at Xeneta, warns that prices could be high. 

“In 2023, the market did not anticipate the demand we saw. This year, it does. Shippers with capacity agreements in place will be better prepared, but if they go above the agreed upon threshold, they will face paying market rates. On the short-term spot market, this could mean a 50 percent increases in rates above what we see now, once the market really heats up,” said van de Wouw.

“Asset holders will be strategizing; how much capacity they are going to keep behind to sell at a premium when this happens. If you were in an airline’s shoes, you’d make sure you had a good chunk of capacity to sell at the premium likely to be paid on the short-term market.”

If you need support in optimizing your operations and budget in light of changing market conditions, we’d be keen to help. Please contact us at air@canaangroup.ca