The trans-Pacific air freight market is expected to remain subdued through the second quarter of 2023 due to slowing demand, high inventory levels in the North America, and abundant capacity on trans-Pacific container ships at low cost. North American retailers are focused on reducing inventory to lower carrying costs, which has resulted in weak demand for Asian imports.
Average spot rates from Shanghai to North America were $5.65 per kg in late March, down 36% from March 2022, but still 71% higher than March 2019. Average spot rates from Frankfurt to North America were $3.23 per kg in late March, down 30% from March 2022, but still 38% higher than pre-pandemic levels.
Despite the current challenges, market observers expect the pent-up demand for air cargo-friendly items to provide a lift in the fourth-quarter peak season, once inventory replenishment needs increase.
1. Quarterly Intelligence – Q2 2023, Journal of Commerce by S&P Global, Accessed Apr 17, 2023.