In September, due to the decline in demand and increased capacity, the "jump" air cargo market was affected, and the General Air Cargo spot price fell 9% year-on-year in September, lower than the 2021 level for the first time, according to the latest weekly market data from industry analysts at CLIVE data Services, Xeneta's CLIVE data Services industry analysts.
Since the beginning of this year, the spot exchange rate of has been gradually declining, indicating that the air cargo market is deteriorating. In September, spot prices of ordinary goods continued to fall below seasonal prices, although continued regional capacity restrictions on East Asia's outbound exports showed greater resistance compared to the marine spot market. In September, the spot rate of sea freight from East Asia to Europe fell 49% from January levels, while the spot rate of air freight fell 19%. However, the market will be strongly affected by the recovery of air cargo capacity.
Take Japan as an example. The route to Europe was affected by the Ukrainian war, resulting in a 12% decrease from the first quarter to the second quarter. In June, Japan began to relax some strict COVID-19 restrictions to welcome guided tourists, and since then, the belly capacity of passenger planes flying to Europe increased by 7% in the third quarter, returning to 38% before the pandemic in the third quarter of 2019. Accordingly, air cargo spot rates fell by 28% in the third quarter compared with the second quarter. Looking ahead, further lifting travel restrictions on individual tourists will further promote the recovery of capacity of long-distance wide-body flights.
Overall, global air cargo demand remained negative in September, down 5% and 2% from the same month before the pandemic in 2021 and 2019, respectively. The overall decline in general air cargo volumes is due to airlines reintroducing passenger and cargo capacity in East Asia, most notably at the end of this month (except Hong Kong), when the Japanese and Taiwan governments announced plans to lift coronavirus restrictions.
According to Clive, global freight volume recovered 5% last month compared with September 2021, and is currently only 7% lower than the 2019 level.
Declining demand and increased capacity had an expected impact on CLIVE's "dynamic load coefficient" analysis, which provided the best indicator of airline performance by measuring cargo volume and weight and available capacity. The index fell 7% to 59% in the same month last year, down 2% from the record level in September 2019.
"What we're seeing is a very 'jumping' air cargo market, which responds very quickly to global events, whether it's an escalation of the Ukrainian conflict, an increase in inflation, a rise in pound pressure, or a strengthening of the dollar. It's too early to tell how these events will reflect in the air cargo market for the rest of the year, but we can't see any signs that demand will rebound from a macroeconomic perspective," said Niall van de Wouw, chief air transport officer of Xeneta.
"We also see that the ocean market is changing very rapidly and we expect its reliability to increase, which will result in a certain amount of air freight that will inevitably return to the ocean. We see that demand in the air freight market is flat, but the overall decline in air freight rates and load rates may be exacerbated by the continued recovery of capacity, even if we are heading towards winter, when we traditionally expect less freight space in major European and North American markets. If shippers keep calm and do not air-freight in the peak season, they may find themselves more purchasing power," he added.
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