There is some evidence that the Red Sea crisis is supporting air freight demand, although many locations beyond Europe and the Middle East are also seeing a stronger market.
IATA statistics that have just been released, show that overall demand for air freight measured in ‘cargo tonne-kilometres’ increased by 11.9% year-on-year in February, something which IATA described as the “third consecutive month of double-digit year-on-year demand growth”. Even this underplays the buoyancy of international demand, with it growing by 12.4%.
Although the marked seasonality of the air freight market generally results in a downturn between January and February, African and the Middle Eastern markets grew month-on-month by 2.9% and 1.6% respectively, resulting in annualised growth rates of 21.9% and 20.9%. On a year-on-year basis, Europe saw marked growth at 15%, faster than either Asia Pacific at 11.2% or North America at a surprisingly low 3.2%. North America saw lower international traffic growth as compared to domestic.
IATA’s Director General, Willie Walsh, drew particular attention to the contrast in background trade growth, which expanded by just 0.9% year-on-year, saying that “this strong start for 2024 could see demand surpass the exceptionally high levels of early 2022. It also shows air cargo’s strong resilience in the face of continuing political and economic uncertainties”. The trade figures are further supported by purchasing managers indexes, which suggest low levels of recovery in both manufacturing activity and exports.
Why air freight is suddenly showing such robustness is not certain, but it does suggest that consumer demand is recovering in economies outside the US and this may be fuelling a desire to quickly rebuild inventories. The Red Sea crisis also appears to be having a real impact, something reflected in both Middle Eastern and European market numbers.
However, the implication of higher demand on prices is not what might be expected as capacity continues to grow rapidly. ‘Available cargo-tonne- kilometres’ were up 13.4% year-on-year, driven by passenger jet belly capacity which alone grew by 29.5%. In contrast the year-on-year freighter cargo-tonne-kilometre growth was 3.2%.
Ti’s Q4 2024 Air Freight Rate Tracker provides an up to date view of current global market conditions and rate expectations for the next year, quarter by quarter. The free report tracks key metrics including freight rates, volumes, capacity, industry sentiment and cost factors – download the report here.
Author: Thomas Cullen
Source: Ti Insight
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