The air freight market is as volatile as ever. Some of the trends that are obscured include the buoyancy of semiconductor demand earlier on in the year combined with the collapse in health-care related cargoes. The movements in these sectors has been violent, both up and down. Yet it is still the US consumer that smooths everything out of the top-line trends.
Being focused on the expedited shipping of consumer goods and electronics production supply, the rates are invariably tied to consumer demand in backhauls of trading routes.
The profile of inventory in the retail sector appears different to that in the US, with a smaller boom leading to lower levels of stock. Equally the reduction in internet retail activity has had less impact as many economies have poorly developed internet retail sector. Additionally, air freight plays a smaller part in the support of the consumer economy compared to the US, or indeed China.
Proportionately, production operations account for a higher proportion of most European economies air freight traffic than consumer demand. Some of these areas are healthy, such as health care which is significant: out of German, Swiss and the UK. Also, areas such as hi-tech precision engineering. The recovery in automotive production will also provide support.
This is a strong signal that air freight rates will be under downward pressure in Q4 2022 to at least Q1 2023, and very probably following quarters.
Ti’s Q4 Air Freight Tracker provides an outlook on the Air Freight market heading into the new year.