‘No big bang’ for air cargo during peak season

“The peak season passes more or less without a big bang,” Stanislas Brun, vice president of cargo, said in an interview at the International Air Cargo Association trade show.

Asok Kumar, executive vice president of global air travel at DB Schenker, said during a panel discussion that the peak season has been very busy so far, “but I wouldn’t call it exceptional.”

Executives at Kuehne+Nagel, the world’s largest freight forwarder by revenue and volume, said in an earnings briefing in late October that shippers’ practice of pre-loading orders would lead to an early end to the high season. “In the fourth quarter of this year, we see a muted peak season, with modest low-single-digit percentage growth on both a sequential and year-over-year basis most likely” for air and ocean cargo, in contrast to more optimistic expectations mid-year. , said CEO Stefan Pohl.

Airlines are benefiting from consumers using ultra-low-cost products from China on new platforms such as Temu and Shein that offer direct shipping, amid ongoing shipping capacity constraints. Cargo flights from China and Hong Kong are completely full, according to market watchers.

Air Canada said third-quarter revenue rose 18 per cent to $181.8 million, driven by higher profitability and higher delivery volumes of passenger aircraft operating in the trans-Pacific market. Korean Air’s cargo revenue increased 22% year-on-year, while Japan Airlines said international cargo revenue increased 28.6%.

DHL Express said air cargo volumes grew 8.5% in the third quarter, with growth driven primarily by trade routes from Asia. It has deployed additional Boeing 777 freighters on key routes to Europe.

Capacity on intra-Asia routes is currently extremely limited as airlines allocate most of their first flights to long-haul services due to higher revenue potential, said Katie Liu, vice president of global sales and marketing at Dimerco Express Group. in the company’s November freight report.

According to Cargo Facts Consulting, main deck cargo ship capacity increased by just one point from August to September, despite strong demand. Freighter deliveries peaked last year at 258, but only 150 new and converted freighters are expected this year due to supply chain inefficiencies, slow regulatory certification for new conversion designs, a Boeing strike and quality issues at a major supplier conversions. The retirement of older aircraft is also accelerating due to rising maintenance costs and regulatory restrictions. Cargo Facts estimates that more than 40 cargo planes will be retired this year as companies phase out aircraft such as the MD-11 and Boeing 747-400.

As always, market conditions vary by region.

The global average immediate booking rate has topped $3/kg over the past couple of weeks as shortened transatlantic winter passenger schedules have slashed lower deck cargo capacity and cargo operators have diverted some aircraft to the more lucrative Asian market, sending spot prices soaring from Europe to America.

Since mid-October, shipping rates from Northern Europe to North America have increased by about 50%. Meanwhile, average rates for non-contract shipments from Europe to South America have jumped 36% in the past two weeks to $5.88/kg, with much of the increase attributed to traffic jams at Sao Paulo’s Guarulhos International Airport. Tariffs to Brazil rose 57% to $6.58/kg due to delays at Sao Paulo, where the airport imposed a five-day cargo embargo earlier this month, benchmarking agency WorldACD said.

Average spot prices from Europe to the world rose 10% over the past week to $2.71/kg – 23% higher than a year ago, it said.

Spot market rates from China to North America rose about 17% over the previous three weeks to almost $7/kg.

Airline and freight forwarder executives say they expect market strength to continue through the first quarter of 2025. The industry will be watching negotiations between East Coast port operators and the longshoremen’s union over technology provisions in a new labor contract that, if not resolved by Jan. 15, could lead to a strike and the diversion of time-sensitive cargo to air transport.

A potential headwind to continued air travel growth is the slowdown in global manufacturing activity, which is putting pressure on export orders in some countries. The manufacturing Purchasing Managers’ Index fell below last year’s level in November for the first time since 2024, signaling a broader decline in manufacturing activity. In addition, Germany has slipped back into recession, and overall economic growth in Europe remains sluggish.

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