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WorldACD Weekly Air Cargo Trends – week 11

Asia Pacific export tonnages and rates continue to rise

Air cargo tonnages and rates from Asia Pacific are continuing to rise, five weeks on from the Lunar New Year (LNY) dip in early February, as disruptions to container shipping and strong demand for cross-border e-commerce shipments continue to boost volumes and prices.

According to the latest weekly figures from WorldACD Market Data, combined export tonnages from Asia Pacific origin points rose by a further +8% in weeks 10 and 11 (4-10 March and 11-17 March), compared with the previous two weeks (2Wo2W), and by +10% compared with the same period last year. Average rates from Asia Pacific origin points also rose by +8% in weeks 10 and 11, compared with the previous two weeks, although, like most origin regions, rates were down on a year-on-year (YoY) basis – which is not surprising given that available capacity ex-Asia Pacific is up +19%, YoY.

Based on the more than 450,000 weekly transactions covered by WorldACD’s data, Asia Pacific to Europe routes recorded the biggest increases in tonnages (+15%), on a 2Wo2W basis, with rates also up +8%, as disruptions to Asia-Europe container shipping (caused by the attacks on vessels in the Red Sea) and strong e-commerce demand added to capacity and pricing pressures. And Asia Pacific to North America routes also saw increases in tonnages (+11%) and average rates (+8%), with e-commerce shipments and water level challenges in the Panama Canal adding to the demand-side pressures, freight forwarders report.

US freight forwarder C.H. Robinson expects the ongoing Suez Canal crisis will cause rates on Asia to Europe air freight trade lanes to stay elevated and perhaps moderately increase through to the end of the second quarter (Q2) of 2024. And on Trans-Pacific routes, it expects that with production momentum picking up in anticipation for the end of Q1 rush, and e-commerce cargo demand growing ahead of Easter, pressure on capacity and rates will likely peak in the last week of March or early April.

Middle East & South Asia surge

The other big ongoing story at the moment is the continuing surge in demand and rates from Middle East & South Asia (MESA) origin points. Although there has been a slight cooling down in demand in weeks 10 and 11, compared with the previous two weeks (-3%), tonnages are well up, YoY (+17%), from MESA and average rates are increasing even more strongly (+9%, 2Wo2W and +23%, YoY). This could be related to decreasing capacity in the last 2 weeks, since the start of Ramadan, although the impact is typically stronger at the end of Ramadan, when there is a holiday period.

As WorldACD has highlighted in recent weeks, certain Asia-Europe sea-air hubs such as Dubai, Colombo and Bangkok have experienced exceptionally high air cargo demand to Europe since the start of this year, in large part linked to the disruptions to Asia-Europe container shipping caused by the attacks on vessels in the Red Sea. Further analysis indicates that Dubai-Europe tonnages remain particularly strong, up by +165% in week 11 compared with their level this time last year, although they were slightly below (-10%) their extraordinary level of the previous week.

Although Colombo-Europe tonnages were still up +22%, year on year (YoY), in week 11, that compares with +38% in week 9 and more than +80% in the three weeks before.

Nevertheless, fresh analysis by WorldACD reveals that the recent disruptions to container shipping have contributed to a big surge in average air freight rates from South Asia as a whole, with average rates from South Asia into Europe up by +67% in the first half of March (1-17 March) compared with December 2023, and up by +36% into North America.

Global picture

Looking at the wider global picture, total worldwide tonnages in week 11 were broadly flat compared with the previous week (-1%), and were also flat on a 2Wo2W basis, although they were up +4% compared with the same period last year.

Average global rates rose again (+3%) in week 11 compared with the previous week to $2.37 per kilo, roughly their level in the weeks leading up to LNY, and they were also up by +6% on a 2Wo2W basis. Compared with last year, average global prices are down by around -12%, but they remain significantly above pre-Covid levels (+32% compared to March 2019).

Overall worldwide air cargo capacity remains significantly up on last year’s levels (+8%), including capacity ex-Asia Pacific up by +19%, and ex-Central & South America capacity up by +12%.

For more details, please refer to the attached WorldACD weekly report.

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