WorldACD: Air cargo rates hold steady as demand dips due to early-October holidays

Average worldwide air cargo rates have held steady in the first two weeks of October despite volumes edging downwards for a third consecutive week in week 41 (5 to 11 October), with the decline due mainly to China’s annual ‘Golden Week’ mid-autumn festival holiday and to a lesser extent to national holidays in Taiwan and South Korea. Still, global tonnage was at +9% year-on-year (YoY) in week 41, continuing the strong YoY trend into October after September closed at the same growth figure. According to the latest weekly figures from WorldACD Market Data, average global spot rates were flat at US$3.55 per kilo in week 41, with full-market rates (combining spot and contract rates) also stable at $3.13 per kilo. Spot rates from Asia Pacific origins dropped by -3%, week on week (WoW), to $4.83 per kilo, as tonnages from the region recorded a third small (-1%) WoW decline. Spot rates also dipped from Middle East & South Asia (-2%, WoW) origins amid further disruptions in the Middle East, but a +10% WoW rise in spot rates from Africa offset the declines from other markets. Golden Week weakening Worldwide air cargo tonnages dropped by a further -1% in week 41 compared to the previous week, including a -4% WoW fall from Central & South America (CSA) and a -3% drop from North America. Although chargeable weight from Asia Pacific origins only saw a -1% WoW fall in week 41, that followed a -2% drop the previous week and a -6% fall in week 39, in the lead-up to China’s Golden Week. Combined tonnages in weeks 40 and 41 from Asia Pacific origins were down -7% compared with the previous two weeks – a slightly steeper fall than the -4% in the equivalent period last year, although in other respects the patterns in week 41 were similar both years. Despite some unique aspects to global trade and air cargo capacity and demand this year, including the US-Iran war and changes to European import rules since July, last year was also extraordinary due to the rapid changes in US tariffs and trade policy and the end of US ‘de minimis’ import exemptions, complicating year-on-year comparisons. Nevertheless, global tonnages in week 41 this year were +9% higher than the equivalent week last year, and full-market rates +29% higher, including spot rates up +34%, YoY. Those higher rates this year reflect continuing disruptions to air cargo capacity on certain markets since the start of the US-Iran conflict, and significantly higher (+111%, YoY, based on data from IATA/Platts) jet fuel prices and related fuel surcharges. Capacity comparisons Total worldwide air cargo capacity in week 41 contracted by -1% for the second consecutive week, led by WoW reductions of -3% from Asia Pacific and MESA origins, due to the national holidays in Asia Pacific but also to renewed capacity disruptions in the Middle East, most notably in Saudi Arabia following the attacks by Yemen’s Houthis on several of the Kingdom’s airports, but most notably Riyadh’s King Khalid International Airport. After Gulf markets in week 40 recorded a +4% capacity increase, those gains were wiped out in week 41 with a -4% WoW reduction, leaving capacity from Gulf markets down by -20% compared with its level in late February (week 7) just prior to the US and Israel attacking Iran. Compared with the equivalent week last year, total global air cargo capacity in week 41 was up by around +1%, with both freighter capacity and passenger bellyhold capacity up by a similar amount. Whereas capacity from Asia Pacific markets is set to return this week following the end of the early-October national holidays in east Asia, the renewed conflict between Saudi Arabia and the Houthis is set to bring further disruption to already-disrupted air cargo capacity and services to, from and within the Gulf. For Editorial Inquiries Contact: Editor Matt Driskill at [email protected] For Advertising Inquiries Contact: Head of Sales Sally Passey at [email protected]