Airfreight rates remained steady in October despite demand growth not reaching the levels initially anticipated for the peak season, raising potential concerns about securing capacity in the future. In his monthly column, TAC Index editor Neil Wilson reported that the Baltic Air Freight Index, calculated by TAC Data, increased 8.1% over the four weeks ending November 4, marking a 10.9% rise year-over-year.
Asia led the rate increases, with the Hong Kong outbound index climbing 8.2% from October and over 10% compared to last year. Outbound rates from Shanghai saw an even sharper rise, jumping 12.6% month-on-month, which translates to a 22.4% year-on-year increase. Other key lanes from Asia, including India, Vietnam, and Thailand, also showed significant gains over 2023 levels.
While rates saw solid improvements, the market’s performance did not meet the robust expectations for the peak season leading up to Thanksgiving and Christmas. “October delivered another in a series of solid gains this year, particularly on major export lanes from Asia to Europe and North America,” Wilson explained. “However, it wasn’t as spectacular as anticipated.”
Several forwarders, including the world’s largest, Kuehne+Nagel, expect a quieter-than-anticipated peak season. This muted demand is partly attributed to a strategy of front-loading cargo to avoid potential disruptions later in the season.
Looking forward, capacity constraints may emerge as a primary challenge for the air cargo sector. Wilson highlighted ongoing production delays at Boeing and shortages of aircraft for conversion, factors that could impact future capacity. Sources recently noted that supply chain issues are prompting passenger carriers to retain aircraft longer than usual, further limiting the availability of planes for freighter conversion.
Boeing market analysis director Aaron Tayler shared at a recent event that projected demand growth of 2.7% per year could outpace capacity expansion, given these constraints.
Wilson added that despite a potentially less intense peak season, 2024 looks promising for airline carriers, with airfreight rates climbing even as average jet fuel prices dropped by 20.7% over the past year. “With capacity looking tighter, the air cargo market may see further strength in the coming years—barring any major geopolitical shifts or changes to global trade dynamics,” he concluded.