2024 Air Cargo Outlook by XENETA
Dive into the future of air freight shipping with Xeneta’s 2024 Outlook report. As Niall van de Wouw, Chief Airfreight Officer at Xeneta, shares his insights, explore the key themes shaping the industry in the coming year. From the impact of consumer spending and the resurgence of classic seasonality patterns to the intricate balance between greener policies and the practicalities of carbon reduction, this report provides a comprehensive view. Uncover projections on demand growth, supply dynamics, and spot rates, offering valuable intelligence for shippers, freight forwarders, and industry players.
Factors impacting air cargo volumes and rates are vast, complex and prone to change, so this is a market which rails against any notion of longterm certainty or stability.
However, using Xeneta data and intelligence, we can put forward some potential outcomes in 2024:
- Demand to grow by 1-2%
- Supply to grow by 2-4%
- Spot rates to follow the classic seasonality patterns
- A green transition that will slow down air cargo growth
- Longer-term price agreements between shippers and freight forwarders
ANALYST INSIGHT Wenwen Zhang, Air Freight Analyst at Xeneta:
“The macro economic environment does not look to be in favor of global trade in the first half of 2024, but if we are being optimistic it will pick up in the second half of the year as central banks loosen monetary policy. We are already seeing shippers look to longer term rates and this trend will most likely continue into 2024 amid lower consumer spending.
Shippers should perhaps be careful not to miss the opportunity of locking into longer term contracts at lower rates in the first half of 2024 – especially if consumer spending does increase later in the year and some negotiating strength returns to the service provider. Freight forwarders are facing fierce competition due to the impact of lower consumer spending (which means less demand for transport services) so they may also be eager to secure freight volumes through longer contracts”
Consumer spending will keep the market subdued
The volume of global merchandise trade is expected to grow 3.3% in 2024, according to the October release from the World Trade Organization (WTO).
This 2024 growth should be viewed in the context of an estimated meagre 0.8% for 2023, which is a significant downward revision from the 1.7% forecast for 2023
made in April of this year. The combination of persistent high inflation and rising interest rates in advanced economies has continued to bite on consumer spending this year.
Lessons from history tell us inflation tends to rise quickly and fall at a slower pace with a long tail.
Therefore, in the first half of 2024, we may still see a continued weakening in consumer spending in Western economies due to increased costs of borrowing and declining real-terms earnings.
Meanwhile, China has a different problem – deflation.It may be the world’s manufacturing powerhouse, but a strained property market and weaker foreign demand has dragged year-on-year growth of the Chinese producer price index into negative territory with 13 consecutive months of decline.
The comeback of ‘classic seasonality in 2024: Familiar annual patterns could return
The global supply chain chaos caused by the pandemic created great opportunities for the air cargo industry. However, as Covid restrictions were gradually lifted in 2022, consumers shifted their spending from goods to services. This resulted in a sharp 9% year-on-year decrease in air cargo demand in Q4 2022 from a record-breaking market high in Q4 2021.
This downward trajectory continued in 2023, with accumulated year-to-date global air cargo demand declining by 2% from the same period in 2022. This trend has decelerated in recent months with October registering the first increase since March 2022. October global manufacturing PMI was the latest of 14 consecutive months of decline. This again points towards subdued air cargo demand for the remainder of the year – and no traditional peak season.
Much of the extreme market volatility has been corrected since the second half of 2022 and global economic conditions will likely show some improvements from H2 2024. Because air cargo demand usually increases faster during economic upturns, we may see signals of a return of seasonality as early as Q3 2024
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Image source: xeneta.com