Global air freight markets to remain strong, says Dimerco

There has been no slow season since March for air freight with rates remaining high compared to the same period last year, according to the latest update from Dimerco.

"Unlike traditional trends in the air freight market, e-commerce and e-cigarettes have been key products driving demand. Additionally, the production shift from China to countries like Thailand and Vietnam has contributed to increased volume within the intra-Asia market."

Kathy Liu, Vice President, Dimerco Express Group says: “The continuously rising ocean freight rates on the Trans-Pacific Eastbound (TPEB) route, driven by strong demand, are expected to impact the air freight market. It is anticipated that more less-than-container-load (LCL) shipments will switch to air freight starting in June, especially on the TPEB route, resembling the situation in 2021. Furthermore, with the new tariff set to be implemented in August, it is expected that a surge in products related to this tariff will occupy both air and ocean capacity to meet the expected arrival dates before the tariff takes effect.”

Global outlook positive
The global purchasing managers index (PMI) rose to 52.4 in April from 52.3 in March, supported by faster growth in the service sector and a third consecutive monthly increase in new orders in the global manufacturing sector.

"Although this figure remains below the long-run average of 53.2, it is the highest in ten months and indicates annualised quarterly global GDP growth of 2.7 percent. However, it is important not to assume that the global economy will continue to accelerate. Price pressures remain a concern, even though global selling inflation has eased to a three-month low. The pace of rising selling prices in April was close to the rolling 12-month average."

On the U.S./Canada trade lane, there is a surge in volume, particularly from Delhi, due to the transshipment of readymade garments from Bangladesh.

Market forecast
Dimerco is expecting space in Beijing Daxing Airport and Shanghai Pudong Airport to be tight with rates for May 27 to June 30 seen stable or rising. Asia to U..S space is likely to see an upturn or tight with rates stable or rising.

Outlook and country report
The global air freight market is projected to achieve a compound annual growth rate (CAGR) of 12 percent from 2024 to 2032. As we approach the end of Q22024, several key indicators continue to drive this growth such as ongoing globalisation, escalating e-commerce, rise of emerging markets, and an emphasis on supply chain resilience.

Air cargo growth in the U.S. is expected to be between one–two percent in June 2024 YoY, based on chargeable weight. "It's crucial to closely monitor geopolitical and seasonal events as they may cause potential spikes in air freight rates."

Air freight rates from India to intra-Asia have seen a slight reduction while space demand for Europe has increased marginally. "On the U.S./Canada trade lane, there is a surge in volume, particularly from Delhi, due to the transshipment of readymade garments from Bangladesh."

The capacity is tight for shipments from Indonesia to the U.S. and Europe. While there is available space to the connecting hubs, the onward space from these hubs to the U.S. and Europe is limited. Due to this high demand and limited capacity, rates to the U.S. and Europe are determined on a case-by-case basis.

For air shipments from Thailand to the U.S. and Canada, rates are determined on a case-by-case basis. Due to crowded conditions, some airlines require advance booking of at least two days.