Asia Pacific air cargo rebounds as global tonnages edge higher

Air cargo tonnages from Asia Pacific rebounded strongly in the second full week of May after falling during the ‘super golden week’ holiday period in East Asia earlier in the month, marking a relatively stable week after nearly three months of market turbulence.

According to the latest weekly figures from WorldACD Market Data, chargeable weight from Asia Pacific increased by 11% week on week (WoW) in week 20 (11 to 17 May), returning volumes to levels seen before the Labour Day holiday period in China and national holidays in Japan and South Korea. The 11% rebound matched the recovery in tonnages from Asia Pacific recorded in week 20 last year.

At the same time, tonnages from Central and South America (CSA), North America and Europe fell by 5%, 5% and 3% WoW, respectively. The decline from CSA reflected the end of the seasonal flower surge linked to Mother’s Day demand in the US and Canada, while Ascension Day holidays limited tonnages from Europe. Volumes from Middle East and South Asia (MESA) origins rose by a further 1% WoW. The strong recovery in Asia Pacific was the main factor behind a 3% WoW rise in worldwide tonnages, taking global volumes 2% higher year on year.

Average worldwide spot rates remained stable in week 20, including from Asia Pacific despite the increase in volumes. Worldwide average spot rates stood at $3.67 per kilo, 48% higher than the same week last year, based on more than 500,000 weekly transactions covered by WorldACD’s data. A 2% WoW increase in contract rates, mainly driven by a 3% rise from North America, pushed worldwide full market rates up by 1% to $3.23 per kilo, based on a mix of spot and contract rates.

Worldwide air cargo capacity increased by 1% WoW in week 20, supported by increases from Asia Pacific (3%) and MESA (2%). Central and South America and Africa were the only regions to record declines, falling 5% and 2% WoW, respectively.

However, compared with week 7, before attacks on Iran by the US and Israel, worldwide air cargo capacity was down by around 6%, mainly because of reduced capacity to and from the MESA region. Capacity in the region remained around 32% below pre-war levels. Within MESA, South Asia capacity was down 9% compared with week 7, while capacity to and from the Gulf area remained around 49% lower.

Plans by major Gulf carriers to add capacity this month stalled and moved in reverse after Iran or its proxies launched further drone attacks in the UAE, including a 4 May strike on the Fujairah Oil Industry Zone and a 17 May drone strike targeting the Barakah nuclear power plant.

Although the outlook for the Gulf conflict remains uncertain and volatile, one improvement for air cargo has been lower jet fuel prices. Prices fell to around $162 per barrel in the week to 15 May, down from a peak of $209 per barrel in early April. The decline of more than 20% has been accompanied by growing confidence among major airlines that significant global jet fuel shortages are now less likely, partly because refineries in several regions have prioritised jet fuel production.

The moderation in jet fuel prices in recent weeks has reduced the likelihood of further major global air cargo rate increases linked to fuel costs. However, jet fuel prices remain around 80% higher than the same period last year, and shortages in some regions continue to cause service cancellations and slow the return of capacity to certain markets.