DHL Global Forwarding releases latest air freight report
The report indicates a notable spike in freight rates, contributing to challenges in business confidence.
DHL Global Forwarding shared key findings from its latest Air Freight State of the Industry report, shedding light on the current dynamics influencing global air cargo. The report indicates a notable spike in freight rates, contributing to challenges in business confidence. A spike in freight rates hinders business confidence however easing inflation is expected to boost customer spending.
Projections for global economic growth foresee a slowdown from 3.5% in 2022 to 2.5% in 2023, with a further dip to 2.4% in 2024. While inflation remains at elevated levels, the trends in 2023 indicate a downward trajectory, expected to drop further in 2024, the report states.
The Purchasing Managers' Index (PMI) took a hit in October 2023, dropping to the neutral mark of 50. This shift is attributed to softening economic conditions, high interest rates, and widespread inventory reduction policies that have constrained purchases. Despite this, demand in the air cargo sector maintains moderate growth, while capacity continues to expand.
Key insights on air cargo demand reveal stability with a slight month-on-month (MoM) increase, remaining flat year-on-year (YoY). The anticipated easing of inflation is poised to boost customer spending, although persistently high prices pose challenges to business confidence.
Air cargo capacity has surged, showing a +11% increase since November 2022, boosted by a +19% growth in belly capacity compared to the same period. With no significant backlogs in most regions, the exception includes Israel, Hong Kong, and China.
Leading the growth in air cargo demand, airlines from the Asia Pacific demonstrated a 4.2% YoY increase, followed by Middle East airlines (2.5%) and Latin American carriers (1.5%). However, a MoM comparison reveals a slight reduction in capacity as some airlines trim passenger flights due to decreased winter travel demand.
The report also highlights insights into jet fuel prices, with EIA Brent crude oil spot forecasts expecting an average increase from $90/b in Q4’23 to $93/b in 2024. While the Israel and Gaza conflict has not directly impacted oil supply, uncertainties surrounding the conflict and other global oil supply conditions could exert upward pressure on crude oil prices.
Global average rates are trending upward with a MoM increase of +3%, although a -27% decline is observed compared to the previous year. Some seasonal uptick on certain tradelanes, such as ex-China, also reflects strong e-commerce growth.
The report further highlights that most of the flights to Tel Aviv remain suspended due to conflict between Israel and Gaza, as airstrikes continue. Additionally, airlines, including Lufthansa, EuroWings, and Swiss Air, suspended flights to Lebanon in mid-October. In the context of Russia/Ukraine relations, sanctions are expected to remain active for the foreseeable future.