No sign of peak season demand surge but air cargo rates are up again

Shippers fearing a lack of peak season inventory saw air cargo rates soar again in October, despite no clear signs of a surge in peak season demand for capacity, according to the latest market performance data from industry analysts, CLIVE Data Services.

As in previous months, CLIVE’s latest market intelligence reports air cargo market performance to pre-covid 2019 levels, as well as 2020 year-over-year comparisons, to provide meaningful analyses of the current conditions. Demand for chargeable weight in October 2021 rose 3 percent over the same month of 2019 and was +14 percent higher than last year but CLIVE’s ‘dynamic loadfactor’ indicator - which measures both the volume and weight perspectives of cargo flown and capacity available to produce a true indicator of airline performance – remained lower than had been expected at 68 percent.

Available capacity last month, while still -13 percent versus October 2019, was +17 percent compared to October 2020, but the dynamic loadfactor remained -3 percent pts below the level seen in the first month of Q4 2020.

The big shift, once again, was in overall air cargo rates, up +155 percent and +37 percent in October 2021 versus October 2019 and October 2020 respectively.

As is often the case, CLIVE recorded significant market performance deviations. Flights ex Asia Pacific-Europe remained virtually full to capacity, lifting rates by a further 20 percent over September 2021, while APAC-North America rates reached a double-digit level per kilo, according to CLIVE’s analyses. Overall, international rates rose 10 percent month-over-month.

Load factors out of APAC Westbound in October 2021 stood at 91 percent, while Eastbound also produced a strong 89 percent. Some mid-tier markets in Asia, such as Vietnam and Malaysia, showed the highest Spot rates - between $9-10 per kg for Spot shipments into Europe. In comparison, Hong Kong, in the last week of October, was close to $7 per kg.

“With loadfactors up 2 percent pts versus September, you can see the build up to the peak season but, admittedly, demand is not yet as high as some stakeholders had feared (or hoped). Capacity on a like-for-like basis (compared to September 2021) was more or less flat (+1 percent) and, combined with a load factor of 68 percent, this does not seem to indicate the final sprint to the end of the year has started,” said Niall van de Wouw, CLIVE’s managing director.

“October was a steady month in the market overall with some strong seasonality factors, but the dynamic loadfactor was lower than anticipated given the strong week-over-week increases we reported in September. A global dynamic loadfactor of 68 percent does show how efficiently the market is currently operating in terms of matching supply and demand.”