Air freight rates resumed their ascend in August after a brief pause at the start of the summer. Air freight rates on the Shanghai to Europe (BAI 81) trade lane rose by +9% month-on-month (MoM) and now sit 48% above last year’s levels. Meanwhile, air freight rates on the Hong Kong to Europe (BAI 31) trade lane rose less forcefully and advanced by only 1% MoM, which translates to a 25% increase compared to last year. Air freight rates for the Shanghai to North America (BAI 82) trade lane rose strongly and advanced by +7% MoM and remained 33% higher than a year ago. With respect to the Hong Kong to North America (BAI 32) trade lane, air freight rates increased by 5% and stood 29% above last year’s prices at the end of the month.

The overall air freight rate level remains supported by air cargo volume growth that eclipsed capacity growth in virtually every month this year. According to IATA data for July, global volumes increased by 14% YoY. 

Again, cargo volumes in Europe, APAC, and the Middle East posted double-digit annual growth rates of 14%, 18%, and 15%, respectively. In addition, volume growth in North America stood at 9%, which is the third consecutive month that North America posted annual growth rates in the high-single-digit percentage range. At the same time, annual cargo capacity growth lagged volume growth for another month.

Again, cargo volumes in Europe, APAC, and the Middle East posted double-digit annual growth rates of 14%, 18%, and 15%, respectively. In addition, volume growth in North America stood at 9%, which is the third consecutive month that North America posted annual growth rates in the high-single-digit percentage range. At the same time, annual cargo capacity growth lagged volume growth for another month. Global cargo capacity growth reached only 8% year-on-year (YoY) as annual cargo capacity growth in the Middle East underperformed significantly at merely 4% YoY.  

While summer is usually the slow season in air freight, ocean freight is quite busy instead and by the end of August, most players in the sea freight industry will already have a fairly good idea about peak season performance.

According to our conversations with relevant companies, as well as 2Q24 reporting, the sea freight peak season lived up to expectations. Crucially, forward bookings suggest that the post-peak season slowdown is not a drastic step change but rather in line with past seasonal patterns, which suggests that pull-forward demand was not the major driver behind the strong peak season in ocean freight. So far, the industry could not be sure that the surge in volumes was not mainly driven by shippers that pulled forward their orders to avoid supply chain disruption in 2H24 due to trade disputes, port strikes, and the Red Sea situation. In our latest conversations with ocean carriers, it looks like pull-forward demand was merely “a” factor rather than the major one, which, if confirmed by September ocean freight data, should bode well for the upcoming peak season in air freight.

About Marc Zeck, Senior Research Analyst, Stifel

Marc Zeck is a Senior Research Analyst covering Global Logistics and Aerospace & Defence at Stifel. Mr. Zeck is based in Frankfurt, Germany and joined Stifel in 2020. He previously worked in Equity Sales at Lehman Brothers, Nomura and UBS.

Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. For more information and current disclosures for the companies discussed herein, please go to the research page at www.stifel.com.

©2024 by Marc Zeck.