air cargo market trends

Air Cargo Market Trends – Less Turbulence as Demand & Capacity Stabilize

Air cargo market trends are providing some welcome news to the transportation, logistics, and supply chain professionals who rely on the fast, global movement of goods that only aviation can provide.

In this post, we will help you determine if this is a good time for you to consider signing a long-term agreement with your air cargo provider and how the market may move in 2024.

Also, we will report on which trade lanes are currently imbalanced and what key North American airports are doing to prepare for air cargo volume growth.

In addition, we will provide you a global top 10 list of air cargo airports and a top 10 list of air cargo carriers, by volume.

SSI can help you maximize your 2024 air cargo savings with services such as carrier contract negotiations, multimodal freight audits and international freight payment. Interested? Let’s talk.

AIR CARGO MARKET TRENDS – LEARN WHAT’S IN STORE FOR 2024

There is growing confidence that the up and down gyrations of air cargo demand in recent years will strike a balance in 2024. Classic seasonality is expected, with annual demand likely rising 1% to 3%. Yet, many experts think rates will remain fairly stable because capacity will increase as more freighters – the aircraft designed specifically to haul air freight – enter the market. 1

In most regions of the world, demand and capacity for air cargo are currently balanced according to this report from DHL Global Forwarding. The exceptions are the Asia Pacific to North America lanes where demand considerably exceeds capacity and two trade lanes where demand exceeds supply to a lesser extent (Asia Pacific to Europe and Middle East to North America). 2

In a separate 2024 Supply Chain Outlook from UPS, strong growth is expected on routes within the Asia Pacific region (intra-APAC). A healthy rebound of transpacific lanes is also expected. 3

IS THIS A GOOD TIME FOR AIR CARGO SHIPPERS TO SIGN LONG TERM AGREEMENTS?

As air cargo rates normalize, there is a growing sense that shippers and freight forwarders are ready to ink long-term deals in 2024. 4

In a balanced market, this makes sense. The agreements provide cost and speed predictability for companies relying on global supply chains. E-commerce businesses that ship a high volume of parcels can also benefit as carriers are eager to attract more customers.

The parcel and air cargo carriers are also seeking predictability after the volatility of recent years. Some carriers have high hopes for the second-half of 2024, which is why now is a good time to negotiate long-term deals.

For example, in a recent article published by FreightWaves, it was reported that Alex Fuller, the UPS Director of Marketing for International Airfreight, anticipates a strong rebound for air cargo with rates rising substantially in the back half of 2024. 5 If that’s the case, then procrastination may be financially detrimental if you wait until later this year to negotiate rates.

Generally, air cargo demand thrives during e-commerce peak season and in times when ocean cargo shipping experiences disruption. 6

So, somewhat ironically, historically low ocean rates and excess maritime capacity may benefit the air cargo market if ocean carriers blank (cancel) more sailings to boost rates in 2024.

Blanked sailings create supply chain disruptions as goods sit at port terminals rather than sailing to their destinations. So, if blank sailings proliferate, a growing number of shippers with time-sensitive deliveries may find the speed and certainty of air cargo appealing. That is another good reason to explore a long-term agreement with an air cargo carrier now.

A BLACK SWAN IN THE RED SEA MAY SOON BOOST AIR CARGO DEMAND

A black swan is a metaphor for a rare, unforeseen and consequential event. In December, multiple cargo ships in the Red Sea were attacked. As a result, most carriers halted or rerouted ships heading to and from the Suez Canal. 7 In the eye of most global supply chain managers, this certainly qualifies as a black swan event.

The Suez Canal is a vital waterway. 17,000 ships – 10% of global trade – pass through the straight each year. To say the Suez Canal is a shortcut is an understatement. Ships travelling back and forth from Asia to Europe, and to some extent, from Asia to the East Coast of North America, must now navigate all the way around Africa through the treacherous waters surrounding the Cape of Good Hope.

Separately, as you are probably aware, the Panama Canal is operating at a reduced capacity due to a historic drought in Central America. In and of itself, the Panama Canal crisis is not a black swan event, yet.

But with access restricted at two of the world’s most crucial shipping canals, it is easy to see how demand for air cargo may soar far beyond current expectations in the months ahead.

At the very least, it may be prudent for you to explore the opportunity right now to lock in competitive rates for the air-cargo capacity you know you will need in the year ahead.

Do you want help negotiating your air cargo agreements? As mentioned before, SSI offers as carrier contract negotiation services. Our process can lower your shipping spend, increase your profits and reduce the hassle of the negotiating process. To learn more, contact us.

AIR CARGO MARKET TRENDS – AIR CARGO CHARTERS GROW IN POPULARITY

The UAW coordinated strikes at General Motors, Ford and Stellantis turned out to be a boon for several companies in the air charter market. The strike at key production facilities in the US sent reverberations across the North American automotive supply chain. Over the course of six weeks, automotive supply chain manufacturing was disrupted as well.

When the Big 3 and their suppliers returned to production, air charters helped get parts where they needed to be fast. Charter demand was especially strong from Mexico, where there are growing number of automotive manufacturers are nearshoring their supply chains. 8

E-commerce businesses also drove up demand for air charters worldwide in Q4. Demand – and rates – for charter freight flights from China to Europe were high. Most striking were scattered reports of long-haul, widebody charter freighters being priced at more than $1M.

In addition to automotive and e-commerce demand, other industries that have boosted the global air charter market lately are aerospace, oil and gas, and the entertainment industries. Humanitarian aid charters were also up due to wars and an uptick in natural disasters. 9

AIR CARGO MARKET TRENDS – IN MEXICO, AIR CARGO DEMAND IS GROWING

Strong manufacturing and economic growth has made Mexico a bright spot for the air cargo market (far beyond the surge in air charters mentioned above). A remarkable 9% of Mexico’s imports arrive via air cargo. International air-cargo traffic rose by 7.3% last year across the country and at Mexico City’s Benito Juarez Airport (MEX), cargo traffic rose 13.6%.

The growth and accompanying cargo-induced traffic congestion at MEX has led the country to create a dedicated cargo airport 35km north of Mexico City, the Felipe Angeles International Airport (AIFA). In fact, air cargo carriers received an edict to move operations from MEX to AIFA last year. In 2024, twenty-seven cargo airlines will fly into the new airport. 10

Lufthansa Cargo is paying attention to this growth, noting that Mexico is attracting key industries such as aerospace, pharma, and automotive.

The German carrier now offers six freighter connections with Boeing 777F aircraft from Frankfurt to AIFA. Two of these flights connect through Dallas-Fort Worth and the other four are routed through Guadalajara. 11

AIR CARGO MARKET TRENDS – NORTH AMERICAN AIRPORTS LOOK TO INCREASE AIR CARGO MARKET SHARE

Hartsfield-Jackson International Airport in Atlanta has long been the world’s busiest passenger airport. In recent years, Atlanta has also become a booming supply chain and logistics hub, as it is well positioned in the economically vibrant southeastern US.

Now, the Atlanta airport is planning a $500M expansion of its air cargo facilities to address the growing demand. The expansion will double the airport’s air cargo handling capacity by the end of the decade, per reports. 12

The Dallas-Fort Worth metroplex is another key supply chain hub across all transport segments. The DFW international airport is adding nearly 350,000 square feet of new warehouse space and making room for seven more freighter parking spots.

The airport leadership is aiming to serve as a vital hub that connects Asia and Latin America. In particular, American Airlines has ample belly capacity between DFW and Latin America. Though located in north Texas, the airport is well connected to Mexico via I-35 so multimodal shippers can easily move goods by land and air to further destinations beyond. 13

Los Angeles International Airport (LAX) is preparing to embark on a multibillion-dollar modernization project to increase their capacity and competitiveness in the air cargo market. The airport processes nearly 2.7 million tons of cargo per year, making it one of the top air cargo airports in the nation.

However, most of the 27 air cargo buildings at LAX are at the end of their useful life and are no longer compatible with current industry standards. A major overhaul is needed, but will surely take years to complete. 14

WHAT ARE THE TOP AIR CARGO MARKETS IN THE WORLD?

87% of the air cargo market is for international business, which is why global supply chain managers have a keen interest in the air cargo market.

According to Air Cargo Market Analysis recently conducted by the International Air Transport Association (IATA), nearly 60% of the total market for air cargo occurs in the Asia-Pacific and North America regions of the world.

These are the top air cargo markets by world share as of October, 2023:

  • 32.4% Asia Pacific
  • 28.1% North America
  • 21.8% Europe
  • 13.0% Middle East
  • 2.7% Latin America
  • 2.0% Africa

The majority of Asia-related trade lanes are experiencing growth. Of note, the greatest annual growth rates by volume were the Africa-Asia market and the Middle East-Asia trade lanes. 15

WHAT ARE THE WORLD’S TOP 10 AIRPORTS FOR AIR CARGO SHIPPING?

Hong Kong International Airport is a massive air cargo hub. The airport is on pace to accommodate around 10m tons of cargo volume by the end of 2024, which is more than double the current capacity of any other airport in the world. 16

A remarkable global distribution point, Hong Kong’s prominence will continue to grow. Case in point, UPS recently announced it will develop a large express cargo hub at the airport. At 215,000 square-feet, the facility will be four-times larger than the current UPS footprint. When completed in 2028, the UPS facility will have an annual package throughput of about 1-million tons. 17

The top 10 airports that handle the most air cargo by volume are shown below:
1. Hong Kong (SAR, China)
2. Memphis, (Tennessee)
3. Anchorage (Alaska)
4. Shanghai (China)
5. Louisville (Kentucky)
6. Incheon (Korea)
7. Taipei (Taiwan)
8. Miami (Florida)
9. Los Angeles (California)
10. Tokyo (Japan)

Source: Airports Council International (ACI), as published here by Air Cargo News. 18

WHAT ARE THE WORLD’S TOP 10 AIR CARGO CARRIERS?

Not surprisingly to those in the United States, where FedEx and UPS delivery trucks are ubiquitous, FedEx and UPS are the top air cargo carriers in the world.

However, when you view the Top 10 list of air cargo carriers below, you may be surprised who are the other leading companies.

Qatar Airways and Emirates, both known for the exceptional service they provide to passengers,  clock in at number three and four with air cargo volumes. These airlines specialize in long-haul flights using wide-body aircraft, which provide plenty of belly capacity for cargo. Emirates serves 85 countries worldwide, which is another reason they are a popular choice.

The top 10 carriers that handle the most air cargo by volume are shown below:
1. Federal Express
2. United Parcel Service
3. Qatar Airways
4. Emirates
5. Korean Air
6. Atlas Air
7. Turkish Airlines
8. Cargolux
9. China Southern Airlines
10. China Airlines

Source: IATA 2022 World Air Transport Statistics, as published here by Air Cargo News. 19

CHOOSE SSI AS YOUR GLOBAL FREIGHT AUDIT PROVIDER

In this post, we have covered air cargo market trends in great detail. However, whether you ship by air, land, or sea – or all of the above – SSI can protect you from wasting money on your shipments with our best-in-class freight audit solutions.

At SSI we transform the complexity of global freight audit into cash savings and supply chain intelligence, providing actionable insights to maximize your profit potential.

  • Customizable solution scales with your growing and dynamic business needs.
  • Automated freight audit drives savings to the bottom line.
  • Actionable business intelligence supports supply chain optimization and operational efficiencies.
  • Cutting-edge data visualization facilitates analysis.

Want to learn more? Our team is eager to help you save money. Contact SSI.

Footnotes:
1. Damian Brett, “Air cargo’s rollercoaster ride set to end in 2024?”, November 28, 2023, as published by Air Cargo News.
2. DHL Global Forwarding, “Air Freight State of the Industry”, November, 2023, as published by DHL.
3. UPS News & Market Updates, “Insights Into 2024: Your End-to-End Supply Chain Outlook”, as published by UPS.
4. Damian Brett, “Shippers and forwarders expected to target longer term deals in 2024”, December 14, 2023, as published by Air Cargo News.
5. Eric Kulisch, “Air cargo market: From ‘doom mongering’ to stability”, December 15, 2023, as published by FreightWaves.
6. AJOT staff, “2024 will see a return of classic seasonality in air freight industry, but risks remain on the horizon”, November 27, 2023, as published by the American Journal of Transportation.
7. Charlie Bartlett, “As warships move into the Red Sea, carriers delay or re-route 100+ box ships”, December 18, 2023, as published by The Loadstar.
8. Ian Putzger, Air charters for US automakers take off following strike at the ‘big three’, December 5, 2023, as published by The Loadstar.
9. Ian Putzger, “General airfreight in the doldrums – but charters are soaring”. November 28, 2023, as published by The Loadstar.
10. Adriana Alarcón, “AIFA’s Cargo Expansion to Attract 27 Airlines”, September 21, 2023, as published by Mexico Business News.
11. Ian Putzger, “Carriers watch as Mexico’s airfreight volumes continue to grow”, November 4, 2023, as published by The Loadstar.
12. Dan Ronan, “Atlanta Joins Top Tier of Global Supply Chain Powers”, November 30, 2023, as published by Transport Topics.
13. Damian Brett, “DFW goes big on expansion as it reaches capacity”, August 7, 2023, as published by Air Cargo News.
14. Eric Kulisch, “LAX airport picks developer for transformational cargo project”. July 25, 2023, as published by FreightWaves.
15. IATA Sustainability & Economics, “Air Cargo Market Analysis”, December 4, 2023, as published by IATA.
16, 18. Megan Ramsay, “Top 20 Cargo Airports: Hong Kong leads the way in a tough 2022”, November 3, 2024, as published by Air Cargo News.
17. Eric Kulisch, “UPS to quadruple size of Hong Kong airport express facility”, December 4, 2023, as published by FreightWaves.
19. Rebecca Jeffrey, “Top 25 air cargo carriers: Cargo airlines tackle tough times”, October 4, 2023, as published by Air Cargo News.

SSI blog post entitled: Air cargo market trends – less turbulence as demand & capacity stabilize.