3. Spot Rates

Due to the aforementioned supply/demand imbalance, global air cargo spot rates have been increasing during the traditionally slack summer period, which typically sees falling or flat rates.

Strong e-commerce demand, ocean shipping chaos due to the Red Sea crisis, and a narrowing spread between air and ocean freight rates drove air cargo spot rates to their highest levels in July 2024.

This is especially evident in outbound Asia markets where rates remain elevated, however it is not all good news for carriers because the trade imbalances mean achieving a profitable backhaul where demand remains subdued is a challenge.

It is a different situation on the Transatlantic market, which is less impacted by these factors. This corridor showed classic seasonal freight rate adjustments with rates falling during the slack season due to ample cargo capacity.

In the near term, the air cargo market will remain buoyant as spot rates (valid for up to one month) stay above seasonal rates (valid for over one month), with a widened gap.

For the rest of the year, geopolitical tensions will continue to play a major role – with knock-on impacts across ocean and air supply chains.

Political unrest in Middle East and Ukraine, along with potential union strikes at US East and Gulf Coast Sea ports, could put upward pressure on air cargo rates during the year-end peak season.

Geopolitics such as US protectionism will almost certainly come into play. For example, a Trump presidency would likely cause a rush to import goods from China ahead of new tariffs.

Potential weakening consumer demand could put downward pressure on rates, but it remains to be seen if this would be enough to counteract the forces that have impacted the market so far in 2024.