General air freight spot rates fell 9% year-over-year in September, to below the 2021 level for the first time this year, as returning global cargo capacity continued to outpace air cargo volumes, according to industry analysts at CLIVE Data Services.

In its latest weekly market data, CLIVE said spot rates have been falling gradually since the beginning of this year, pointing to a deteriorating air cargo market.

It said in September, general cargo spot rates continued to plunge below seasonal rates, although continuing regional capacity constraints from outbound East Asia showed more resistance in comparison to the ocean spot market.

Meanwhile, during the same month, ocean spot rates from East Asia to Europe fell 49% from the January level, while air freight spot rates were 19% lower.

CLIVE said the market, however, will be strongly influenced by returning air cargo capacity.   

"Overall, global air cargo demand in September, measured in chargeable weight, remained a negative trend, falling 5% and 2% in the same months of 2021 and pre-pandemic 2019," the airfreight data analytics company, which is now part of Xeneta, added.

Air cargo volume drops, capacity up

Source: CLIVE Data Services

CLIVE noted that the overall decline in general air freight volumes came as airlines reintroduced passenger and cargo capacity from East Asia, most notably at the end of the month in Hong Kong, Japan and Taiwan after their governments announced plans to lift coronavirus restrictions.

It said global cargo capacity for the period recovered by 5% versus September 2021 to now sits just 7% below the 2019 level.

CLIVE reported that declining demand and increasing capacity had the expected impact on CLIVE's 'dynamic load factor' analysis, which provides the best indicator of airline performance by measuring both the volume and weight perspectives of cargo flown and available capacity.

It dropped 7% pts over the same month last year to 59% and was 2% pts adrift of the level recorded in September 2019.

"What we see is a very 'jumpy' air cargo market which responds very quickly to global events, whether this is the escalation of the conflict in Ukraine, rising inflation, the pressure on the Sterling, or the stronger US dollar," commented Niall van de Wouw, chief airfreight officer at Xeneta.

"It's still early to judge how such events will be reflected in the air freight market over the rest of this year but we see no indications that demand will pick up from a macroeconomic perspective," van de Wouw added. 

"We also see the ocean market changing very rapidly and we expect its reliability to go up, which will see certain volumes pushed to air cargo by necessity go back to the ocean."

 Source: CLIVE Data Services

The Xeneta airfreight chief added that the general air cargo rates are also expected to further decline as more capacity is reintroduced in the market.

"We see a flat air cargo market in terms of demand, but the fall in general air freight rates and load factor are likely to be exacerbated by the continuing return of capacity, even as we head towards a winter season when, traditionally, we would expect to see cargo space in the prime Europe and North America markets cut back," van de Wouw said.

"Shippers who have held their nerve and not shipped their peak season goods early by air are likely to find themselves in a stronger buying position," he added.