Air cargo capacity shifts to meet rising demand

Air cargo carriers are responding to increased demand by shifting capacity to the most lucrative routes, especially from Asia to Europe and North America.

Over the past week, air freight capacity from Asia Pacific to North America has grown by 6%, while capacity to Europe has increased by 4%. The most significant capacity jumps were seen on key routes such as Shanghai to North America, which rose by 17%, and Hong Kong to North America, with a 12% increase.

Demand remains strong despite capacity increases
The driving force behind the strong demand is eCommerce, particularly hi-tech and electronic goods from China, Southeast Asia, and India. Perishable goods from the Pacific and Americas are also contributing to higher cargo volumes, which are up compared to the same period last year and year-to-date.

Despite the rise in capacity, air freight rates have remained resilient, with slight increases observed. Market analysts reported a nearly 2% week-on-week rise in spot rates out of Hong Kong and a 3.5% increase in rates from Shanghai. This suggests that the current level of demand is sufficient to sustain pricing, even with the additional capacity brought online.

Tariff concerns loom for US importers
Existing import tariffs are already imposing significant costs on US households, and any further increases by a new administration could push these costs to over $4,000 per household in some scenarios. Such an impact could lead to reduced consumer spending, affecting demand for goods and, consequently, air cargo volumes.

Carriers prioritise high-demand routes
Looking ahead, carriers are expected to continue focusing on high-demand routes, particularly those driven by eCommerce, as this sector continues to fuel air cargo volumes. Maintaining flexibility and adjusting capacity to match fluctuating demand will be key for carriers seeking to maximise revenue during the peak season.

How we can help
As demand for air freight continues to rise, we maintain long-term agreements with our primary carriers to secure space and offer dependable solutions for your time-sensitive shipments. If you have upcoming consignments that require timely delivery, we encourage you to reach out for insights, pricing, and guidance.

For more information, please EMAIL Colin Redman.