Secure your air freight space now: Peak season pressure builds

Air cargo demand surged again in July, and shippers are advised to plan and book space early to avoid disruptions during the upcoming peak season.

According to IATA’s latest figures, global air cargo demand rose by 14% year-on-year, fuelled by the ongoing eCommerce boom and disruptions such as the Red Sea diversions.

This marks the eighth consecutive month of double-digit growth in cargo tonne kilometres, with demand reaching levels not seen since the Covid-driven surge in 2021. However, capacity only increased by 8%, leading to a 2% rise in load factors, now at 44%.

With peak season starting in September, air cargo demand is expected to remain strong, particularly in the Asia Pacific region, which recorded an 18% year-on-year increase. North American carriers saw 8.7% growth despite disruptions from Hurricane Beryl. The Asia-North America trade lane experienced an 11% increase, while the North America-Europe route posted a more modest 5% growth.

Typically, carriers reduce capacity on the transatlantic trade during the winter season, which starts in October. However, this year, extra capacity will be shifted from the LATAM region and US-Europe into the Asia Pacific-Europe trade lane to capitalise on the demand and rate spikes in Asia Pacific.

However, despite the added volume Asia Pacific’s spot market remains very high, with most of the existing capacity reserved by eCommerce. And the reduction in capacity on other lanes increases market fragility, leaving it more susceptible to geopolitical, labor, or unexpected disruptions, leading to potential backlogs or price spikes.

Shippers need to secure space now, as the air cargo market is already experiencing capacity shortages out of some Asian markets ahead of the peak season, in what is traditionally a quieter time of year.

Flights on many lanes are already full, leading to elevated rates. The potential impact of strikes combined with reduced belly capacity toward the end of Q4 could create a challenging environment, with the market potentially overheating as we approach the end of the year.

Mitigating Impact on Customers
We are proactively taking steps to minimise any impact on our customers. This includes securing long-term deals with primary carriers, blocking space, and planning for various scenarios.

Operationally, we have contingency plans in place to avoid hubs likely to be most affected by a surge in eCommerce demand, along with alternate routes to market.

Many customers are already discussing their concerns with us. If you anticipate time-sensitive consignments over the next four months, we urge you to contact us as soon as possible to ensure your shipments are prioritised.

To discuss your time-sensitive needs, or the issues raised here, please EMAIL our managing director, Colin Redman.