Air cargo market update – UK and Europe 16/04/24

General overview

Flights to Europe and the Middle East are starting to be cancelled due to the conflict between Iran and Israel. So far, only Singapore and Malaysia Airlines have taken this step, but more are likely to follow. There are reports of rate increases and problems with space availability.

Huge e-commerce volumes and Red Sea disruption continue to drive rates higher. Apparel companies are also looking to get stock onto shelves in time for Spring, without running the risk delays when moving their goods by ocean. Another contributing factor to rising rates has been an increase in jet fuel prices, which climbed 3% in the past month. The global air cargo market grew 11% year-on-year for a third consecutive month in March. Average rates are 41% above April 2019 pre-Covid levels.

Demand is likely to tail off towards the end of the month, and with carriers typically deploying more aircraft to cope with the Summer season, there are hopes that rates will stabilise. However, should carriers continue cancelling flights due to tensions in the Middle East, rates may continue to rise and space will become increasingly hard to find.

ISC

After a brief plateau, rates have continued to rise. From India, they are now 160% higher than at the same time last year, and 179% ex Bangladesh. Volumes are up 95% since the Red Sea disruption began.

China

The flight cancellations by SQ and MH have had an immediate impact on ex-China air cargo rates. The boom in e-commerce from China continues unabated, with inevitable effects on rate levels. E-commerce volumes equate to 70 widebody freighters per day – more than 20% of total air volume ex China. Within a few years, it’s predicted that e-commerce will comprise a third of all Chinese air cargo exports.