SUPPLY
Air Freight
Quarterly overview of the majordevelopments in air freight supply
A slowdown in global capacity growth
Compared to double-digit demand growth, the global air cargo supply only grew 3% year-on-year in the second quarter of 2024.
This slower pace is because, unlike the low comparison base for global cargo demand in 2023, global capacity began its recovery phase far earlier.
By the final quarter of 2023, global supply had fully returned to pre-pandemic levels.
As a result, the global air cargo dynamic load factor increased 3 percentage points year-on-year to 58% in the second quarter.
Dynamic load factor is Xeneta’s measurement of cargo capacity utilization based on the volume and weight of cargo flown.
Available capacity facing more constraints
Around the globe, the air cargo dynamic load factor has increased year-on-year in 2024 across most global corridors.
The outbound Middle East and Central Asia markets led the dynamic load factor growth.
The region’s load factors to North America, Europe and Africa increased by 8-12 percentage points year-on-year in June, with Europe and North America at the 80% threshold – a level which often indicates a shift in negotiating power from freight buyers to freight sellers.
Such a notable surge is in part due to a low comparison base in 2023, and more importantly, increased pressure from Red Sea ocean container disruption causing shippers to move more cargo to air services.
Similarly, the load factor from Asia Pacific to Europe and Middle East experienced high single-digit growth, reaching 88% in June. Meanwhile, the Asia Pacific to North America load factor remained at 87% in the same timeframe, due to the slow recovery of passenger belly capacity for outbound Northeast Asia, high demand in e-commerce and a general increase in air cargo demand.
Additionally, the North America to Latin America load factor saw a notable increase of 8.8 percentage points compared to a year ago.
Despite being a traditional backhaul, this increased load factor suggests additional demand from Asia to Latin America partly due to increased e-commerce demand.
China and US belly capacity still lagging behind
One reason for the relatively unchanged - and still high - Transpacific eastbound load factor is the lack of passenger belly capacity on the China to the US market.
As of 31 March, the number of permitted passenger flights between China and the US stands at 100 round-trips per week, which is less than one-third of pre-pandemic levels.
Simply Flying reports that Chinese airlines have used all 50 weekly round-trip flights granted by the US aviation authority. In contrast, US airlines are currently only operating 35 flights per week. US airlines plan to increase the total round-trip flights to 39 from 30 August and to 42 from 31 October, leaving eight spots unused.
Additionally, some industry insiders believe US airlines are currently operating fewer wide-body planes compared to the pre-pandemic period, leading them to prioritize these planes for shorter and more profitable European destinations rather than routes between the US and China.
