We have seen that there have been conflicts in many parts of the world and there are two wars in Russia-Ukraine and Israel-Gaza going on right now which means that logistics is bound to get affected due to it. That is also what the data suggests as it has been revealed that Air Cargo demand has been sub-seasonal this year compared to the last five years. It is expected that the effects of the latest Israel-Gaza conflict will be seen in the next few months as the situation is still developing but it is already being seen.
It is worth noting that the latest industry data shows a “2% month-over-month improvement in airfreight volumes in October, which was sub-seasonal compared to the previous five years, while general air cargo spot rates edged up 2% versus September to USD 2.28 per kg, rising above seasonal rates in the opening two weeks of October for the first time since mid-May 2023 before falling back to below the seasonal level”. It is added that “the global air cargo spot rate declined at its slowest pace of -30% in October. This is attributed to the slight uptick in global cargo volumes as well as a slowdown of cargo capacity growth in a month in which global belly capacity returned to its pre-pandemic level, albeit this recovery is varied across major lanes”.
Xenata’s Chief Airfreight officer said, “October’s market performance is what we expected to see. It was a marginally busier month but not a cause for much optimism, nor pessimism. Carriers and forwarders are not expecting the market situation to improve significantly until well into the second half of 2024. The ongoing situation in Ukraine and now the conflict in Israel and Gaza will only add to these concerns. This is a volatile market. Freight forwarders are still procuring capacity on a short-term basis but are selling more long-term. That’s a risk, but clearly forwarders are not willing to commit to capacity because of so much uncertainty,”
However, the problems for Airfreight forwarders are not going to end as data shows that “global carriers continued to register declines in their October revenues, down 26% at an overall industry level from the same month last year. This is also reflected in trends reported in carriers’ latest Q3 results, although October 2023 revenues still outperformed October 2019’s pre-pandemic numbers by 21%.”
