Air cargo rates dip as transatlantic freight volume cools off

Global air cargo volumes fell again in June as additional summer airline capacity applied downward pressure to freight rates, according to a report from air cargo industry analysts Clive Data Services.

Specifically, global air cargo volumes were down 8% compared to last June, the Dutch firm said. That movement has been developing steadily, with volumes in the general airfreight market dropping 7% in June compared to 2019, after they had dropped 8% in May.

Combined with added capacity, that trend has also forced a drop in freight rates, highlighted by a 30% decline over the past three months for the North Atlantic route. While air cargo rates from Europe to North America are still more than double their pre-pandemic levels, they have now dropped below their mark for June 2021 and have nearly sunk to where they were in June 2020, Clive data shows. Put another way, general airfreight rates in June were 129% higher than in 2019 and 13% higher than in 2021.

“In our analysis of air cargo market performance in May, we said the North Atlantic market could provide ‘a test case for the direction of other markets once they also return to their pre-Covid levels.’ This is still true, and we may see the consequences sooner than we anticipated a month ago,” Niall van de Wouw, founder of Clive and now Chief Airfreight Officer at Xeneta, said in a release. Clive was acquired in January by Xeneta, the Norwegian provider of ocean and air freight rate benchmarking services.

“General North Atlantic airfreight rates dropped by around 30% between the first week of April to the last week of June. This brings these rates very close to the 2020 levels. If we just look at the Spot market, the rates are already lower in the last two weeks of June 2022 compared to 2020 by around 5% and the market has yet to bottom out. This will be causing some interesting soul-searching for airlines and forwarders,” van de Wouw said.

The knock-on effects of a softening air cargo market could see carriers redeploying their freighters to other markets in Asia Pacific, Africa, or South America in search of better revenues, he said. The shift comes as air freight carriers face continuing labor shortages with a “people drain” in the aviation and logistics industries, spanning both airports and road transport. And some forecasts now see a worsening situation in 2022, due to relatively low wages and poor working conditions for some workers on the frontline of supply chains, van de Wouw said.