Resurgent air cargo demand provided a quick recovery from July’s global IT outage, with rates rising for a sixth consecutive month and no significant ongoing disruption produced, according to a market analysis by Xeneta.
The software outage, which was caused by a buggy update from the Texas cybersecurity vendor Crowdstrike, shuttered Microsoft Windows-based systems around the globe and hit the air cargo sector particularly hard.
Initially, the July 19 IT outage brought widespread disruption, with flight delays and cancellations that lasted more than a week. The resulting cargo backlogs saw cargo load factors on some impacted airlines increase up to 4 percentage points compared to the previous week. Load factors had mostly recovered to pre-outage levels by 28 July.
But as is often the case, short-term panic among shippers and forwarders pushed up the price of capacity, which rose to its highest level of the year in the last week of July to a global average air cargo spot rate of $2.70 per kg, Norway-based Xeneta said.
For the month of July, global average air cargo spot rates reached $2.66 per kg, an increase of +20% higher year-on-year. That was driven by strong global cargo demand growth, as July volumes rose +13% year-on-year, thanks to buoyant e-commerce demand from Asia as well as the comparatively low demand base in the corresponding month in 2023.
In Xeneta’s forecast for the second half of the year, disruptions in the Red Sea will likely continue to pose risks to supply chains due to container vessels’ longer sailing times and reduced schedule reliability. Despite the container market’s early peak season, the current situation may last until China’s Golden Week in October. On top of this, potential sea port strikes in Hamburg and the US East and Gulf Coasts could coincide with the much-anticipated peak season for airfreight and apply further upward pressure on air cargo rates, as Xeneta highlighted last month.
“For the air cargo market, it’s now all eyes on late August for the first signs of a proper peak season, which would be the cherry on top of the cake for airlines after such unexpected volumes and demand growth in the first seven months of the year,” Niall van de Wouw, Chief Airfreight Officer at Xeneta, said in a release. “In July, had the IT outage taken longer to fix, we might have seen a slightly different outcome. However, once again, air cargo showed resilience, after seeming to have dodged another major disruption. Going into the peak time of the year, airlines might just be starting to think their tailwinds will hold out.”
