The air freight market has been on a rollercoaster ride of late but 2024 could see a return of "classic seasonality," according to Oslo-based Xeneta, an ocean and air freight rate benchmarking and intelligence platform.

“2024 could be an opportunity for shippers to catch their breath after the volatility of the past few years," says Niall van de Wouw, Chief Airfreight Officer, Xeneta. “The rapid rate decline which started earlier this year has calmed down in recent months. It seems to be the market has a new baseline, from which I expect classic seasonality patterns to emerge.”

Niall van de Wouw, Chief Airfreight Officer, Xeneta

The industry saw the cost of transporting goods by air skyrocket during Covid-19 before plummeting again during 2023 but they are still 32 percent above pre-pandemic levels, the update added.

The Xeneta Air Freight Outlook 2024 highlights muted consumer spending as a key factor for the year ahead. "Demand for air freight in 2023 remains down by eight percent compared to pre-pandemic and is only predicted to grow by 1-2 percent in 2024. At the same time, supply is expected to grow by 2-4 percent in 2024."

Van de Wouw says: “The key indicators are not great from a demand point of view. It’s muted and there’s a lot of uncertainty in the world. People and companies are a bit more conscious of how they are spending their money and we will likely not see demand pick up in any meaningful way in 2024. Yes, we will see a return of classic seasonality but it will be muted seasonality.”

Xeneta data reveals an increasing trend for longer term contracts but Van de Wouw believes this presents a potentially perilous situation for freight forwarders in 2024. “There is fierce competition and I understand why freight forwarders want 12 month contracts to secure volumes and shippers want to lock in for a longer period to reduce their workload.

“The problem is freight forwarders are selling long-term contracts but buying the majority of volume from carriers on the short-term spot market. If the rates go up, there is a serious issue.

“We saw it recently out of Vietnam where 70 percent of volume is bought on the spot market. Rates suddenly went crazy prior to Golden Week and freight forwarders told shippers they could not honour the contracted service. This could happen on any market and is a real risk for next year unless freight forwarders and airlines can find common ground on long-term rates.”

The Xeneta Outlook 2024 also highlights the continued recovery of capacity putting downward pressure on rates as a key theme for 2024, along with environmental sustainability and improving schedule reliability in ocean freight shipping.

Van de Wouw says: “At Xeneta, I have learned how incredibly important it is for the air freight industry to look towards the ocean. 97 percent of global containerised goods are transported by the ocean. Given the volumes involved, if the ocean industry messes things up, even to a small degree, then there is always money to be made in the air.

“Reliability in the ocean is improving but it only takes one black swan event for the situation to change and rates to increase rapidly. No one has a crystal ball but you only have to look at the drought in the Panama Canal, threat of volcanic eruptions in Iceland and conflict in the Middle East to understand how delicate and sensitive to world events the air freight industry is.

“If we do get a black swan event in 2024 then strap yourselves in for another ride on the rollercoaster.”

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