Air cargo under pressure as peak season looms

With capacity already strained and further challenges expected from potential labour strikes and reduced belly capacity in the final quarter, shippers are under increasing pressure to secure cargo space ahead of the peak season.

Strong demand
According to IATA’s latest figures global air cargo demand surged by 14% year-on-year in July, marking the eighth consecutive month of double-digit growth. This increase is largely driven by ongoing eCommerce expansion and disruptions such as the Red Sea crisis.

Despite the high demand, capacity only grew by 8%, pushing load factors up significantly and intensifying the pressure on available space.

The Asia Pacific region has seen particularly strong growth, with demand up 18% year-on-year in August, while North American carriers recorded an 9% increase, even amid disruptions like Hurricane Beryl. The Asia-North America trade lane experienced an 11% rise, and transatlantic routes also saw rates climb  in August compared to July, with expectations of further increases as the year progresses.

Preparing for peak season
With the peak shipping season starting in September, air cargo demand is expected to remain robust, particularly in high-demand regions like Asia Pacific. However, capacity constraints are already evident, with flights on many lanes fully booked. The market faces potential additional pressure from reduced belly capacity in Q4 and the possibility of strikes at US East Coast ports, which could exacerbate the existing challenges.

Shifting capacity
The ongoing Red Sea crisis has disrupted traditional shipping routes, leading to a shift towards air freight as shippers seek more reliable alternatives. This shift, combined with the seasonal reduction of capacity on other lanes, has left the market vulnerable to further disruptions, potentially causing backlogs and price spikes.

As carriers redirect freighter capacity to the high-demand Asia market and reduce capacity on other routes, the market’s fragility increases. The anticipation of a strong peak season, coupled with the current tight capacity, means that shippers must act quickly to secure space and avoid significant disruptions.

Outlook and recommendations
Given the current market conditions, shippers are strongly advised to plan ahead and secure air freight space as soon as possible. The combination of high demand, potential capacity shortages, and the risk of labour disruptions could lead to an overheated market towards the end of the year, with rates likely to continue rising.

Early booking and careful planning are essential to navigate the challenging air freight landscape in the coming months, so please share your forecasts with us as early as possible so that we can ensure there are no disruptions to your supply chain.

For urgent, valuable and sensitive shipments we have a range of airfreight, charter and sea/air solutions, with block space agreements (BSA) and capacity purchase agreements (CPA) to protect space and capacity on the busiest routes.

Regardless of your cargo type, size and requirements, we have extremely competitive rate and service combinations, to meet every deadline and budget.

EMAIL Elliot Carlile, Operations Director, for insights, prices and advice.