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A cooling world economy will likely slow air cargo market growth over the next six months as rates rise further, according to Xeneta’s Air Freight Outlook Update published in July.
After starting the year generally stabilized despite geopolitical conflicts and shifting U.S. trade policies, air cargo sector was thrown a curveball in February with the start of the Iran war. Despite the war’s more regionalized cargo impact, 12% of global capacity was removed “overnight,” per Xeneta. Market demand swung as a result, falling 3% in March before recovering in April through June.
Meanwhile, a blockade of shipments through the Strait of Hormuz — a critical waterway for global oil — drove fuel volatility and higher costs. However, fuel prices have begun to ease even as they remain at higher than usual levels, according to the International Air Transport Association.
With the Iran war continuing, ocean reliability remains low, keeping air cargo volumes from shifting back to maritime, further boosting activity as ocean shippers began to pull forward inventory, spurring higher rates for the mode. However, elevated inventories due to frontloading may leave less to ship, possibly dampening Q4 peak season air cargo demand, Xeneta reported.
