Asia-Pacific soars while other regions face congestion
Asia
Fueled by ecommerce and seasonal peaks, demand is rising and capacity is expanding, driving a recovery, especially in the Asia-Pacific region. However, geopolitical tensions and operational disruptions are causing delays and increased costs.
Major airports like Shanghai and Hong Kong are experiencing significant congestion, impacting schedules and transit times. Additionally, Chinese airlines have increased market share on China–Europe routes due to ongoing airspace restrictions, forcing European airlines to take longer, costlier routes.
Furthermore, air cargo rates have surged due to reduced capacity and high demand. For instance, spot rates from China and Southeast Asia to Europe have risen significantly. The situation is intensified by the need for aircraft to carry more fuel during the winter season, which reduces cargo capacity.
Europe
Rising fuel costs coupled with environmental regulations continue to impact costs. The EU Emissions Trading System (EU ETS), effective January 2024, requires airlines to purchase carbon credits, increasing operational costs. To manage these costs, airlines are investing in more fuel-efficient aircraft and exploring sustainable aviation fuels. Specific locations like Frankfurt and Amsterdam are feeling the greatest impact due to their high air traffic volumes and stringent local regulations.
Additionally, geopolitical tensions and labor strikes are causing disruptions. Strikes at major European airports, including Heathrow and Charles de Gaulle, and ongoing conflicts in regions like the Middle East are leading to delays and cancellations.
These disruptions impact shipping schedules and increase transit times. To mitigate these issues, companies continue to diversify logistics strategies, use alternative routes, and invest in digital tools for better visibility and coordination. Staying adaptable and proactive remains the best practice.
LATAM
Aeroporto-Guarulhos (GRU) has been overwhelmed with high volumes since September, causing significant delays in gate schedules and cargo release for both inbound and outbound shipments. Priority is given to perishable goods, pharmaceuticals, and live animals, with dry cargo handled secondarily. Operations are expected to normalize by the end of Q1 2025.
This congestion has also affected Viracopos (VCP), Rio de Janeiro (GIG), Alfonso Pena (CWB), and São José dos Campos (SJK) airports. U.S. destinations are experiencing over 10-day delays for space availability, even for express services, while South America, Europe, and Asia have flat space and are open to negotiations, especially for services with connections.
North America
The biggest challenge for U.S. exports remains the South American market. Airlines have shifted freighter capacity to Asia due to strong demand and high yields, leaving other markets struggling for capacity. Strong air demand from Europe and Asia into South America relies on Miami as a transshipment point, causing extreme backlogs (two weeks or more) and higher rates. No relief is expected in the short term, so advanced planning is crucial to mitigate long transit times.
For other destinations, the market is relatively stable when cargo flies on passenger flights. Outside of China, where freighter capacity is abundant, cargo that requires freighter aircraft faces slightly longer transit times and higher rates.
South Asia, Middle East, Africa (SAMA)
Air capacity is currently constrained, and equipment shortages grow increasingly common. Air India plans to cancel over 100 flights due to equipment shortages, while Qatar Airways has shifted capacity from the United States to Europe.
Etihad's use of narrow-body aircraft limits cargo capacity, and British Airways is expected to downgrade equipment, further reducing capacity. Additionally, winter fuel requirements strain payloads, leading to less cargo space. Delhi remains a key transshipment gateway for cargo from Bangladesh, increasing demand for capacity.
Most carriers have added capacity out of China due to rising demand and yield. However, they prefer cargo with good loadability, accepting volume cargo at higher prices compared to dense cargo. Carriers are also reluctant to provide long-term rate validity due to geopolitical uncertainties affecting demand and supply.