Air freight demand picking up after holiday season
Asia
As factories in China close for the Lunar New Year in late January and early February 2025, overall demand in China and Hong Kong will start picking up by mid-February. Sectors like crypto and AI servers are expected to rebound strongly, taking up capacity on flights to the United States and, to a lesser extent, Europe.
Airlines will reduce capacity and adjust starting in mid-February. Bad weather in the United States may cause delays in cargo retrievals from airports, so plan accordingly. Rates are expected to soften in February but may start to rise in the second half of the month.
Europe
While freighter capacity is improving airlines are still shifting capacity to Asia, so equipment remains tight. Accordingly, spot rates are stubbornly high. Expect additional capacity from carriers at the start of summer schedules in early April.
Air cargo rates from Europe to the United States surged to $3.61 per kg. in mid-December. This was a 100% increase from late September and was caused by reduced passenger belly capacity from airlines' winter schedules, a capacity dip during Thanksgiving, and airlines reallocating capacity to meet rising demand on ex-Asia corridors.
Capacity from Europe to the United States fell by 5% compared to the same period in 2023 and by 15% from pre-winter schedule levels. Key airports impacted include Frankfurt (FRA), Amsterdam Schiphol (AMS), and London Heathrow (LHR) in Europe, and New York (JFK) and Los Angeles (LAX) in the United States.
LATAM
Air freight spot market rates from Latin America to the United States are expected to remain elevated through February due to strong demand and market volatility. Key gateways include Mexico City, São Paulo, and Buenos Aires.
Other influencers, like the Lunar New Year holiday and U.S. import tariffs may further tighten space and increase rates. Carriers are well-positioned for upcoming contract negotiations amidst elevated rates and a dynamic, competitive market.
North America
U.S. exports to South America saw some welcome relief from extreme congestion in late 2024. The key question now is whether this improvement is temporary or not. A contributor to the congestion was strong ecommerce demand, which has been light since the beginning of the year. However, volumes are likely to rebound after the Lunar New Year ends and production ramps back up.
On the U.S. West Coast, the start of asparagus season will increase demand on the Trans-Atlantic market. Depending on the strength of the crop, capacity could tighten, spot market rates could increase, and transit times could extend in February and March.
South Asia, Middle East, Africa (SAMA)
Air freight to and from South Asia, the Middle East, and Africa is facing significant disruptions due to geopolitical tensions and capacity constraints. In South Asia, key hubs like Mumbai (BOM) and Delhi (DEL) are experiencing increased rates and tight space as demand surges after the Lunar New Year.
Cargo in the Middle East is heavily impacted by airspace closures in Israel, Jordan, and Iraq, causing major airlines to reroute flights and leading to delays at key airports like Dubai (DXB) and Doha (DOH).
In Africa, limited air freight capacity is constraining exports from Kenya, particularly affecting the horticulture sector at Nairobi's Jomo Kenyatta International Airport (NBO). The ongoing Red Sea crisis is further complicating logistics, with rerouting around the Cape of Good Hope adding significant time to transit.
Oceania
Air freight to and from Oceania is facing significant disruptions due to recent industrial actions and capacity constraints. In Australia, major airports like Sydney (SYD) and Melbourne (MEL) are experiencing delays due to a 48-hour pilot strike at Fremantle Port, which has caused a ripple effect on air cargo operations.
Additionally, the recent severe weather events in the United States have impacted cargo retrievals, further complicating the logistics landscape. Capacity remains tight after airlines adjusted their schedules after the holiday season, leading to increased rates and limited availability. Plan for potential delays and higher costs in the coming weeks.