Air freight capacity takes off, and rates descend, with boost in Europe-US flight numbers

The latest analysis from Oslo-based Xeneta shows marked fluctuations in air freight rates and dynamic load factors between Western Europe and the US, as increased appetite for travel drives cargo capacity to new heights for 2022.

According to Xeneta, which crowd sources real-time ocean and air freight data from leading global shippers, in addition to dynamic load factor data from airlines, capacity surged by 21% between mid-March and the end of April. 

With high passenger demand for the transatlantic corridor, and new summer schedules rolling out, capacity in April was actually higher than pre-pandemic, currently sitting above 2019 levels.

Market Moves

“The aviation industry is obviously keen to put an extremely challenging period behind them and get back to normal… even if it is a new normal. So, this healthy passenger demand is a very welcome development, helping drive strong capacity growth between week 12 and today,” comments Niall van de Wouw, Xeneta Chief Air Officer. 

“Of course, you ‘can’t have your cake and eat it’, meaning freight rates are impacted by having more ‘bellies’ to fill. Especially when the volume and weight of cargo has dropped between mid-March and the end of week 17 (by 1.4% and 6% respectively).”

Lightening the Load

Van de Wouw points out that this has led the westbound dynamic load factor to drop to its lowest levels since the beginning of January – although week 17’s 67% was an improvement on the 63% recorded the week before (which also helped rates climb a little). The eastbound transatlantic load factor has also fallen to its lowest level since the start of the year, now sitting at 57%.

On the subject of rates developments, Van de Wouw imparts: “Our shipper community informs us that spot prices have been impacted by added capacity, with an average short-term rate of USD 4.1 per kg from Europe to the US. That’s around USD 1.7 per kg below the average for the long-term contracts signed across the last three months (approx. USD 5.9 per kg). On the backhaul the rates are substantially lower, with spot prices of USD 1.5 per kg against long-term contracts of USD 2.3kg.”

Stay Informed

He concludes: “It’s early days for May, but our market intelligence so far points towards a softening of both short- and long-term rates in the next couple of weeks. I’d advise all parties looking to negotiate to stay informed of the very latest weekly developments to get the optimal value for their businesses in a fast-changing marketplace.”

Xeneta’s software platform compiles the latest crowd-sourced air and ocean freight rate data aggregated worldwide to deliver unique market insights. Companies participating in the benchmarking and market analytics platform include names such as ABB, Electrolux, Continental, Unilever, Nestle, L’Oréal, Thyssenkrupp, Volvo Group and John Deere, amongst others.