‘More common ground’ in stabilising air cargo market

LONGER-TERM contracts between shippers and freight forwarders may signal ‘more common ground’ in a stabilising global air cargo market which saw demand dip at a slower -3% year-over-year in March, according to the latest weekly market insight from industry analysts CLIVE Data Services, part of Xeneta.

The distribution of shippers’ contract duration in the first quarter of 2023 saw the number of six-month agreements rise to 36% versus 23% in Q4 of last year, a shift which Niall van de Wouw, Chief Airfreight Officer at Xeneta, says could indicate a ‘hunt for volume’ by forwarders which want to lockin customers for a longer period of time.

This latest data comes at a time when some retailers are starting to voice concerns over the hoped for rise in consumer spending in Q3 this year and a resulting need to restock inventory levels. As the cost-of-living crisis gathers pace in prime consumer markets, and the conflict in Ukraine shows no sign of abating, retailers now fear a slower and subdued market, meaning restocking and the peak season airfreight windfall this usually creates may not materialise.

“I think we’re seeing signs that some forwarders are willing to take a little more risk on what airfreight rates might do because they don’t expect the market to drop much further. Everybody wants to achieve growth, but if the market is not growing, you have to grab a share from someone else. The fact that we see longer term contracts between shippers and freight forwarders is a signal that the market is stabilising. Shippers have regained some ground because of the lower rate conditions, which have affected the airlines and forwarders, but it’s not like the bloodbath we see in the ocean market,” he said.