Xeneta: 2024 will see a return of classic seasonality in air freight industry, but risks remain on the horizon
OSLO, Norway – The air freight market has been on a rollercoaster ride of late – but 2024 could see a return to ‘classic seasonality’, according to the Oslo-based Xeneta, the leading ocean and air freight rate benchmarking and intelligence platform.
The recently released Xeneta Air Freight Outlook 2024 highlights muted consumer spending as a key factor for the year ahead. Demand for air freight in 2023 remains down by -8% compared to pre-pandemic and is only predicted to grow by 1-2% in 2024. At the same time, supply is expected to grow by 2-4% in 2024.
“2024 could be an opportunity for shippers to catch their breath after the volatility of the past few years. The rapid rate decline which started earlier this year has calmed down in recent months. It seems to be the market has a new baseline, from which I expect classic seasonality patterns to emerge,” said Niall van de Wouw, Xeneta Chief Airfreight Officer.
The industry saw the cost of transporting goods by air skyrocket during COVID-19 before plummeting back down again during 2023, albeit they are still 32% up on pre-pandemic levels.
“The key indicators are not great from a demand point of view. It’s muted and there’s a lot of uncertainty in the world. People and companies are a bit more conscious of how they are spending their money and we will likely not see demand pick up in any meaningful way in 2024. Yes, we will see a return of classic seasonality, but it will be muted seasonality,” said Van de Wouw.
Xeneta data reveals an increasing trend for longer-term contracts, but Van de Wouw believes this presents a potentially perilous situation for freight forwarders in 2024.
The Xeneta Outlook 2024 also highlights the continued recovery of capacity putting downward pressure on rates as a key theme for 2024, along with environmental sustainability and improving schedule reliability in ocean freight shipping.
Has the rollercoaster come to a halt or are there more twists and turns yet to come?
Van de Wouw said: “At Xeneta I have learned how incredibly important it is for the air freight industry to look towards the ocean. 97% of global containerized goods are transported by the ocean. Given the volumes involved, if the ocean industry messes things up, even to a small degree, then there is always money to be made in the air.
“Reliability in the ocean is improving, but it only takes one black swan event for the situation to change and rates to increase rapidly. No one has a crystal ball, but you only have to look at the drought in the Panama Canal, the threat of volcanic eruptions in Iceland and the conflict in the Middle East to understand how delicate and sensitive to world events the air freight industry is. If we do get a black swan event in 2024 then strap yourselves in for another ride on the rollercoaster.”
