The ‘Bull Run’ in Numbers
Some indicators of the ongoing momentum of exports moving out of Asia via air freight in what should be the slack season are quite startling. Driven by exports, Hong Kong International Airport (HKIA) has recorded record double-digit year-on-year cargo volume growth each month. Exports in April alone were up 24.7 percent compared to a year earlier.
WorldACD reported in late May that tonnages were up by 9 percent globally, led by strong demand from Asia Pacific with an increase of 15 percent, and Middle East and South Asia (MESA) which increased by 16 percent.
Member carriers of the Association of Asia Pacific Airlines (AAPA) recorded a 13.7 percent year-on-year increase in demand in April. While offered freight capacity expanded by 14.4 percent in the month, rates have continued to rise.
WorldACD calculated that average rates from MESA were highly elevated in late May (45 percent increase). To European destinations, average rates from MESA origins were up 119 percent year-on-year.
Subhas Menon, AAPA Director, said Asia Pacific airlines had seen volumes boosted by the pick-up in global demand supporting export activity from major manufacturing hubs located in the region, particularly China.
Supporting this statement, the TAC Index found that air freight prices outbound from Shanghai were up 41.5 percent at the end of May compared to a year earlier.
There is every chance that Asia’s export boom could have legs. The May edition of DHL’s Air Freight State Of The Industry report noted that sea-air service demand is anticipated to remain high due to escalations in the recent Red Sea conflict. The continuous boom in e-commerce will also likely boost air freight markets throughout the summer.
Following a slight dip in May, analyst firm Nomura’s updated Asia exports leading index, also known as NELI, rebounded to 100 in June. The NELI reinforces the view that double-digit Asian export growth is within reach by the end of Q2.
Nomura cited a sustained tech-led goods cycle upturn, Europe’s ongoing economic recovery, and fledgling optimism around China as positives for Asia’s export growth.
Moreover, air freight demand could also be bolstered by more summer disruption to shipping services. S&P Global noted that a new round of disruptions to operations at Asian ports had further elevated shipping rates as May turned to June.
Citing the U.S. National Oceanic and Atmospheric Administration, the financial analyst firm added that the Atlantic hurricane season is set to be more active than normal through the peak shipping period.
U.S. Customs Crackdown
Amid the U.S. import surge, the trans-Pacific market encountered a major stumbling block to the free flow of e-commerce volumes in late May when the U.S. Customs and Border Protection (CBP) agency started inspecting every single e-commerce shipment coming from mainland China on freighters, according to The Loadstar.
As previously reported in this column, e-commerce exports from China to the U.S. have been a key driver of air freight this year. A statement released by CBP at the end of May confirmed that the agency was taking action to ensure compliance and minimize the exploitation of the small package, or de minimis, environment. This has resulted in congestion at customs warehouses and shipment delays.
“The freight sector has been no stranger to supply chain disruptions in 2024. But carriers have proven that they are capable of adapting quickly to volatile market conditions,” said Frank. “In particular, carriers in Asia Pacific are projected to increase widebody belly capacity in anticipation of the summer 2024 traffic season, which will likely help to ease the supply-demand balance.”