Air Partner’s Cargo Division, flew more aid cargo operation to Gaza in early June. The 49 ton consignment moved on a single A330-200F charter flight from Dubai to Al Arish, Egypt and delivered overland due to the ongoing conflict.
As with previous flights, operating from international airports allowed for any permit and traffic right issues to be organized prior to the mission and Air Partner coordinated with a local agency and freight forwarder in the UAE. It said that the only challenge was that the shipment contained medicine, necessitating temperature control on board to keep the contents between +15 to +25C.
Air cargo is heading for a hot fourth quarter of rate increases after a sixth straight month of double-digit growth in June, says analyst Xeneta in its latest report. It warns that shippers and forwarders ill-prepared for this year’s peak season may find themselves “at the mercy of the market”.
Demand in June, measured in chargeable weight, was up 13% year-on-year, continuing the upward trend seen throughout the first half of 2024. In contrast, supply grew at its slowest pace in 2024, edging up only 3%. As a result, the global air cargo dynamic load factor – Xeneta’s measurement of capacity utilisation based on volume and weight of cargo flown alongside available capacity – increased by 4% pts year-on-year.
While June’s data, alongside previous months of annual growth, must be balanced against a weak comparison month in 2023, market players are now busy working out how to navigate the financial challenges and opportunities expected to present themselves at the end of 2024.
Chief airfreight officer at Xeneta, Niall van de Wouw, said: “June’s growth in demand was not surprising and we would expect to see a continuation of double-digit year-on-year growth in July and August because of low demand in the same months last year. The global machine is humming along nicely at this level – but this is likely the calm before the storm in terms of air freight rates.
“I’ve heard already that certain airlines and forwarders are thinking of implementing a peak season surcharge by the end of August. There’s a consensus it will be a hot fourth quarter for air cargo in many Asian markets. We expect lower demand growth year-on-year in the second half of 2024 because of such a strong Q4 2023 comparison, but if you haven’t arranged your Q4 capacity by now, you could be in for quite a ride. Shippers will pay more throughout Q4, the question is how much more?” he added.
As for demand versus supply in the last quarter of 2024, van de Wouw said: ‘The rules of the game are becoming clear” and contain strict compliance conditions. Shippers and forwarders with capacity agreements in markets that are ‘tight’ already, based on fixed volumes and a peak surcharge, will have reduced risk, while those dependent of the spot market can expect to pay “a hefty premium”.
Niall van de Wouw continued: “In 2023, the market did not anticipate the demand we saw. This year, it does. Shippers with capacity agreements in place will be better prepared, but if they go above the agreed upon threshold, they will face paying market rates. On the short-term spot market, this could mean 50% increases in rates above what we see now, once the market really heats up.
“Asset holders will be strategizing; how much capacity they are going to keep behind to sell at a premium when this happens. If you were in an airline’s shoes, you’d make sure you had a good chunk of capacity to sell at the premium likely to be paid on the short-term market,” van de Wouw stated.
The e-commerce boom, disruption to ocean freight in the Red Sea, and general improvements in global manufacturers’ activities were the three main pillars driving up global air cargo spot rates in June. These registered their largest increase of the year so far, climbing 17% year-on-year to US$2.62 per kg.
Measured month-on-month, the air cargo spot rate edged up 2% in June, as the 4% month-on-month growth of cargo demand continued to outpace capacity supply.
Zooming into the corridor level, Southeast Asia to Europe and the US markets saw the largest cargo spot rate increases in June, growing 14% versus May to $3.65 per kg and $5.32 per kg respectively. Northeast Asia to Europe and the US also experienced modest spot rate increases, up 5% to $4.26 per kg and 4% to $4.00 per kg.
Conversely, outbound China markets stalled as China to Europe and the US rates both dipped -1% to $4.09 per kg and $4.80 per kg respectively. The Europe to US spot rate fell -4% to $1.69 per kg due to the boost of belly capacity from summer passenger flights.
Looking ahead, much uncertainty remains. The latest manufacturing Purchasing Managers’ Index reported manufacturing production grew at a slower pace in June, with its subindex of new export orders showing the first decline in three months. This coincides with still-soft retail sales volumes in the US and Europe, despite cooling inflation.
Given the market turbulence and the potential for an air cargo rate boom in Q4, shippers are once again adjusting their preferred contract lengths.
In the second quarter of 2024, contracts lasting more than six months topped the list, with an increasing share of 28%. Shippers are shifting towards contracts of six months or more to avoid the anticipated extreme freight rate fluctuations during the upcoming year-end peak season.
The decrease in three-month contracts suggests unease among shippers about renegotiating rates just before the year-end peak season.
Freight forwarders appear to share the same view, also procuring less space in the spot market. In the second quarter of 2024, the proportion of volume procured in the spot market accounted for 42% of the total, showing a -3% pts reduction versus a year ago.
“As we head into the second half of the year, it might be now or never to consider longer-term contracts. With a mix of ocean shipping chaos, an upturn in manufacturing activities, and fear-of-missing-out, a delicate balance of short and long-term contracts is on everyone’s mind. Only time will tell, but whatever happens, you’re going to be paying a lot more to ship goods from Asia Pacific once September comes,” van de Wouw concluded.
Texas-based start-up company Aerolane is claiming that its system of gliders towed behind a powered aircraft could reduce airfreight costs by 65%. The company, founded in 2021, is currently testing a system of automated tow gliders, dubbed Aerocarts, towed behind powered turboprop light aircraft that, it says, mimics the formations adopted by migrating birds to reduce aerodynamic drag.
The tow gliders are fitted with electrically powered propellers that allow them to take off and land automatically and can boost payload significantly, while only marginally increasing fuel consumption in the lead aircraft.
So far, the tests have used a Beechcraft turboprop and a converted Pipistrel as the tow glider but Aerllane’s graphics suggest a rather larger tow glider, about the size of a medium-sized commercial freighter. It also envisages that multiple gliders could be towed behind a single powered aircraft.
Aerolane says that towed cargo gliders could be towed behind any powered plane, making it a ‘drop-in’ increase to the capacity of existing fleets of aircraft.
As well as the technical challenges that Aerolane faces, it would also need to convince regulators that towing heavy unpowered gliders would be safe in all weather conditions and that the te4chnogolgy could be counted on to land the gliders in every circumstance.
International Cargo Logistics (ICL) has nearly doubled the size of its cold storage facility at Heathrow Airport, from 1,650 to 3,300 sq ft.
ICL Site Unit 13 now consists of five chambers with varying temperature regimes, as well as X-ray and external temporary storage facilities (ESTF), and temperature-controlled vehicles.
It also offers inspection areas for the Department for Environment, Food & Rural Affairs (DEFRA) and a control point for Customs checks and clearances.
ICL is preparing to be BRC-accredited by the end of the summer, allowing it to deliver to a wider range of retailers and wholesalers.
ICL expanded its temperature-controlled airfreight capabilities in the UK when it launched a partnership with FreshLinc and has also opened an office in Rotterdam.
This year the company plans to expand into Southeast Asia, starting with a new office in Vietnam.
Air cargo software specialist Hermes Logistics Technologies has appointed Joe Hickey as global business development manager. He brings over a decade of experience working with enterprise clients across various sectors, including logistics, supply chain, travel and hospitality, education, automotive, and financial services and, before joining HLT, served as sales director at software as a service company Ratio.
German leisure airline Condor is to make its entire network available on Cargo.one’s digital procurement platform and bolster digital sales in key forwarding markets such as the US and Europe.
Condor offers belly capacity on a fleet of more than 50 aircraft, including Airbus A330neos wide bodies, to over 100 destinations from its ground facilities in Frankfurt, Dusseldorf and Zurich.
Forwarders can use Cargo.one to book Condor capacity firstly for destinations in Europe, US and Canada from July, with more regions due to be added in the coming weeks.
DoKaSch Temperature Solutions has appointed Rory Ward as its new business development manager for the Midwest Region in the US. he brings over a decade of experience in the logistics industry, most recently as the operations and sales manager at Airport Logistic Services Group.
In his new role, Rory Ward will focus on expanding DoKaSch TS’s presence in the region where the pharmaceutical and biotech sectors are seeing significant growth. Illinois aims to enhance its reputation as a key hub for biomedical research, led by Chicago with its concentration of biotech and pharma firms.
Since 2018, the company has operated its subsidiary, DoKaSch Americas in California. Both the RKN and RAP versions of DoKaSch’s Opticooler container are FAA-certified, enabling any US airline to use them.
Worldwide Flight Services (WFS), a member of the SATS Group, has increased cargo handling capacity by 60% at Adolfo Suárez Madrid-Barajas Airport with the opening of its fifth cargo terminal.
The new facility, which makes WFS Madrid’s largest independent cargo hander, was formally opened in a ribbon-cutting ceremony by John Batten, chief executive, Europe, Middle East, Africa, and Asia and Humberto Castro, managing director of WFS in Spain and Italy.
The new terminal increases WFS’ total cargo facility footprint in Madrid to 17,000sq m (183,000sq ft) and will support its client base of 65 airlines as well as providing expansion opportunities. In the last 12 months, WFS has renewed cargo contracts in Madrid with customers including Air China, Air Europa, Etihad Airways, Pegasus, Turkish Airlines and World2Fly, and signed new agreements with CMA CGM and TAAG Angola Airlines.
The building provides 17 landside truck/van docks, direct access from the airport main road, two build-up pallet lanes and docks, four airside truck docks with ULD handling, 2-8°C and 15-25°C temperature-controlled cool rooms for pharma and perishable shipments.
It is powered by 100% renewable energy and with electric battery chargers for cars and warehouse GSE. Indoor AGV (Automated Guided Vehicles) will also be introduced in the second half of 2024.
Courier firm ACS Time Critical recently chartered a private jet to transport life-saving blood plasma from Manchester in the UKr to a hospital in San Francisco.
The company received a call to deliver the plasma to the US within a very specific timeframe. It also had too be kept cool and couldn’t be X-rayed at customs and so needed an onboard courier experienced in medical transfers, so a member of our time critical team in Frankfurt, Germany jumped on the next flight to Manchester to wait at the hospital for the surgery to be completed.
But ACS then learned that the operation to extract the blood from the donor was going to take much longer than expected and the only solution was a private jet charter to deliver the shipment in time. As part of the larger Air Charter Service group, ACS Time Critical was able to contact the San Francisco office’s private jet division, who quickly sourced a Bombardier Global Express with last-minute availability in Europe, which immediately flew into Manchester.
With the life-saving box in hand, the courier contacted security at the airport to prepare for a quick screening, ensuring it was kept in the right conditions. He then called ahead to the pilots, advising them to be ready for an immediate departure. After a near 12-hour flight to San Francisco, ACS arranged for a customs agent to board the aircraft and expedite clearance of the shipment instead of processing it in the terminal.
The plasma was successfully delivered to the hospital in San Francisco less than 13 hours after the extraction surgery was completed in Manchester.
Air cargo alliance SkyTeam Cargo has introduced a paper-based carton pallet as a replacement for wood and plastic. Weighing 10-15kg less than wooden and plastic palletsthe pallets are made from 94% recycled fibres, are humidity resistant and comply with ISPM 15 standards. They can be used multiple times, depending on handling and usage. The latest version of the carton pallet has been developed by TRIP&CO and is EASA part 21G approved. It was successfully tested last year by SkyTeam Cargo members, Air France Cargo and KLM Cargo during SkyTeam’s annual flight challenge which brings together global to find new ways to cut aviation’s footprint.
