Growing demand for air travel amid instability in the maritime sector
According to experts, demand for air travel is likely to grow in 2024. Xeneta presented market data for December 2023. Demand for services increased by 9% year-on-year. However, many analysts believe this performance is due to weakness at the end of 2022.
However, other factors also point to rising demand:
- spot rates reached a nine-month high of US$2.6/kg;
- capacity utilisation increased by 3% to 59%.
Xeneta’s Niall van de Wouw believes this momentum bodes well for the sector. This trend could herald a return to stability in the air freight market. He thinks that by 2024, service customers will appreciate the benefits of this mode of transport in a new way. This will be facilitated, particularly by more accurate forecasting of product delivery costs. This is becoming increasingly important in a challenging economic environment and geopolitical tensions.
Situation in the maritime sector
The maritime transport sector is in a difficult situation. The main reason for this is the tense confrontations in the Red Sea and increased ship attacks.
Van de Wouw stresses that global supply chains still face some challenges. The instability of this mode of transport could be an advantage for other sectors, such as aviation. We can expect delays if major companies abandon routes through the Red Sea. This will adversely affect a wide range of processes and have severe consequences for the global economy.
Analysts cannot predict precisely when the situation will stabilise, but shippers cannot wait much longer. It is clear that many of them will use air freight as a reliable sector with predictable processes.
Recovery of the air freight market
There is good momentum in the airline sector. Here, customers prefer to enter into long-term contracts with fixed service costs.
According to Xeneta, the situation in Q4 2023 was as follows:
- contracts for more than 6 months accounted for 45% of the total number of contracts;
- over 3 months increased by 3%;
- 6-month contracts account for 28% of the total;
- 1-month contracts account for only 14%.
These figures are qualitatively different from the cooperation during the pandemic. At that time, most customers preferred contracts of 1 month or less.
At the end of 2023, the airline market is busier than analysts predicted at the beginning of the period.
