India to Europe air cargo spot rate in Mar rose 68% MoM to $3.38/kg

The Middle East and South Asia to Europe market continued to lead the growth of air cargo rates in March as the influx of air cargo demand caused by Red Sea concerns squeezed capacity on these lanes, according to the latest weekly market data from Xeneta.

The average spot rate on this corridor jumped +46% over February’s level to $2.82 per kg, up +71% year-on-year.

“This was especially seen for the India outbound market, where the India to Europe air cargo spot rate in March rose 68% month-on-month to $3.38 per kg,” it reads.

In contrast, the average ocean containerised spot rate on the India West Coast to North Europe lanes experienced a -9% decline in March after its peak in February, although this remained +340% above the level in December, prior to the Red Sea disturbance. Earlier, Xeneta had reported the high spot rates on the India to Europe lane and noted that the rates are likely to remain elevated in the near term.

The Middle East and South Asia to US air cargo market followed suit. Its average spot rate of $4.03 per kg in March was up +35% month-on-month and +51% year-on-year.

In comparison, the air cargo spot rate from Europe to US increased only marginally by +3% month-on-month to $2.12 per kg due to this corridor being less impacted by the Red Sea.

Meanwhile, global air cargo market demand rose +11 percent year-on-year for a third consecutive month in March as buoyant e-commerce volumes and concerns over the impact of conflict in the Red Sea region on ocean freight services delivered an unexpected first quarter bonus for forwarders and airlines.

In what are typically weaker months of the year for the airfreight industry, these higher volumes outpaced growth in capacity supply in Q1, which increased by +8% YoY. In turn, this produced a jump in the global dynamic load factor, which is Xeneta’s measurement of cargo capacity utilization based on volume and weight of cargo flown alongside capacity available.

Load factor in the opening three months of 2024 rose +2% pts YoY to 59%, and March performance has shown similar growth, edging up to 61%.

“While this latest monthly data should be balanced against the lower base recorded in the corresponding month of 2023, when we saw weakened global manufacturing activities, Q1 2024 has still seen a surprisingly busy airfreight market. The level of demand in the first quarter doesn’t indicate a market which is running out of steam so far,” said Niall van de Wouw, Xeneta’s chief airfreight officer.

“The question is, should we be surprised by it, or should we get used to it? Although the market didn’t benefit immediately, the Red Sea disruption was clearly a factor in these latest figures. Airfreight growth was primarily driven by increased volumes from the Middle East and South Asia as shippers shifted services from ocean to air to avoid Red Sea delays. We also cannot underestimate the importance of e-commerce growth, which shows no sign of abating on its most prominent lanes.”

Subsequently, the average global airfreight spot rate in March increased +7% from the previous month to $2.43 per kg.