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Air Cargo Volumes Drop but Slump Does Not Necessarily Translate into Lower Rates

Air Cargo Volumes Drop but Slump Does Not Necessarily Translate into Lower Rates

Asia Pacific airlines saw a drop in air cargo volumes last month, with demand dropping 10.4 per cent in September. Cargo capacity expanded 5.9 per cent while the average load factor was down 11.4 points to 64 percent.

According to the Association of Asia Pacific Airlines (AAPA), cargo markets remained under pressure due to depressed business and consumer confidence levels.

“The outlook for the cargo market remains subdued in the near term. Overall, the region’s airlines continue to face a challenging operating environment, with costs under pressure as a result of high fuel prices and weak local currencies,” said AAPA director general Subhas Menon.

While air freight rates in Asia have been dropping recently, there was a “short-lived price increase in the first half of October” due to cancelled flights from China during Golden Week and demand for e-commerce cargo.

In its October freight update for Asia Pacific, it said: “With a reduction in shipment volume in the Southeast Asia market, airlines are now willing to negotiate prices on high-quantity shipments and offer special ad hoc rates for some outbound shipments from countries such as Indonesia and Thailand.”

“However, if inventories become sufficiently low and consumer demand strengthens, a late-season spike may still be possible. As of now, rates and volumes continue to drop.”

Scan Global Logistics (SGL) took a similar outlook in its October advisory, noting the demand slump had left air cargo carriers in limbo.

“With many companies applying a strict cost focus amid rising inflation levels, air freight – being the most expensive transport mode – has taken its fair share of the brunt caused by fading demand,” said SGL.

“With this said, expectation remains that the traditional Q4 peak season will not materialise and, if it does, there’ll only be a modest increase in volumes.”

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