In June, the decline in global air cargo volumes showed signs of easing, providing hope for the industry's recovery. However, an unexpected phenomenon, the 'fear of missing out,' swept through the airline and freight forwarding market, leading to erratic behaviour among shippers. Air cargo capacity rose 8% year-over-year in June, but despite this surge in availability, the drop in global chargeable weight stayed at -1%, repeating the market performance seen in May.Niall van de Wouw, chief airfreight officer at Xeneta, said June's air cargo data demonstrated the jumpiness in the market. "The surprise in June is the difference between the sentiment in the market and what the actual data shows us. It is getting nasty out there, and stress levels among airlines and forwarders are rising. Still, we see a clear distinction between market sentiment and market fundamentals, and the sentiment is more negative right now. "Airlines and forwarders are getting jumpy because of falling rates, not so much the volumes. The fear of missing out is driving the aggressive drop in cargo rates because no one wants to lose volumes, and they also want to get more of the cargo in the market. We can see forwarders taking big risks," he said.According to Van de Wouw, freight forwarders are still 'handcuffed' by high airfreight rates locked under BSAs (blocked space agreements), while airlines are also facing growing pressure from shippers pushing to relaunch tenders to negotiate freight rates down to the new market level, inspired by the aggressive pricing policies of other forwarders trying to gain their volumes. This can be seen in the shipper contracts negotiated in the second quarter. Xeneta saw six-month and 6+ month contracts gaining more ground as the airfreight market normalised. The six-month contract remained the most preferred option for shippers, accounting for over one-third (37%) of all valid contracts in the second quarter. The 6+ months contract also gained in popularity, with a share of 28%. The most time-consuming spot market negotiation option shrank from 25% in the second quarter of last year to only 14% in the corresponding period in 2023.Van de Wouw said the air cargo industry would likely remain muted in growth, given the continuing uncertainties around the market. The possibility of no peak season in the ocean freight market could boost air cargo's recovery later in the year if shippers needed urgent shipments or consumer spending suddenly picked up. However, Xeneta expects any airfreight peak to be short-lived and not at the level seen prev iously.
