Air Freight Rates Rise 17% Annually as Demand Grows 8.5% Against Lower Capacity

Global air cargo demand recorded an 8.5% year-on-year growth, outstripping capacity growth which reached only 4.4%, leading to an increase in air freight rates of around 17% compared to levels recorded last year.

This disparity between demand and supply growth reflects mounting structural pressure on the air freight sector, which has witnessed a shift in demand patterns as more companies turned to air transport to offset maritime delays resulting from disruptions in the Panama Canal and the Strait of Hormuz.

Air freight is traditionally used to transport high-value, time-sensitive goods such as electronics, pharmaceuticals, and perishable products. Elevated rates are causing some manufacturing companies to reconsider optimizing their inventories to reduce reliance on this costly option.

Freight experts estimate that the continuation of the supply-demand gap through the end of the year could push air freight rates to levels not seen since the COVID-19 disruptions, burdening e-commerce companies that rely on speed as a competitive advantage.

What do these terms mean?

Demand Measurement Unit (CTK): Cargo Ton-Kilometer, a metric measuring the volume of goods transported multiplied by the distance covered. It is the standard benchmark for measuring actual demand in the air cargo industry.

Freight Capacity: The total payload that cargo aircraft can transport, affected by the number of available aircraft, flight frequency, and fleet composition between passenger aviation and dedicated freighters.

Supply and Demand Gap: The situation in which demand for a service exceeds the supply's capacity to absorb it, automatically pushing prices higher according to market mechanisms.