E-Commerce Surge Propels Global Air Cargo, but Sustainability Concerns Loom

In November, a surge in e-commerce activities from Hong Kong and China drove a remarkable +5% year-over-year increase in global air cargo demand, as US and European consumers embraced low-cost products. However, this growth, led by e-commerce giants Shein and Temu, raised concerns about the market’s underlying subdued nature and its sustainability heading into 2024, according to the latest weekly market data analysis by Xeneta.

China to the US spot rates outpaced October’s growth, soaring +11% month-over-month to USD 4.46 per kg. Similarly, air cargo spot rates from China to Europe experienced an upward trend, reaching USD 3.96 per kg, a 9% increase from the previous month.

Despite the positive figures, Niall van de Wouw, Xeneta’s Chief Airfreight Officer, urged caution in interpreting the data. He emphasized that the growth in November was heavily influenced by e-commerce volumes from China, particularly driven by Shein and Temu, which accounted for approximately 80% of airfreight volumes ex-Hong Kong on certain days.

“You rarely have a conversation with an airline or forwarder right now that doesn’t reference Shein or Temu because these two e-commerce behemoths seem to be upsetting the market by themselves, supposedly accounting for some 80% of airfreight volumes ex-Hong Kong on certain days. In a tight market, you only need a slight imbalance to push rates up because of the ‘fear of missing out’ that we have referenced previously. This seems to be happening out of China and Hong Kong, which are experiencing quite a boost in rates.”

Niall van de Wouw

Van de Wouw questioned the sustainability of this growth, especially as it is not driven by higher-value products. He highlighted the challenge of delivering low-cost goods sustainably, raising concerns for airlines and forwarders. He went on to add that the improvement is not being driven by an increase in shipments of higher value products, which is a point of worry for airlines and forwarders. “E-commerce produces big volumes but how can you, in a sustainable manner, deliver an $8 t-shirt to someone’s doorstep from China to the US and make money across the entire supply chain? Even the vendors delivering these goods question its long-term viability,” he said.

Xeneta’s analysis also revealed continuing weak demand in the general cargo market, with global general cargo spot rates remaining below seasonal rates. While air cargo spot rates from Asia markets showed slower growth, rates from Europe to the US increased, primarily due to reduced belly capacity during carriers’ winter season.

Looking ahead to 2024, global airfreight capacity is expected to outpace market demand, driven by anticipated weak consumer spending in H1 2024. The recovery in belly capacity, boosted by improving passenger travel, may further contribute to this trend.