January 2024 – Market Update
By USA In Insight On 10th January 2024
HOLIDAY ALERT
Chinese New Year - February 10, 2024
Holiday closures and delays anticipated during the period of February 8 - 17
AIR FREIGHT
Demand
Air freight demand is expected to increase significantly ex-China starting in mid-January due to the situation in the Red Sea causing re-routing of ocean sailings. Importers are facing potential inventory shortfalls because of the increased ocean transit times. As Chinese New Year approaches on February 10th, this increased demand for space, along with e-commerce shipments, could raise spot rates significantly in a short period. It is too early to determine what the market will look like after the holiday in China.
Service to Tel Aviv
Lufthansa will resume limited service to Israel this month. United Airlines will resume limited-service on February 1st. Delta and American have both indicated their service to Israel will remain suspended through March 29th, when they will reassess the situation.
2024 Spring and Summer International Schedules
U.S. passenger airlines reflect capacity above pre-Covid levels. Besides new flights from their traditional hubs new widebody service is being introduced from non-hub cities with 787 and A-350 aircraft.
Jet Fuel
Prices continue to trend lower but must be watched closely due to the current situation in the Middle East. Should crude oil supply chains incur delays, prices could rise.
Rates
According to Oslo-based Xeneta (a major global air freight rate monitor), despite the current issues related to the Red Sea situation and the upcoming Chinese New Year, the market for air freight in 2024 should resemble a normal (classic) pattern. They forecast rates to be stable for the balance of the year with the usual uptick for peak season. Global air freight demand is forecasted to rise 1-2% in 2024, while capacity is scheduled to rise 2-4%.
Volcanic Activity
Carriers have been watching the volcanic activity in Iceland closely. There is concern that a situation similar to the 2010 eruption in Iceland could occur. That event affected flights on the North Atlantic lanes and within Europe, resulting in 100,000 cancellations. The volcanic activity so far has been a lava flow and not an eruption, which would produce an ash cloud. Worldwide agencies are monitoring this situation closely.
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OCEAN FREIGHT
Red Sea Global Disruption
Ripple effects from the Red Sea attacks on cargo vessels are seen worldwide as ships are rerouted around Africa to avoid the critical passageway. Shipping schedules are being reconfigured, causing delays in some cases. Prices are rising as a direct result. Read More
EU Emissions Trading System
Effective January 1, 2024, the European Union's Emissions Trading System (EU ETS) now covers the maritime sector. Vessels visiting EU ports must offset their CO2 voyage emissions by purchasing an equivalent number of EU Allowances (EUAs). This is an additional cost on top of GRIs and other surcharges.
Asia - USA Trade Lane
Rates from Asia to the USA are jumping significantly in 2024 due to many factors in the market, from the situation in the Red Sea to the drought in the Panama Canal and the reduced capacity set by carriers last quarter. This trend might continue through the upcoming Chinese New Year holiday, which is usually a season for rushing cargo before the big factory shutdown in China and other Asian countries.
We recommend booking as early as possible, especially with current market conditions, to avoid surprises or delays.
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