Trans-Pacific Air Cargo Demand Up 17%, But Capacity Squeeze Bites

Air cargo demand between Asia and North America rose 17% year on year in September, marking the lane's eighth consecutive month of growth and the strongest pace of the seven global routes IATA tracks, according to the International Air Transport Association. For apparel sourcing teams shipping samples, replenishment stock and e-commerce parcels across the Pacific, that number translates directly into firmer rates and thinner available space.

Every month since April has delivered at least 8% demand growth between the two markets, and September was the fourth double-digit month in a six-month span. Asia Pacific and North American carriers together accounted for 77% of total year-over-year demand growth, adding 721.1 million and 678.2 million cargo tonne kilometres (CTKs, the standard measure of freight carried one kilometre) respectively. Intra-Asia flights ranked a distant second at 10.2% growth.

"Stronger global trade and manufacturing provided a supportive backdrop, while AI-related shipments helped drive another month of double-digit growth across the Pacific," said Marie Owens Thomsen, IATA's senior vice president of sustainability and chief economist.

What does the capacity gap mean for rates?

Global air cargo demand grew 7.7% in September, with international operations up 8.6%. Capacity did not come close. Total capacity grew just 2.7%, and international capacity, measured in available cargo tonne kilometres (ACTKs), grew 3.3%. That demand-led tightening pushed the global cargo load factor — the share of available space filled — up 2.2 percentage points to 47.9%. North American carriers posted the largest gain, up 4.3 points to 43.9%.

Yields responded. Rates rose 2% sequentially in September, the second consecutive monthly increase, and stood 25.9% higher year on year. Jet fuel averaged $184.5 per barrel during the month, up 17.5% from August and up 103.4% from $90.7 a year earlier. Oil supply disruptions at the Persian Gulf and Strait of Hormuz extended an eight-month run of annual fuel price gains.

"The challenge is cost. Jet fuel prices have more than doubled compared with a year ago, and yields have not kept pace," Thomsen said. "There is no shortage of goods to ship, but doing that profitably in the face of persistently high fuel prices has become more challenging."

The squeeze was uneven. Asia Pacific demand rose 8.6% against capacity growth of 4.9%, lifting its load factor to 50.7%. European carriers withdrew capacity by 1.6% even as demand rose 4.5%, pushing their load factor to 54.6%.

Is the EU de minimis fallout still hitting volumes?

Yes, and by a wide margin. The EU ended its duty-free low-value import threshold effective July 1, adding a 3-euro duty on low-value shipments, and on Sunday (late October) imposed a new 2-euro handling fee on e-commerce imports from outside the bloc, applicable to every package regardless of value. During week 43, chargeable weight from Asia Pacific into the EU-27 fell 16% year on year, while weight to the U.S. rose 9%. Since the July change, EU-bound volumes from Hong Kong have dropped 33%; mainland China chargeable weight declined 9%.

Spot rates climbed on both lanes. Europe-bound shipments rose almost 30% year on year to $5.10 per kg; U.S.-bound cargo jumped 41% to $7.43 per kg. WorldACD data, drawn from more than 500,000 weekly transactions, put global spot rates at $3.80 per kg, up 5% week over week and 38% annually. Global tonnages fell 2% in the week of Oct. 19-25, cancelling out a 2% rise the prior week.

How constrained is Gulf routings capacity?

Middle East and South Asia capacity remains the bottleneck. Global capacity dipped 1% in the week of Oct. 19-25, and Gulf capacity is down 19% since late February. Riyadh's King Khalid International Airport was running at roughly 6% of normal capacity as of Oct. 29, according to air cargo consultancy Aevean, after Houthi missile strikes forced its closure on Oct. 10. A partial reopening left most foreign carriers suspended into November.

The sourcing decision this forces: shippers reliant on trans-Pacific air for time-sensitive freight should book capacity early and budget for yield escalation, while EU-bound e-consolidations now carry per-parcel duty plus handling fees that change the landed-cost maths on low-value goods.