Airfreight Remains Strong Despite IT Outage

Airfreight shipments bounced back to normal levels just nine days after the major CrowdStrike outage in July, demonstrating the resilience of the industry.

The outage, which began on July 19th, disrupted thousands of flights, causing significant worry among logistics managers. However, airfreight cargo load factors, a measure of available capacity against the volume of goods flown, quickly recovered.

According to Wenwen Zhang, airfreight analyst at Xeneta, some airlines saw cargo load factors increase by up to 4 percentage points compared to the previous week due to the IT failure-induced backlogs. But by July 28th, load factors had mostly returned to pre-outage levels.

“The majority of flight cancellations were quickly reversed, showcasing the resilience of air cargo,” said Zhang. “This was aided by the increased number of passenger flights during the summer travel season, which provides extra belly capacity.”

Xeneta data reveals a 5% year-on-year increase in cargo load factor for July, reaching 59%. This surge in demand is largely driven by booming e-commerce activity.

“Although summer is typically a quieter period for airfreight, July saw the sixth consecutive month of general cargo spot rate increases,” said Zhang. “Shippers and freight forwarders are concerned about the upcoming peak season, as competition for limited capacity is expected to push rates higher.”

The rising demand has boosted July spot prices by 13% year on year. Xeneta data shows that the global average air cargo spot rate for the last week of July hit its highest point of the year at $2.70 per kilogram, marking the sixth consecutive month of growth.

“The significant increase in global air cargo demand in 2024 is primarily fueled by the remarkable growth of e-commerce originating from China,” explained Zhang. “The disruptions to ocean container services due to the Red Sea conflict have also pushed some shippers to rely on airfreight for supply chain security.”

While air cargo demand has soared, global air cargo supply grew at a much slower pace of 2% year on year in July.

“Global air cargo supply chains are facing immense pressure in 2024, with demand significantly outpacing supply growth,” cautioned Zhang. “The July 19th IT outage, which resulted in widespread flight delays and cancellations at major airports worldwide, was the last thing shippers needed.”

Zhang added: “Carriers are also navigating a balancing act when managing different customer groups. They want to capitalise on the high volumes shipped by e-commerce giants like Temu and Shein. But they must also consider their broader customer base. With limited capacity expected later in the year, who will take priority?”