Global air cargo spot rates climbed again in May, but there were some signs of airfreight rates easing and this is expected to continue in the next few weeks, according to Xeneta.
The industry analyst said that after hitting a three-year high in April, spot rates rose 41% year on year in May, with an average global spot rate of $3.40 per kg.
This was driven by resilient global air cargo demand, which outpaced capacity.
Demand grew 4% year on year in May, lifting the dynamic load factor two percentage points to 61%.
Dynamic load factor is Xeneta’s measurement of capacity utilisation based on volume and weight of cargo flown alongside available capacity.
Xeneta said that capacity continued to recover from disruption caused by the Middle East conflict, ending the month 1% above last year’s capacity level.
As Middle East carrier capacity returns to almost full-scale operations, Xeneta’s chief airfreight officer, Niall van de Wouw believes there will be lower global airfreight rates in the weeks ahead.
“We are on record saying rates wouldn’t come down as fast as they went up, and that is the case,” he continued.
“It takes a while for rates to adjust to the market situation, but I would not be surprised to see year-on-year spot rate comparisons decline in June, especially as there are not a lot of industry verticals that are booming at the moment.”
Despite the overall rise in the global spot rate in May, the month did show some signs of airfreight rates easing.
Despite rising 22% year on year, long-term rates (valid for more than one month), eased after peaking at the end of April – a sign the market already considers the pricing peak has been reached.
Further easing of spot rate growth is expected to be driven by the northern hemisphere summer months, typically a slack season for airfreight as peak passenger travel capacity is largely restored, although rate reductions are likely to lag the market by some weeks.
At the corridor level, the drivers of elevated rates sit in a handful of trade flows rather than across the global market.
Artificial intelligence is the clearest of them: shipments tied to data centres and semiconductors continue to push transpacific volumes, making it the strongest corridor so far this year.
Renewed missile activity during the US-Iran ceasefire stalled some capacity recovery into and around the Middle East in May, keeping rates on Europe, South Asia and Southeast Asia corridors to the region elevated, even as they have come off their April peak.
Spot rates rose by double and triple digits versus late February, the largest reaching 113% in the week ending 31 May.
The Europe to North America corridor once again stood out last month. Although demand on the transatlantic firmed in May, ample capacity from summer passenger schedules is putting downward pressure on rates compared to a year earlier, Xeneta said.
Shippers’ strategies vary when it comes to the rate volatility, points out van de Wouw. Some are extending existing capacity contracts and accepting the surcharges that come with this.
“This is because they’re not ready to make a longer-term commitment until there are clear signs the market is normalising,” he said.
“Looking ahead, for shippers who have postponed tenders and bought time with short-term extensions and surcharges, the combination of an anticipated slack summer, and long-term rates already past their peak, is a more useful and welcome signal,” he added.
E-commerce down
E-commerce is one such vertical that reflects a weakening of the market, although volumes are not expected to drop away.
China’s low-value and e-commerce exports fell 11% year on year in April, their fifth consecutive monthly decline.
The pull-back is uneven by destination: shipments to the US fell 33%, while volumes to Europe dropped 6% and Asia Pacific slipped just 1%.
For airfreight, the B2C e-commerce growth engine has stalled – though part of the apparent decline reflects a shift out of individual B2C parcels into bulk, consolidated air freight shipments that fall outside the e-commerce parcel data, rather than volumes simply disappearing, noted Xeneta.
More regulatory tightening, however, will not improve the market mood for a recovery of e-commerce volumes.
From 1 July, the EU scraps its €150 de-minimis exemption, replacing it with a flat €3 duty per item from outside the bloc, with a further €2 handling fee expected around November – aimed at fast-fashion parcels from Shein, Temu, and AliExpress.
Early national moves hint at the disruption a clumsy rollout of these new charges could cause. When France brought a parcel levy forward, small-parcel volumes through its main hub fell sharply as shipments were simply rerouted to neighbouring countries.
Integrators have cautioned that some of the reform’s technical and data requirements may be hard to implement in time, raising the risk of parcels being held at borders.
Xeneta expects the e-commerce sector to adapt rather than rupture, with volumes not expected to fall away massively, but to keep flowing and reshape around the new rules, much as platforms did after the US de-minimis shock by opening new routings within weeks.
More tarrifs?
Shippers and airfreight stakeholders will also be closely monitoring tariffs. After the US Supreme Court struck down the Administration’s ‘emergency’ IEEPA tariffs in February, the White House has found a new legal route for implementation.
In early June, the US Trade Representative proposed an additional tariff of 10–12.5% on goods from 60 trading partners, including the EU and China, on the grounds that they have failed to introduce or properly enforce bans on forced-labour goods.
Brought under a Trade Act Section 301 investigation rather than emergency powers, the measure remains a proposal ahead of hearings in early July, and the EU has called the proposal unjustified.
Pondering potential reduced demand, van de Wouw said: “Don’t expect a hot summer for air freight demand.”
All this aside, frontloading is already happening in the ocean freight market and could become a leading indicator of the action some shippers might follow with their airfreight volumes, he added.
“On the ocean side, we see some frontloading. In many cases, the shippers doing this are acting now because they expect energy to become more costly, so they are producing now in anticipation of higher costs later, as well as to avoid traditional peak season surges in rates,” van de Wouw elaborated.
“But they then must move and sell their goods, and this is at a time of higher transportation costs. So, what happens? Demand rises and rates go up. It’s self-inflicted on the ocean side, but the longer the current market operating conditions continue, we could see this seep over into the airfreight.”
