Dive Brief:
- Shippers are being cautious of long-term capacity commitments despite steady market growth, according to an Oct. 1 Xeneta report. Instead, shippers are looking for a base rate that adjusts to market conditions.
- Three-month agreements accounted for 60% of new contracts effective Q3 2026, compared to 47% in Q2, Xeneta reported.
- “There remains a lot of instability and that’s making it almost impossible for shippers to make long-term capacity deals without having [terms and conditions] in place to deal with these volatile conditions,” Chief Airfreight Officer Niall van de Wouw said.
Dive Insight:
Fluctuating market conditions are driving shippers to keep a "high degree of realism" when buying freight capacity, van de Wouw said.
As three-month agreements continue to rise, the share of 12-month contracts dropped year over year from 40% to 25%, Xeneta reported. And although one-year deals without adjustment mechanisms exist, many will not survive the following 12 months, according to van de Wouw.
“A one-year fixed rate deal doesn’t fit the current conditions. Shippers are looking to build mechanisms which add flexibility to their commercial relationships with forwarders, and which will help to ensure they hold across the year,” he added.
Meanwhile, global air cargo spot rates valid for up to one month averaged $3.10 per kilogram in September, up 27% YoY, Xeneta reported. Rates were up just 2% month over month, aligning with seasonal firming at the end of Q3.
Elevated jet fuel prices due to ongoing conflict in the Middle East continue to push the global air freight spot rate, with the price of Brent crude rising above $100 in early September, Xeneta reported. However, supply and demand set rates for each trade lane.
For instance, the gap between China-U.S. and China-Europe air spot rates widened since the European Union implemented a customs duty in July, per Xeneta. E-commerce exports to the U.S. were up 17% YoY in August, whereas low-value, e-commerce goods from China to Europe fell 40% YoY in August.
On a corridor level, rates from Southeast Asia to North America were flat month over month at $6.12 per kilogram, per Xeneta. Northeast Asia to North America saw a 5% month-over-month increase to $6.03 per kilogram. Europe to North America stood at $2.30 per kilogram, up 2% compared to the previous month.
Compared to late-February, spot rates from Northeast and Southeast Asia to North America were up 34% and 29%, respectively, Xeneta reported. Europe to North America still remained lower than late-February levels, however, the gap has narrowed as summer passenger belly capacity gets removed from the market.
Looking ahead, the air freight market is forecast to be “more of the same,” and remains on track for about 4% YoY demand growth, according to van de Wouw.
For instance, air cargo demand in September continued the upward trend recorded in August and July, up 6% YoY, Xeneta reported.
However, the proposed easing of China and U.S. tariffs for some goods is renewing trade uncertainty. Ocean shipping also remains a wildcard, as ocean schedule reliability struggles to recover to pre-pandemic levels, port congestion delaying container movements, and more, van de Wouw said.
“When ocean becomes this unreliable and this expensive, some volume moves to air,” van de Wouw said. “We are not yet seeing that in the September data, and it doesn’t change our view of a muted peak season, but it is the factor we are watching most closely.”
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