The global air freight market is undergoing subtle yet profound transformations, mirroring the complexities of international trade. Like an invisible chess game, each move carries uncertainty that could significantly impact shipping costs. Recent data reveals shifting patterns that demand strategic responses from businesses reliant on air cargo.
Market Turbulence: Temporary Fluctuation or Sustained Downturn?
The pandemic's initial years saw air freight prices skyrocket as passenger flights—and consequently belly capacity—disappeared. Now, with commercial aviation recovering, capacity has rebounded while demand shows signs of softening. Xeneta's June 6 report indicates global spot rates fell 4% year-over-year in April to $2.44/kg, the first decline since April 2024.
However, the China-U.S. route tells a different story. Rates rebounded 14% from May lows to $4.31/kg by June 1, demonstrating the market's volatility. This raises a critical question: Are we witnessing a structural shift or temporary turbulence?
Airline Anxiety: Concerns Over Trade Stability
Niall van de Wouw, Xeneta's Chief Airfreight Officer, notes carriers express growing unease about post-tariff stability. "When businesses no longer rush to beat tariffs via air shipments, demand could contract substantially," he observes. This apprehension stems from companies having prioritized speed over cost during supply chain disruptions—a pattern that may reverse as global trade normalizes.
Tariff Respite Fails to Reverse Trend
The 90-day tariff extension announced in May provided minimal market relief. Van de Wouw explains: "Tariffs impact finances more profoundly than air-versus-sea cost differentials. This creates both challenges and opportunities." The temporary measure hasn't halted rate declines, suggesting deeper market forces at work.
Regional Disparities: Northeast Asia-North America Defies Trend
Amid broader declines, the Northeast Asia-North America corridor saw 7% higher year-over-year spot rates at $4.53/kg. This resilience highlights how high-value, time-sensitive commodities sustain demand even during downturns—a crucial consideration for logistics planners.
Strategic Implications for Supply Chains
The evolving landscape demands agile responses. Van de Wouw warns: "Contingency plans become obsolete rapidly in this environment." Many shippers now use air freight for goods traditionally moved by sea, creating operational complexities.
Anticipating a Pre-Tariff Surge
Xeneta predicts short-term volume spikes as the 90-day tariff pause concludes—July 9 for most nations, August 13 for China. This mirrors early shipping strategies seen in ocean freight, evidenced by March surges at Los Angeles port.
Ocean Freight as Leading Indicator
The container shipping market may preview air cargo's trajectory, given its longer lead times. Van de Wouw cautions: "Current trade conditions favor some air routes, but eventual tariff resolutions might suppress rather than stimulate demand."
Navigating the New Normal
Businesses must adopt multifaceted strategies:
1. Transport Diversification: Balance air, sea, and land options based on product characteristics and urgency.
2. Inventory Optimization: Implement just-in-time systems and vendor-managed inventory to reduce carrying costs.
3. Partner Collaboration: Strengthen relationships with suppliers and logistics providers for shared resilience.
4. Technology Integration: Leverage data analytics for dynamic route planning and rate negotiations.
As trade policies evolve and capacity fluctuates, companies that combine market vigilance with operational flexibility will best weather the storm. The air cargo chessboard remains in motion—success belongs to those who anticipate moves rather than react to them.