News / Forwarders predict fall in airfreight rates as ecommerce eyes sea freight

© Vitalii Shkurko

Forwarders are warning that although the airfreight market currently seems stable, conditions could change very quickly, and the longer-term outlook could be challenging for airlines as ecommerce platforms look to sea freight instead. 

“So far, volumes from China to the US have not reduced significantly, but it is very much dependent on US tariff policy; so it could go upside down overnight,” said one Shanghai-based airfreight forwarder. 

Scan Global Logistics agreed. “It is clear that the highly volatile market conditions can change the dynamic very quickly and without warning.” 

Spot rates have seen little change in week 11 over week 10, said WorldACD, while the global Baltic Air Freight Index calculated by TAC Index was up 2.3% over the week to 17 March. 

But the Chinese forwarder said ecommerce was likely to become a less reliable source of tonnage for carriers, which could hit rates. 

“From what I understand, the ecommerce platforms are all preparing to send cargo by sea, then keep the shipments in overseas facilities /bonded areas, to make final deliveries when the orders are placed. Sending those shipments by air won’t work for most ecommerce in the long run.” 

Currently however, rates and volumes have held up, and so far, contracts are being maintained.  

“Contract renegotiations have happened in some cases but not yet for most. After all, it’s only a couple of bad months in January and February, because of Chinese New Year,” explained the Shanghai forwarder. 

“March still looks still acceptable for the most part …but if the market stays weak for another two to three months, then things could be different.” 

The forwarder added that the market to Europe was “not strong, but not that weak”.  

“Personally, I think air freight in general will come down. This March, after rates increased over a few weeks, it is still 25% less than same period of last year. 

“Rates increased a lot in the past couple of weeks, but I think perhaps it has reached its peak already. They might hold, with perhaps another small peak related to Easter. 

“But there are not many reasons for airfreight rates to go higher if we look at the global economy, and de-globalisation etc.” 

He added that forwarders were adaptable.  

“There have been always all sorts of challenge over the years , but I believe most forwarders and shippers will find their own way out sooner or later.” 

Scan Global said meanwhile in a customer note that some capacity was being shifted. 

“Air carriers are slowly but surely redirecting some capacity from Asia-US to Asia-Europe routes due to softening ecommerce demand.  

“Summer schedules have been introduced, and we consider that the major tradelanes ex-Asia will feature sufficient capacity during the majority of 2025. Accordingly, we also assess that rate levels will modestly decrease across most lanes.” 

Lufthansa Cargo and Air France-KLM Cargo said this week that they were adding freighter capacity to Hong Kong this summer, with the latter reducing space to Latin America. 

Cathay Cargo confirmed that volumes in its home market were on the rise, with the first two months up nearly 13% over last year, and February capacity up 3.5%. 

“Demand from our Hong Kong hub and the wider Greater Bay Area market started slowly due to the lunar new year holiday, but picked up towards the end of February,” explained chief customer and commercial officer Lavinia Lau. 

“We observed continued growth in our Cathay Secure solution, driven by increased shipments of electronics from the Chinese Mainland and South-east Asia.  

“For March, we expect market demand to pick up as we ramp up our scheduled freighter frequencies to prepare for the quarter end. We are also keeping a close watch on the volatility of the cargo market, and will leverage our built-in flexibility to adjust our network and capacity to capture demand changes,” she added. 

Meanwhile, WorldACD said Asia Pacific-Europe spot rates had stayed flat in week 11 over week 10, “with no major swings”. China to Europe fell 2%, to $3.92 per kg, a fifth consecutive weekly decline. 

From Asia Pacific to the US, spot rates also stayed flat, at $4.91 per kg. 

But the analyst added: “However, there are some major week on week differences on an origin-country level, with spot rates from China and South Korea to the US up strongly (+15%), WoW, whereas from Japan (-8%) and Vietnam (-11%) spot rates were significantly down.” 

Tonnages out of Asia Pacific had “rebounded strongly” in weeks 10 and 11, it added, up 13% to Europe and 10% to the US. But it noted that this recovery had followed a “steep drop”.