News / Air cargo players still wary of long-term block space deals – 'a risk on both sides'

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Airlines have reported increased demand for security in a blocked space agreement, expecting a rate spike later this year.  

The Loadstar has reported that airfreight forwarders had been sceptical of long-term block space agreements with airlines, amid the on-off tariff-related demand lulls.  

Brandon Fried, executive director of the Air Forwarders’ Association, had told The Loadstar the 90-day ‘reciprocal tariff’ pause had made long-term airfreight contracts much less desirable.  

“I spoke to a couple of airlines, and they said people were willing to sign for 30 days, but not willing to make longer commitments. Because you don’t know what’s going to happen in 90 days – anything can come out of the White House right now,” he said. 

However, Richard Forson, CEO of Cargolux told The Loadstar on the sidelines of the Transport Logistic conference in Munich this week: “That’s not been my experience.”  

“We’ve had a very good renewal rate. The ones we’ve got have gone for are on the normal terms clients do with us,” he said. 

“I think a lot of forwarders, and especially their customers, probably learned a lot through the Covid period and, with the ecommerce market of 2024, where a lot of capacity was being taken away, the ad hoc markets went through the roof. 

“So I think a lot are prepared to say, ‘let’s get a bit of certainty – that’s the rate we know, and that’s what we work with’, instead of arriving at the end of the year and the price is triple what it was at the beginning of the year,” he added. 

Indeed, Mark Drusch, chief cargo officer of Qatar Airways, told The Loadstar he was also betting on a demand – and subsequent rate – spike later this year.  

“Sometimes we are the ones that doesn’t want to contract beyond six months,” he said. 

“Everybody is worried. It’s not just China-US that’s put a crimp on everything. And I think once it gets settled, you’ll see everything go back, not to normal, because there’s that pent-up demand that you’ll have to satisfy,” Mr Drusch added. “I actually think there will be a very strong resurgence, to catch up on what we’ve missed over the past 90-120 days, for however long it takes.

“We’ll see what happens. I want to see how it moves. 

“Some want longer [deals], and we’d say, ‘no, no, no, we want to wait’. It all depends on when and to whom you’re speaking.”  

Mr Forson noted that agree a longer-term blocked space agreement was “a risk, on both sides”. 

“You’re taking a view as to what you believe the market is going to be like at the end of the year,” he explained.