News / Forwarders and airlines reposition as air cargo market steadies

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Air cargo markets are showing early signs of stabilisation after the sharp rate surge, while forwarders and airlines are continuing to secure capacity amid ongoing disruption and uneven demand. 

Speaking during last week’s Q1 earnings call, DSV chief executive Jens Lund described conditions as “challenging”, amid geopolitical uncertainty, but said the company had “managed to limit the impact of the situation in the Middle East to something moderate in our numbers”, and reported solid air freight profitability. 

That resilience is being matched by forwarder action on the ground: DHL Global Forwarding is expanding its controlled airfreight capacity with a new thrice-weekly 777 freighter service linking South-east Asia and the US, alongside additional Asia-Europe routes, underlining continued demand on key east-west lanes. 

Kuehne+Nagel, meanwhile, struck a cautious tone in its latest results, highlighting a volatile environment and fragile demand backdrop, but it also pointed to stable air volumes and a continued focus on yield over volume. 

Airlines are also adjusting networks as conditions in the Middle East begin to normalise, although capacity remains structurally constrained. 

Qatar Airways Cargo has resumed freighter and bellyhold services to Iraq, restoring more than 115 tonnes of weekly capacity on the Doha–Baghdad route, while Etihad Cargo received a boost via a long-term agreement with UAE-based EDGE Group to handle its global airfreight requirements. 

DHL CEO Tobias Meyer highlighted the scale of disruption during the conflict, noting that the company had been forced to relocate its Middle East hub operations from Bahrain to Muscat and Riyadh following airspace closures. 

“I’m very proud how colleagues in the Middle East handled the situation,” he said, adding that the company was able to redeploy aircraft and use its road feeder network to maintain service levels across the region. 

However, he warned that reduced Middle Eastern capacity continued to affect global flows, particularly on Asia-Europe lanes. 

“There is a broader impact on the air freight market for Asia-Europe, where we continue to see elevated rates,” he said. “As the Middle Eastern capacity is not available, the hub carriers in the Middle East do not provide the same capacity we are used to.” 

Meanwhile, jet fuel prices are also easing – although they remain more than 100% above the same time last year, according to IATA’s jet fuel price monitor. 

Out of Hong Kong, where cargo fuel surcharges are made public, major operators including Cathay Cargo and other international carriers, raised surcharges sharply during the initial fuel spike. While increases have slowed in line with stabilising fuel prices, surcharge levels remain elevated, although varying significantly between airlines. 

Xeneta cautioned that fuel alone did not explain rate movements. Chief airfreight officer Niall van de Wouw said: “We need to bust the myth that if jet fuel goes up, airfreight prices go up… the all-in cost a freight forwarder pays an airline is more driven by demand and supply than it is by fuel costs.” 

Market data suggests the air cargo sector is now transitioning out of its most acute disruption phase. 

According to WorldACD, global air cargo spot rates rose around 2% week on week in late April, with full-market prices, which include contract rates, up about 1%. On a year-on-year basis, spot rates remain around 45% higher, and full-market rates up about 30%. 

However, the pace of increase has slowed. 

More recent TAC Index data show a more mixed picture in early May, with China-US rates continuing to edge upwards, while some Europe-bound lanes have softened. 

Forwarders reported demand for capacity from China to the US had been strong in recent weeks, driven by AI server shipments, ecommerce flows, ocean-to-air conversions and general cargo, maintaining pressure on available capacity and keeping rates elevated. 

Demand to Europe, by contrast, has been stabilising, with rates expected to follow. 

While the pressure on capacity was expected to ease slightly for China’s Labour Day holiday, forwarders say demand across most Asia Pacific markets remains high, with tight capacity, elevated pricing, and extended lead times likely to persist. 

At the same time, broader demand signals are becoming more fragmented. Data from Aevean shows China-origin ecommerce volumes fell  6% year on year in March – the first decline since mid-2023 – driven by sharp drops to the US (-24%) and Middle East (-45%).  

While Europe (+27%) and Latin America (+31%) recorded strong growth, this was not enough to offset declines elsewhere. 

With disruption to key trade routes continuing, fuel costs remaining volatile, and no clear resolution to the Iran crisis in sight, air freight rates are likely to stay high in the near term – with further upside risk linked to fuel availability and capacity constraints. 

But, as Xeneta notes in its latest market update, “the worst may be behind us”. 

 Check out our latest News in Brief podcast, with exclusive insights from Xeneta’s Peter Sand.