News / Air cargo rates slow as capacity returns, but fuel squeeze keeps market tight

Ethiopian Cargo has started operating to Glasgow. Photo: PIK

Air cargo rates are beginning to plateau after weeks of sharp increases triggered by the Iran conflict, with returning capacity beginning to outpace demand in key markets. 

However, tightening fuel supply is limiting options for a full market reset. 

Latest data from WorldACD shows global spot rates rose just 1% week on week in mid-April, to $3.73 per kg – the slowest increase since the start of the war – although this is still more than 40% above pre-conflict levels, and 46% higher year on year. 

The slowdown comes as capacity continues to return, particularly in the Middle East & South Asia (MESA) region, where available lift rose 7% week on week. The capacity deficit versus pre-war levels has now narrowed to about 30%, down from 35% last week. 

Airlines are also beginning to restore networks. Qatar Airways Cargo, for example, is resuming freighter services to Dubai World Central and Sharjah, alongside a broader rebuild of its passenger and bellyhold network, with freighter destinations set to exceed 50.

But the recovery is not straightforward. 

“Carriers are redeploying capacity in ways and places not directly linked to the Gulf,” explained Jonathan Mellink, VP and head of sales and marketing at Rotate, speaking on today’s Loadstar News in Brief podcast. 

Rather than simply rebuilding pre-war schedules, airlines are adjusting their networks to chase yields, particularly on Asia-Europe lanes. 

Tonnages from MESA origins fell 6% week on week, dragging spot rates from the region down 2%, despite the improved supply picture. Flows from India and Sri Lanka weakened sharply, while volumes from Dubai offered only partial support. 

From Asia Pacific, the picture is also mixed. Outbound rates rose 3% week on week, but volumes from Asia to Europe fell 3%, while rates edged up just 1%, indicating softening demand. Transpacific pricing remained broadly stable. 

“Carriers are being more creative with the rotations they’re flying, redeploying capacity in search of higher yields,” Mr Mellink said. 

Today’s TAC Index data reinforces the sense of a market losing upward momentum rather than collapsing. China-Europe rates remain elevated, at around Rmb37.54 per kg ($5.50), with Shanghai–Frankfurt at Rmb39.42, while Shanghai-Amsterdam edged slightly lower. China-US pricing remains stronger, at Rmb44.49, and India–Europe rates have risen sharply. 

While the ceasefire has allowed some stability to return, conditions remain fragile. Fuel shortages, industrial action in Europe, and ongoing risks in the Strait of Hormuz continue to disrupt operations, limiting how quickly capacity can fully normalise. 

Signs of tightening jet fuel supply are also emerging beyond the Middle East, with stockpiles in key markets, such as the US west coast reportedly falling to multi-year lows, pointing to the global nature of the constraint. 

“The fuel shortage is by far the most pressing issue… you can’t throw money at that problem. If there’s no fuel, there’s no fuel,” said Mr Mellink. 

He added that “even when flights operate normally, capacity can be significantly reduced due to fuel bunkering, and that isn’t always visible in the data”. 

Airlines are also facing difficult operational trade-offs, including cutting marginal routes, prioritising higher-yield long-haul sectors. and avoiding older, fuel-inefficient freighter aircraft whose operating costs have become prohibitive. 

Despite signs of short-term softening, underlying demand drivers remain robust – particularly in ecommerce and China-Europe trade flows. 

This is reflected in continued network expansion and infrastructure investment across Europe. 

China Eastern Airlines has launched a new thrice-weekly A330 service between Xi’an and Vienna, adding both passenger and cargo capacity and strengthening links between Central Europe and western China. 

Meanwhile, Glasgow Prestwick Airport has secured three new weekly Ethiopian Airlines freighter flights from Hong Kong, targeting inbound ecommerce volumes and opening new export routes to South Korea and Vietnam. 

At the UK’s East Midlands Airport, Chinese logistics firm YunExpress is preparing to open a new 7,000 sq metre cargo handling facility, marking the first UK-based operation by a China-headquartered cargo handler, and giving it full end-to-end control of cross-border ecommerce flows. 

The combination of easing rate momentum, returning capacity, fuel constraints, and resilient underlying demand suggests the air cargo market is entering a more complex phase. 

Capacity is returning, but not always where it is needed; demand is softening in some regions, but remains structurally strong in others; and fuel constraints are potentially limiting how much supply can truly come back into the market. 

With volumes weakening in some lanes and capacity steadily rebuilding, albeit unevenly, the next phase of the market is likely to be defined by yet more volatility. 

Catch up with today’s News in Brief podcast!