News / Cautious air cargo shippers delay tenders amid signs rates may have peaked 

Air cargo shippers are increasingly delaying tender decisions and extending existing contracts, rather than locking themselves into fresh agreements at today’s elevated rates, according to market analysts.

They are betting that the extraordinary pricing surge triggered by the Middle East crisis may finally be easing. 

Data from Xeneta shows global air cargo spot rates averaged $3.40 per kg in May, up 41% year on year, despite signs that market conditions are beginning to soften.

While demand remained resilient, growing 4% year on year, capacity continued to recover and ended last month 1% above last year’s level. 

According to Xeneta chief airfreight officer Niall van de Wouw, many cargo buyers are opting to wait rather than commit. He said: “Shippers clearly have a sense of ‘here we go again’, in terms of rate volatility, but they are adjusting and buying time by temporarily accepting the surcharges that come with extending existing capacity contracts.

“This is because they’re not ready to make a longer-term commitment until there are clear signs the market is normalising.” 

The strategy reflects growing confidence among shippers that rates may be close to a peak, even if the decline is likely to be gradual.

“We are on record saying rates wouldn’t come down as fast as they went up, and that is the case,” Mr van de Wouw added. “It takes a while for rates to adjust to the market situation, but I would not be surprised to see year-on-year spot rate comparisons decline in June.” 

There is already some evidence to support that view. 

While May spot rates remained sharply elevated, Xeneta noted that long-term rates, which tend to provide a more forward-looking view of the market, have eased since peaking at the end of April. 

Meanwhile, the latest figures from WorldACD show global airfreight pricing slipped 1% week on week in the first week of June, while capacity recovered by 1% after the disruption caused by a convergence of public holidays, including Memorial Day, Pentecost, and Eid al-Adha. 

WorldACD also reported an 8% week-on-week increase in capacity from the Middle East and South Asia region, although capacity remains 28% below pre-conflict levels, suggesting there is still room for further recovery. 

A potential reopening of the Strait of Hormuz is also hanging over contract negotiations. While air cargo rates were pushed higher by fuel concerns, disrupted networks and emergency freight movements during the conflict, a return to normal energy and shipping flows could remove some of those supports. That possibility is one reason many shippers may choose short-term extensions over fresh tenders, betting that today’s elevated rates may not survive a full market reset. 

The cautious approach from cargo buyers reflects a wider desire for stability after several years of disruption. 

Speaking on this week’s News in Brief podcast, Global Shippers Forum director James Hookham said supply chain disruption had again forced shippers into short-term adjustments, while their longer-term preference remained ‘predictable costs and reliable contractual relationships’. 

“What shippers really value are long-term relationships,” he said. 

The question now is whether the market will deliver the rate relief many cargo buyers are expecting. 

While the apparent end of hostilities between Iran and the US has improved sentiment, demand remains supported by sectors such as electronics and other high-value cargo. Xeneta also warned that renewed trade tensions and additional tariff proposals from Washington could yet alter demand patterns in the second half of the year. 

For now, however, the mood among many air cargo buyers appears to be one of patience rather than panic. 

Despite rates remaining far above historical norms, many are choosing to wait for the market to come to them, rather than locking-in pricing they increasingly suspect may prove temporary. 

Check out today’s News in Brief podcast featuring Global Shippers’ Forom James Hookham