News / Shippers eye softening airfreight market momentum as BSA renewals loom

Photo: © Serhii Akhtemiichuk

Shippers could get the upper hand in airfreight negotiations this year, with lower demand expected, while predictions for cheaper and increasingly reliable ocean freight could trigger modal shift to sea. 

Airfreight market conditions in 2025 delivered mixed outcomes, setting up a more cautious backdrop for block space agreement (BSA) negotiations for 2026, which will likely differ by market – with intra-Asia BSA rates anticipated to be significantly higher, while other key lanes could see falls. 

“Last year had something for everyone,” said Xeneta’s chief airfreight officer, Niall van de Wouw, with airlines benefiting from higher-than-expected volumes early, while shippers gained from lower rates in the second half. 

Xeneta had forecast demand growth of up to 4% for 2025, but expectations for 2026 are more restrained. It is now forecasting global air cargo volumes to rise by around 2% to 3%. 

“With many questions remaining over trade, and geopolitical tension adding a further layer of uncertainty, I think something has to give in 2026 from a volume perspective, and that means there’s going to be more in it for shippers in terms of lower rates,” Mr van de Wouw said. 

He added: “When I look at the biggest risks this year, right now I would say it’s more likely we will see something that will put a stopper on the level of airfreight growth we have seen in the last two years.” 

Contracting behaviour shifted as 2025 drew to a close, with short-term purchasing continuing to dominate. 

Airlines and freight forwarders remained focused on the spot market, with close to half of all forwarder volumes bought on contracts valid for up to a month – a pattern that has persisted since Covid. 

Shippers, however, showed a notable change in the fourth quarter. One-year contracts accounted for just 24% of new deals in Q4, down 20 percentage points from the previous quarter, as buyers appeared unwilling to lock-in rates during peak season and, instead, bet on further price erosion, said Xeneta. 

Despite that drop, the share of one-year contracts was still eight percentage points higher than in Q4 24. With demand expected to lag supply this year, the key question is whether longer-term contracts regain ground, or whether shippers increasingly mirror the prevailing short-termism. 

“Overall, the market has been relatively stable, but we are entering a phase when shippers will be looking for better rates, and demand may deteriorate in the first quarter,” said Mr van de Wouw. 

Market fundamentals suggest increasing downside risk. However, at the same time, hi-tech, AI and ecommerce cargo continue to drive strong airfreight flows from Asia-Pacific into North America and Europe, according to Catherine Chien, chair of Dimerco. 

Most BSAs were set to expire by the end of December, and airlines are showing confidence in the 2026 market, particularly on intra-Asia routes, added the forwarder. 

According to Dimerco, carriers remain optimistic about demand on key lanes. Average BSA rates for intra-Asia in 2026 are expected to increase by 10% to 20%, compared with 2025. 

Kathy Liu, Dimerco’s VP sales & marketing, said that by the end of 2025, several major intra-Asia lanes across both air and ocean freight had reached historical highs, exceeding even pandemic-period levels. That performance has reinforced carrier confidence in a robust outlook for the new year. 

For shippers, however, the case for committing to higher-priced BSAs is complicated by the growing potential for modal shift, even in traditionally air-dominated segments. 

Asok Kumar, CEO of Morrison Express, told The Loadstar last year that there could be increasing scope for AI servers to move by sea, provided supply chains could be planned accordingly. 

“From a logistics perspective, if customers can plan their supply chains, then clearly moving by sea is a much more financially effective solution,” he said, pointing to overcapacity in ocean shipping and falling rates. Any easing of Red Sea disruptions could further increase capacity and put additional downward pressure on pricing. 

“If that does happen, the attraction of moving by sea freight increases substantially,” he added, noting that shippers were actively exploring ocean options for cargo traditionally moved by air. 

But the debate over BSA coverage versus spot exposure remains unresolved. 

Industry executives note that, during the ecommerce surge of 2023, many forwarders lacked sufficient BSA protection and were exposed to extreme volatility. The following year saw a push to secure more block space to protect both rates and capacity. 

As negotiations continue, few players are willing to commit firmly to BSA volumes while demand signals remain unclear. For shippers in 2026, flexibility rather than long-term protection may yet prove to be the stronger hand.