News / Short-lived spikes, long-term slump? Airfreight rates struggle into Q4

© Denisismagilov

“Short-lived spikes have passed, leaving a dampened peak-season in their wake.” 

Expectations for a decent air cargo peak season are waning, according to Transport Intelligence’s (Ti) Q3 air freight rate tracker. 

“It’s likely then that fragmentation will be central to the air freight market as we move forward. There isn’t really a single, dominant driving trend that’s driving the market, instead, we’re seeing a collection of conflicting forces at play,” it explained. 

“In general, demand is softening,” it said, noting weak consumer spending. “As it stands, Q4 won’t see a dramatic rebound for composite rates. The overriding sentiment in the industry is that, despite pockets of tightness, the combination of high capacity and muted demand points to softness.” 

The latest data from TAC Index, released today, supported this. “Global air freight rates edged a little lower last week… by -0.7% in the week to 15 September, leaving it lower by -6.5% over 12 months”. However, it added that gains in some regions were “offset by declines elsewhere as shippers continued to switch around supply chains in response to changing tariffs and trade rules”.  

In a weak market, capacity could become a problem, said Ti. 

“Lower volumes mean that global air capacity is outstripping demand, pushing the benchmark 7% lower year on-year.” 

Nevertheless, airlines continue to receive new aircraft: this month has seen new deliveries for both Silk Way West, which now has a third 777F, part of its order for 10 to be delivered by 2030. Kalitta Air received two 777Fs, following conversion by IAI on behalf of lessor AerCap, part of a seven-aircraft order. 

Meanwhile forwarders are looking to set their capacity levels for the next quarters. 

“We have a little bit less long-term capacity this year,” explained one European airfreight forwarder. 

“Our long-term capacity is primarily in Asia, primarily China. And then obviously you want a share of the ad-hoc market, with a little bit of an increase on stable capacities towards the end of the year.” The forwarder noted that Emirates and Lufthansa are both pushing ad hoc capacity at the moment. 

“They are amongst the few selling BSAs from Hong Kong and China; the majority of airlines do it towards the beginning of the year or end of Q1.” 

He added: “You don’t want to put all your eggs in one basket. You need to play the ad hoc market, and you need a little bit of stability. But then it’s also about the carrier and forwarder relationship.” 

He added that some Chinese co-loaders had committed to higher rates earlier in the year, and would be looking to recover that in Q4.  

The forwarder said that this year had been harder to predict. 

“That’s a fact. There are hardly any historic patterns which you can use. What happens to the China-plus-one strategy now after tariffs? Will Vietnam continue to grow or not? Or Thailand? There are all these kinds of questions, so we are uncertain about the capacities in these markets.” 

While the market may look messy to forwarders, Ti said it expected “limited tightening on some Transpacific and Asia-Europe routes as holiday shopping gathers pace, especially for consumer electronics and fast fashion”. 

However it warned: “But with air cargo capacity in Q3 and Q4 forecast to expand by up to 3%, there is little sign of a supply squeeze. Any uptick in rates would therefore be modest and short-lived, and confined to lanes where peak demand plays out against local capacity constraints. 

“In Q4 carriers will have to trim schedules without over-correcting as oversupply problems are more than likely to persist. As we move into Q4 and Q1, the narrative will depend less on seasonal uplift and more on how carriers choreograph capacity against uneven, policy-shaped demand.” 

And then there is ecommerce. “[The end of de minimis] … will force US importers to consolidate shipments into bulk consignment and route goods through domestic warehouses,” said Ti. “It’ll naturally reduce the number of small parcels leaving Asia by air. Economic headwinds are also likely to compound this trend. Industry reports indicate that slowing ecommerce and indifferent European industry will lead to only 0.6% growth in air cargo volumes in 2025.” 

But Intra-Asia has had a strong year, and UPS plans to capitalise on it, it said today, as it announced five-times-a-week direct flights from Shenzhen to Sydney, giving it two-business-day delivery times from Southeast Asia to Australia. It has also boosted its Hanoi-Shenzhen route by deploying 747Fs, doubling its weekly capacity. 

“We continue to see strong momentum across Asia Pacific with intra-Asia trade staying resilient, even as businesses navigate an evolving global trade landscape,” said Wilfredo Ramos, president, UPS Asia Pacific. 

Intra-Asia has also benefited from the rise in electronics and AI servers, a market that will remain “resilient” said Ti.  

“Pharma will maintain steady flows, providing a stable cushion of demand. In Q4 they will continue to be firm, but as they make up a small fraction of air cargo they’re unlikely to offset the softness in consumer-centric cargo.” 

Ti concluded: “Arguably the only constant is the advice to shippers: remain flexible. Traditional planning cycles seem less relevant in the current environment, and to that end, real-time decision making and diversified routing are vital tools for managing risk and disruption.”