News / Spot vs contract gap widens as air shippers get wise to capacity limits

© Stephen Coburn

Ecommerce shippers reserving freighter capacity have widened the gap between global contract and spot rates, leaving transatlantic players more likely to find themselves stuck with the latter.

Product development director at WorldACD Rogier Blocq told delegates at this week’s World Cargo Summit in Bruges: “If we look at how rates developed in 2024 worldwide, the spot rate was more volatile than contract rates, and towards the end of the year there was a higher spread. 

“It always causes a bit of shock. Still, while it is very small, there is a price increase on the spot rates,” he added. 

Mr Blocq explained that this had an “impact on the amount of business done on spots”, as rising prices made forwarders “more eager” to go for long-term contracts.  

“You see a bit of spot share going down, and the business moving to longer-term contracts more often,” he said. 

However, he noted a “huge difference in terms of behaviour” seen between Asia-to-Europe and Europe-to-North America. 

“The spread between spot and contact is very small on the lane Asia-to-Europe, which means people were quite well prepared for the big peak. There was so much panic in the markets that capacity was already planned,” said Mr Blocq.  

Indeed, Peter Scholten, CCO of Air One Aviation, explained: “I think what we see now is the maturity of the ecommerce giants – the Alibabas, the Temus, and Sheins. 

“A trend is that those big shippers in the world today are becoming more professional and taking long-term commitments. They realise there are only 550 or so freighters, and they want to lock-in demand, lock-in long-term.” 

Mr Blocq added that westbound, from Europe to North America, “the preparation was a bit less” and shippers were less able to obtain long-term commitments, “due to a capacity shift going to the Asia market”. 

He said: “If you look at the US, there was 10% less capacity on the transatlantic flow, which caused a huge spike in the yields and the spot rates on the transatlantic… And that had a clear impact on the market.” 

Ludwig Hausmann, partner at McKinsey & Co, explained that cross-border ecommerce “really drove freighter movements between China and North America” last year, and pointed to near-21% growth, compared with 2023. 

“Just to put it into perspective, that’s 36 more daily freighter flights than in 2023 in a market where freighter capacity didn’t grow, which means this market sucked out quite a lot of freighter capacity from other lanes, which again then supported yields on other markets,” Dr Hausmann concluded.