Global air cargo spot rates surge 41% in May amid tensions

Global air cargo spot rates rose 41% year-on-year in May to an average of $3.40 per kg, driven by resilient demand, constrained capacity and ongoing geopolitical disruptions, according to Xeneta. The market update, released in June, showed that global air cargo demand increased 4% year-on-year while capacity recovered to 1% above last year's level. The dynamic load factor also climbed two percentage points to 61%, reflecting stronger capacity utilisation across the industry.

Despite the sharp increase in rates, Xeneta believes pricing pressures on shippers may begin to ease in June as capacity returns and demand growth moderates. Niall van de Wouw, Chief Airfreight Officer at Xeneta, said: “A lot of the air cargo market statements we made in April hold true. 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."

Van de Wouw noted that some shippers are delaying long-term commitments in anticipation of lower rates. He pointed to growing frontloading activity in the ocean freight sector, where companies are accelerating production and shipments to avoid potential future cost increases and peak season surcharges. He warned that similar behaviour could eventually influence patterns of air freight demand.

“On the ocean side, we see some frontloading. In many cases, the shippers doing this are acting now because they expect energy to become more costly, so they are producing now in anticipation of higher costs later, as well as to avoid traditional peak season surges in rates. But they then must move and sell their goods, and this is at a time of higher transportation costs. So, what happens? Demand rises and rates go up. It’s self-inflicted on the ocean side, but the longer the current market operating conditions continue, the more we could see this seep over into the airfreight,” van de Wouw said.

At the same time, the recovery of Middle Eastern carrier capacity is expected to exert downward pressure on air freight rates in the coming weeks. Van de Wouw said: “We are on record saying rates wouldn’t come down as fast as they went up, and that is the case. 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, especially as there are not a lot of industry verticals that are booming at the moment.”

Although global spot rates remained elevated in May, Xeneta observed early signs of market softening. Long-term contract rates, which increased 22% year-on-year, eased after reaching a peak at the end of April, suggesting the market may have already passed its pricing high point. Further moderation is expected during the northern hemisphere summer period, when additional passenger aircraft capacity typically returns to the market.

The report highlighted that elevated pricing remains concentrated in specific trade corridors rather than being spread evenly across the global market. Artificial intelligence-related shipments, particularly semiconductors and data centre equipment, continued to drive strong transpacific demand. Meanwhile, renewed missile activity during the US-Iran ceasefire slowed capacity recovery into the Middle East, keeping rates on routes from Europe, South Asia and Southeast Asia to the region significantly above pre-conflict levels. Some spot rates were up by as much as 113% compared with late February.

In contrast, the Europe-North America corridor experienced downward pressure on rates despite firmer demand, as expanded summer passenger schedules added substantial capacity to the transatlantic market.

Xeneta also reported continued weakness in China's low-value and e-commerce exports, which fell 11% year-on-year in April, marking a fifth consecutive monthly decline. Shipments to the United States dropped 33%, while exports to Europe and Asia Pacific recorded smaller declines. The company noted that some apparent declines may reflect a shift from individual parcel shipments to consolidated bulk air freight movements.

The outlook for e-commerce faces further uncertainty as the European Union prepares to remove its €150 de minimis exemption from 1 July, replacing it with a €3 duty per imported item and an additional €2 handling fee expected later in the year. Xeneta expects the sector to adapt to the new rules rather than experience a major collapse in volumes.

Trade policy developments are also drawing attention from air freight stakeholders. Following the US Supreme Court's decision to strike down the Administration's emergency IEEPA tariffs earlier this year, the US Trade Representative has proposed additional tariffs of 10% to 12.5% on goods from 60 trading partners, including the EU and China, under a separate legal framework. The proposal remains under review ahead of hearings scheduled for July.

Summing up the market outlook, van de Wouw said: “Don’t expect a hot summer for air freight demand.”