Air freight demand rises as shippers favour flexible deals

Global air freight volumes increased 6% year on year in September, extending the growth recorded in July and August, according to industry data from Xeneta. However, shippers are increasingly opting for shorter-term capacity agreements as they seek greater flexibility amid changing market conditions and freight rates.

Demand growth in September followed a 6% increase in August and a 5% rise in July, helping to slow the anticipated decline in air cargo rates. Global air cargo spot rates averaged $3.10 per kg in September, up 27% from the same month last year and 2% higher than August.

The increase was supported by seasonal market firming at the end of the third quarter, alongside higher jet fuel costs amid continuing tensions in the Middle East. Brent crude prices surpassed $100 per barrel in early September.

Meanwhile, global air cargo capacity grew 2% year on year in September, following flat growth in July and August. With demand expanding faster than capacity, Xeneta’s dynamic load factor rose by two percentage points to 62%, indicating higher utilisation of available capacity.

Shippers move away from long-term deals
Xeneta’s data also points to a significant shift in how shippers are securing air freight capacity. Of new contracts beginning in the third quarter of 2026, 60% were for three months or less, compared with 25% during the same period in 2025 and 47% in the second quarter of 2026.

Three-month contracts accounted for 42% of new agreements, up sharply from 16% a year earlier. Meanwhile, the share of 12-month contracts declined from 40% to 25%, while agreements longer than a year accounted for just 3% of new contracts.

Niall van de Wouw, Chief Airfreight Officer at Xeneta, said shippers are increasingly seeking “floating mechanisms” that combine a base rate with adjustments reflecting changes in market conditions.

The trend highlights growing demand for flexible pricing and capacity arrangements as shippers seek to manage volatility in air freight rates and market capacity.

He said, “There is a high degree of realism in the way shippers are approaching the market. There remains a lot of instability and that’s making it almost impossible for shippers to make long-term capacity deals without having T&Cs in place to deal with these volatile conditions.”

Van de Wouw said fixed-rate agreements covering an entire year are becoming less suited to current market conditions, with shippers seeking more flexible arrangements with freight forwarders that can adapt to market changes throughout the year.

He added that one-year contracts without adjustment mechanisms are increasingly uncommon and suggested that few such agreements are likely to remain unchanged over the next 12 months.

China–Europe e-commerce exports still falling; China–US rebounds
China’s low-value and e-commerce exports to Europe declined further in August, falling 40% year on year, according to an analysis by Xeneta and Trade and Transport Group of the latest China Customs data. The drop was significantly steeper than the 25% decline recorded in July, as the EU’s €3 customs duty per item, introduced on July 1, continues to weigh on shipments.

By contrast, China’s e-commerce exports to the US rose 17% year on year in August, extending their recovery following the removal of the US de minimis threshold in 2025, although volumes remain below their previous base.

The contrasting trends are also reflected in air freight rates. The gap between China–US and China–Europe spot rates has widened since the EU duty came into effect. Despite the decline in European e-commerce exports, China-to-Western Europe air cargo spot rates increased 10% month on month in September to $4.26 per kg. The rebound followed declines of 6% in August and 22% in July, as outbound demand from China strengthened ahead of the Golden Week holiday.

Corridor rates rebound month-on-month as the seasonal upswing begins
Most major air freight corridors recorded month-on-month spot rate increases in September, following the seasonal decline seen over the summer. Rates from Northeast Asia to Europe rose 5% to $4.74 per kg, while Northeast Asia to North America also increased 5% to $6.03 per kg. Southeast Asia to Europe saw a more modest 3% rise.

Transatlantic rates also strengthened in September, with Europe-to-North America rates up 2% and North America-to-Europe rates increasing 4% from August. The only major corridors to record declines were North America to Southeast Asia, down 1%, and Europe to Southeast Asia, down 2%.

Compared with late February, before the escalation of the Iran war, air freight rates into the Middle East remained significantly elevated in week 39 (September 21–27), rising 91% from South Asia and 80% from Europe.

Rates from Northeast Asia and Southeast Asia to North America were also 34% and 29% higher, respectively, than late-February levels, supported by recovering e-commerce demand and shipments linked to artificial intelligence. Europe-to-North America remained an exception, with rates still 20% below late-February levels, although the gap narrowed from 25% in August as summer passenger aircraft belly capacity gradually declined.

Shippers holding out for a fairer way forward
Niall van de Wouw expects global air freight demand to grow by around 4% year on year in 2026, potentially exceeding industry expectations at the start of the year. However, he said shippers are increasingly seeking more flexible and transparent ways to manage changes in market conditions and freight rates. This trend is also driving more shippers to use Xeneta to gain greater visibility into air freight pricing.

The growing preference for three-month contracts is one way shippers are managing this uncertainty while negotiating what they consider fairer capacity-buying arrangements. Van de Wouw said such mechanisms should ideally be linked to the all-in rates airlines charge freight forwarders, rather than relying solely on traditional fuel surcharges.

Looking ahead, he expects the global air cargo market to remain broadly stable through the end of the year, with limited signs of a strong peak season emerging so far. While it is too early to determine how the fourth quarter will develop, current indicators point towards a relatively muted peak season, in line with Xeneta’s mid-year outlook.

Another factor being closely monitored is the ocean freight market. Ocean schedule reliability remains below pre-pandemic levels, while renewed disruption in the Red Sea and port congestion have pushed Asia–US West Coast ocean rates closer to pandemic-era levels.

Van de Wouw noted that prolonged disruption and higher ocean freight costs could shift some cargo to air, although this trend was not yet evident in September data and does not alter the expectation of a subdued peak season.

Meanwhile, changes in trade policy, including the recent partial easing of China–US tariffs, are adding further uncertainty to the market. However, air freight markets have so far absorbed these developments without a significant change in the broader trend.