Global air freight rates ease as capacity recovers

Global air cargo rates continued to soften in the week ended 5 July despite renewed tensions between the US and Iran, which are expected to heighten disruption and put upward pressure on pricing in the coming weeks.

According to the latest market data, average worldwide air freight rates declined 1% week on week to $3.13 per kg in week 27 (29 June–5 July), following a 2% drop the previous week. Average global spot rates also fell 2% to $3.62 per kg, with rates declining 4% from Europe and North America, and 2% from Asia Pacific, where spot rates averaged $5.03 per kg, and from Central and South America.

Despite the weekly decline, spot rates remained 37% higher year on year, reflecting continued strength in the market. Year-on-year increases were led by the Middle East & South Asia and North America, both up 46%, followed by Africa at 42% and Asia Pacific at 37%.

Global air cargo volumes declined for a second consecutive week in week 27 (29 June–5 July), with worldwide chargeable weight falling 2% week on week after a 1% decline the previous week.

The sharpest drop came from North America, where volumes fell 10% due to the US Independence Day holiday, followed by a 7% decline from Central and South America, also influenced by reduced trade activity around the 4 July celebrations. The weekly decline was broadly in line with seasonal trends, compared with a 3% week-on-week fall during the same period last year.

Despite the short-term slowdown, global chargeable weight remained 4% higher year on year, supported by an 8% increase in volumes originating from Asia Pacific, according to data covering more than 500,000 weekly air cargo transactions

Taiwan sees surge in Europe-bound cargo as Hong Kong volumes fall
Air cargo traffic from Asia Pacific showed diverging trends in week 27, with e-commerce shipments from Hong Kong to Europe recording a sharp decline following changes to the European Union's import rules.

Tonnages on the Hong Kong–Europe lane fell 12% week on week after declines of 7% and 2% in the previous two weeks, taking volumes back to late-March levels. The drop coincided with the EU's decision to end its de minimis import duty exemption for goods valued below €150 from 1 July. In contrast, cargo volumes from China to Europe remained stable after a 6% decline the previous week. Overall, Asia Pacific-to-Europe tonnage fell 2% in week 27, following a 4% decline a week earlier, while spot rates eased to $5.09 per kg.

Meanwhile, shipments from Taiwan to Europe surged by around 20% over the past three weeks, driven by demand for AI-related computer equipment. During the same period, cargo volumes from Taiwan to the US declined by around 5%, while Hong Kong-to-US traffic fell by about 7%, compared with an overall decline of roughly 20% on the Hong Kong-to-Europe corridor.

On the pricing front, average Asia Pacific-to-US spot rates declined for a second consecutive week, falling 3% to $6.83 per kg. Spot prices from China and Hong Kong to the US have dropped by a combined 12% over the past two weeks.

Air freight capacity climbs above pre-war levels
Meanwhile, global air cargo capacity slipped 1% week on week in week 27, largely due to a 4% reduction in capacity from North America during the US Independence Day holiday. The decline was partly offset by a 3% increase in capacity from Middle East & South Asia (MESA).

Despite the weekly dip, worldwide cargo capacity has recovered to 2% above levels recorded in week 7, before the outbreak of the US–Israel conflict involving Iran. Capacity to and from the MESA region also continued to improve, with the deficit narrowing to 10% in week 27 from 14% a week earlier and 30% in early June.

However, the recovery could prove short-lived if escalating tensions between the US and Iran lead to further disruptions in global air cargo operations.