Xeneta sees softer H2 for air cargo

Air freight rate premiums that surged following the escalation of the Middle East conflict in late February continue to ease, with little indication of a traditional peak season lifting demand, according to Xeneta's latest market data and analysis. The air cargo intelligence platform expects the global market to experience a softer second half of 2026 despite a strong start to the year.

Global air cargo spot rates averaged $3.12 per kg in July 2026, representing a 28% year-on-year increase, but the pace of growth slowed for the second consecutive month after rising 38% in June and peaking at 41% in May. Every month, spot rates declined 6%, reflecting a gradual unwinding of the rate premiums that emerged during the Middle East conflict.

Xeneta noted that July is typically a softer month than June, making the moderation in rates consistent with seasonal trends. While robust market performance in the first half of the year prompted the company to improve its outlook for 2026 compared with its November 2025 forecast, it expects weaker demand in the second half. The market intelligence provider also observed limited expectations of a traditional peak season, with few signs of increased charter activity or stronger seasonal demand from shippers, indicating a more subdued market outlook for the months ahead.

Niall van de Wouw, Xeneta’s Chief Airfreight Officer, said, “In all the conversations we’ve had with our shipper community, in only one was there talk of peak season charters. This is another signal of the lower expectation for the coming months.”

As the market enters the Northern Hemisphere's August summer holiday period, air freight rates are expected to continue easing. However, lingering geopolitical tensions stemming from the Iran conflict and recent volatility in jet fuel prices are likely to result in a gradual decline, rather than the sharp increases shippers experienced earlier this year.

New EU E-commerce Duty Hits Air Cargo Market
Asia–Europe air cargo lanes recorded the steepest rate declines in July, with spot rates from Northeast Asia to Europe falling 13% month-on-month and those from Southeast Asia dropping 9%, according to Xeneta. The most significant correction was seen on the China–Western Europe corridor, where spot rates fell 22% month-on-month to USD 4.15 per kg, marking a much sharper decline than the low single-digit decreases recorded during the same period over the past two years.

The slowdown coincided with the European Union's removal of the €150 duty-free threshold for low-value imports on July 1, 2026, replacing it with a flat €3 duty per item. Market reports also indicate that freighter capacity has begun to shift away from China–Europe e-commerce services, reflecting changing trade dynamics following the policy change.

Middle East Rate Premiums Continue to Ease
Air freight rates on trade lanes most affected by the Middle East conflict remained well above pre-conflict levels despite recent market softening. By the final week of July, spot rates from South Asia to the Middle East were 84% higher than in late February, while rates from Southeast Asia were up 47% and Europe–Middle East rates remained 62% higher.

Meanwhile, AI-driven demand continued to support the Transpacific market, with spot rates from Northeast Asia and Southeast Asia to North America remaining 33% above late-February levels. However, this represented a moderation from the 41% and 42% increases recorded at the end of June. On the transatlantic corridor, abundant belly cargo capacity resulting from expanded summer passenger schedules pushed Europe–North America spot rates 27% below their late-February levels.

Air Cargo Demand Eases as Supply Rebounds
Global air cargo demand increased 4% year-on-year in July, moderating from the 8% growth recorded in June, according to Xeneta. Meanwhile, global air cargo capacity expanded 1% compared with the same month last year, continuing its recovery following disruptions caused by the Middle East conflict. Xeneta's dynamic load factor, which measures capacity utilisation based on cargo volume, weight and available capacity, rose by two percentage points year-on-year to 61%, indicating continued healthy utilisation despite slowing demand growth.

Market Faces Ongoing Uncertainty
Xeneta said the air cargo market outlook remains uncertain, with factors such as the ongoing Iran conflict, fluctuating fuel prices, and the European Union's new customs duties on low-value e-commerce imports expected to influence demand. The market intelligence platform also noted that the sharper decline in China–Europe air freight rates during June and July, compared with last year, could be an early sign that the EU's e-commerce regulations are already weighing on the broader freight market. Despite recent easing in rates, Xeneta expects the market to remain volatile through the rest of 2026.