Topic of the week: Air Freight Rates Rise 41% Year on Year in May as Capacity Recovery Signals Potential June Easing
Global air freight spot rates climbed sharply in May, rising 41% year on year to an average of $3.40/kg, according to Xeneta. The increase was driven by ongoing geopolitical disruptions, elevated fuel costs, and strong demand on key Asia–North America trade lanes.
Spot rates from North East Asia to North America increased 39% between late February and late May, while South East Asia to North America rates rose 33% during the same period. In contrast, Europe–North America pricing softened, declining 26%.
Despite the strong year-on-year growth, market indicators suggest rates may begin easing in June. Long-term contract rates, which often provide insight into future market direction, peaked in late April and have since started to trend downwards. Xeneta believes this could signal that the current pricing cycle has reached its high point.
Additional downward pressure may come from the continued restoration of Middle Eastern carrier capacity, which is approaching normal operating levels, and the seasonal increase in passenger belly capacity typically seen during the Northern Hemisphere summer travel season.
Global air cargo volumes increased 4% year on year in May, while the dynamic load factor reached 61%, up two percentage points from last year. However, demand remains concentrated in specific sectors rather than broad-based across the market. Data centre infrastructure, semiconductor shipments and technology-related cargo continue to support Transpacific volumes.
Ocean freight trends may also influence air cargo demand. Ongoing front-loading activity by shippers seeking to avoid potential future energy cost increases and peak-season rate hikes could generate additional transportation demand in the coming months.
Meanwhile, cross-border e-commerce volumes remain under pressure. Low-value and e-commerce exports from China to the US fell 33% year on year in April. However, part of this decline reflects a shift from individual parcel shipments towards larger consolidated air freight movements rather than a complete disappearance of demand.
Overall, while air freight rates remain elevated compared with last year, the market is showing signs of stabilisation. Barring further disruptions, softer seasonal demand, increased capacity and easing contract rates could lead to more favourable pricing conditions during the summer months.
