Air freight spot rates surged 41% year-on-year in May, driven by Middle East conflict-related disruptions and fuel volatility since February. Xeneta reports signs of near-term relief: Transatlantic spot rates fell 17% YoY to $2.57/kg, Southeast Asia–North America rates rose 33% YoY to $6.46/kg, and long-term rates climbed 22% YoY before dipping post-April peak. E-commerce shipments from China declined 9% YoY in March, marking a four-month sustained drop. Xeneta’s Niall van de Wouw advises shippers to scrutinize forwarder routing and surcharge structures amid rising jet fuel costs.
Air freight spot rates spike 41% YoY in May, but relief expected soon | Supply Chain Dive The return of Middle East carrier capacity to nearly full-scale operations further contributes to the possibility of lower rates in the short term, Chief Airfreight Officer Niall van de Wouw.
Rate dynamics and market drivers
Xeneta also reported that rate reductions may be influenced by the typical summer slack season for air freight due to an increase in passenger capacity in the northern hemisphere. Rates typically climb during globally impactful events, such as the Iran war, which has influenced annual contract negotiations between carriers and forwarders. Subsequent service disruptions, surcharges and fuel supply volatility since the conflict began in February have impacted the air freight market and driven up prices.
But regardless of May’s higher global spot rate, there are signs that freight prices may cool in June, Xeneta reported. For instance, despite long-term rates — or rates valid for more than one month — being up 22% YoY, prices started to dip after peaking at the end of April. Spot rates from Southeast Asia to North America were up 33% YoY to $6.46 . Rates from Northeast Asia to North America reached $5.54 for the week ending April 26, Xeneta reported.
E-commerce shifts and China volume decline
Although the B2C e-commerce growth engine has cooled, the decline is partially attributed to a “shift out of individual B2C parcels into bulk, consolidated air freight shipments that fall outside the e-commerce parcel data” instead of volumes just disappearing,
E-commerce growth also seems to be over as volumes from China continue to drop, In March, e-commerce shipments out of China were down 9% YoY, with a four-month sustained decline. The atypical Q2 announcement goes into effect later this month as heavier freight mixes gain traction. Shippers can now use the e-commerce giant’s network to deliver freight to third-party sites, the company announced Wednesday.
Transatlantic correction and fuel-cost disconnect
The shift in Transatlantic spot prices — which dropped 17% YoY to $2.57 from Europe to North America — is a direct example of this, van de Wouw said.
“We need to bust the myth that if jet fuel goes up, airfreight prices (need to) go up,” van de Wouw said. “Fuel costs have gone up dramatically, but rates are starting to go down in specific markets.” Spot rates for the month also included a more than 18% increase in long-term rates, or rates valid for over one month, The spike in air freight rates was driven by supply issues, Chief Airfreight Officer Niall van de Wouw.
Outlook and ship
However, challenges still linger on the horizon despite signs of possible relief, including what will happen to Q3 and Q4 demand after uncertainty, inflationary pressures and spikes in fuel and production costs ease, van de Wouw said.
The lower rates will be welcome news for shippers who have stalled Q3 and Q4 tenders with freight forwarders in anticipation of a more normalized market, van de Wouw said. Looking ahead, to secure needed capacity for the second half of the year at a “fair and equitable price,” van de Wouw is advising shippers to get a clearer understanding of how freight forwarders are transporting goods and to be cautious of the “feast of surcharges” from carriers looking to curb higher jet fuel prices.
“Overall, we do think we have seen the peak for global air freight rates, and we expect them to go down on more lanes, but, based on recent experience, there will undoubtedly be an underlying concern about what’s next in terms of trade disruption,” Niall van de Wouw, Chief Airfreight Officer at Xeneta.
Source: Supply Chain Dive
Compiled from international media by the SCI.AI editorial team.
