Shifting Tides: Air Cargo Markets Embrace Short-Term Flexibility Amid Global Volatility

The global air freight landscape is undergoing a fundamental structural shift as shippers move away from traditional long-term commitments in favor of agile, short-term capacity procurement. According to the latest market intelligence from Xeneta, the industry is witnessing a decline in the dominance of 12-month contracts, as businesses prioritize “realism” and flexibility to navigate a landscape defined by geopolitical instability, fluctuating fuel costs, and unpredictable e-commerce demand.

Main Facts: The Move Toward Short-Term Agility

The air cargo sector is currently characterized by a notable retreat from the rigidity of annual fixed-rate contracts. Data indicates that the share of 12-month air freight agreements has plummeted from 40% to 25% year-over-year. In their place, three-month agreements are surging in popularity.

Niall van de Wouw, Xeneta’s chief air freight officer, emphasizes that the traditional one-year fixed-rate model is no longer compatible with current market volatility. “A one-year fixed rate deal doesn’t fit the current conditions,” van de Wouw stated. Instead, shippers are increasingly integrating commercial mechanisms that allow for mid-term adjustments, ensuring that agreements remain viable even when market conditions shift unexpectedly.

This strategic pivot is not merely a preference; it is a necessity driven by the fact that many long-term contracts are struggling to survive the duration of their intended terms. As supply chain managers seek to hedge against uncertainty, the ability to renegotiate capacity pricing on a quarterly basis has become the new industry standard.

Chronology of Market Trends: February to September

To understand the current state of the market, one must look at the trajectory of spot rates since late February. The period has been marked by divergent trends across major trade lanes, influenced heavily by regional economic policies and the seasonal influx of passenger belly capacity.

• Late February: The baseline period, before significant shifts in e-commerce legislation and summer travel capacity impacted the market.
• July: A pivotal month for trans-Atlantic trade, as the European Union implemented new customs duties. This policy shift created a stark divergence in the performance of China-to-U.S. versus China-to-Europe air freight lanes.
• August: E-commerce exports from China to the U.S. surged by 17% year-over-year. Conversely, low-value e-commerce goods moving from China to Europe saw a dramatic 40% decline, illustrating the chilling effect of new regulatory hurdles.
• September: The market saw a continued upward trend in global air cargo demand, marking a 6% year-over-year increase. Global spot rates settled at an average of $3.10 per kilogram—a 27% increase compared to the previous year—reflecting the sustained pressure of high jet fuel costs and tightening capacity.

Supporting Data: A Snapshot of Global Performance

The September market data underscores the intensity of the current air freight environment. The global dynamic load factor—a key metric measuring cargo volume and weight against available capacity—rose by two percentage points to 62%.

Key Performance Indicators (September YoY/MoM)

Metric	Status
Global Air Cargo Volume	+6% YoY
Global Spot Rate	$3.10/kg (+27% YoY)
Northeast Asia to N. America Spot Rate	+34% (vs. Feb)
Southeast Asia to N. America Spot Rate	+29% (vs. Feb)
Europe to N. America Spot Rate	-20% (vs. Feb)

The divergence in trade lane performance is particularly striking. While rates from Asia to North America have seen significant spikes—up 34% and 29% for Northeast and Southeast Asia, respectively, since February—the Europe-to-North America corridor has experienced a 20% decline over the same period. However, as the summer season concludes and passenger belly capacity is withdrawn from the market, the gap on the Europe-North America route is beginning to narrow, signaling a potential stabilization or upward climb in rates for the coming quarter.

Official Responses and Expert Analysis

Niall van de Wouw remains cautiously optimistic regarding the remainder of the year. Despite the current turbulence, he projects a steady 4% year-over-year demand growth for the air freight sector. However, he warns that the industry should not interpret current trends as a precursor to a massive, record-breaking peak season.

“We are not yet seeing [a massive shift in volume] in the September data, and it doesn’t change our view of a muted peak season,” van de Wouw noted. His perspective is rooted in the interplay between air and ocean freight. While ocean shipping reliability remains historically low, leading to delays and port congestion, the air cargo industry has yet to see a definitive "overflow" of volume from sea to air.

"When ocean becomes this unreliable and this expensive, some volume moves to air," he explained. "It is the factor we are watching most closely."

The volatility of jet fuel prices—heavily influenced by the ongoing conflict in the Middle East—remains a persistent headwind. With Brent crude prices occasionally eclipsing the $100-per-barrel mark in early September, operational costs for carriers are ballooning, which inevitably filters down to the shipper in the form of elevated spot rates.

Implications: Navigating the "New Normal"

The implications for logistics managers and supply chain directors are clear: static, long-term planning is a liability.

The Regulatory Wildcard

The potential easing of U.S.-China tariffs for select goods introduces a new layer of uncertainty. While tariff relief is generally welcomed, it creates an unpredictable market environment where sudden surges in demand could catch capacity-strapped carriers off guard. Shippers must maintain a high level of visibility into regulatory changes to pivot their logistics strategies accordingly.

Ocean-Air Synergy

The struggle of ocean freight to recover to pre-pandemic schedule reliability levels continues to cast a long shadow over the air cargo market. While air freight is typically reserved for high-value or time-sensitive goods, the unreliability of ocean transport is forcing a recalibration of what constitutes "essential" air freight. If ocean delays continue to worsen through the end of the year, the "muted" peak season predicted by analysts could be disrupted by a sudden, last-minute demand spike for air capacity.

Future-Proofing Procurement

The decline of the 12-month contract is not just a trend; it is a fundamental correction. Companies that fail to incorporate flexibility into their commercial relationships with forwarders will find themselves at a disadvantage. Building "mechanisms for flexibility" allows companies to maintain continuity in their supply chains without being locked into rates that may become uncompetitive or unsustainable within a few months.

Conclusion

As we move toward the close of the fiscal year, the air cargo market remains a balancing act of regional regulatory impacts, fluctuating energy costs, and the delicate transition from ocean-heavy logistics to more diversified, multi-modal strategies. For stakeholders, the message from the September data is one of tempered agility: monitor the trade lanes, maintain a realistic view of capacity, and—above all—keep contracts flexible enough to weather the next wave of global economic change.

With demand consistently trending upward but the peak season remaining muted, the industry is entering a period of "more of the same," where success will be defined by the ability to manage risk in real-time rather than betting on long-term market stability.