In its February market report, Xeneta said spot rates fell by 29% month-on-month to $3.23 per kg, which may be the first indicator that political and regulatory changes are affecting international e-commerce after the US temporarily removed the de minimis exemption on Chinese shipments.
Spot rates were also affected by the earlier Lunar New Year and seasonal slowdown at the start of the year.
Niall van de Wouw, Chief Airfreight Officer of Xeneta said that when the e-commerce boom started, the outbound demand quickly clogged up Hong Kong and southern China so the market started looking eastwards towards Shanghai, even though the additional costs made it less desirable.
He says, “If a fall in e-commerce volumes means there’s currently more available capacity to do business out of Hong Kong and southern China again, we would expect Shanghai to be the first market to feel this impact, and that’s what we saw in February. This may be short-term, but the uncertainty around e-commerce is impacting the market.”
Spot rates from Shanghai to Europe only fell by 2% month-on-month to $3.86 per kg.
Global air cargo demand grew by 4% year-on-year in February and when numbers are adjusted for the Lunar New Year, January and February registered 3% growth.
In addition to US de minimis changes, the figures were affected by the high comparison base of last year and the diminishing impact of the Red Sea disruption as supply chains continue to adapt to longer transit times.
Capacity remained flat with 1% growth in January and February, keeping the dynamic load factor at 59% in February.
Global spot rates grew at the lowest rate since June, rising 10% year-on-year in February to $2.53 per kg while the global seasonal rate dropped 1% to $2.21 per kg.
Northeast Asia to Europe saw spot rates rising 10% to $4.32 per kg with a 2% month-on-month fall while rates to North America fell 17% month-on-month to $3.79 per kg.
The transatlantic market remained buoyant with spot rates from Europe to both North and Latin America 20% higher than last year due to limited belly capacity in the winter schedule and freighters moving away from the corridor.
Plentiful backhaul capacity has led to large declines in spot rates in North America and Europe to Northeast Asia, both dropping by over 10% year-on-year.
Xeneta was forecasting 4-6% growth in 2025 but growing trade tensions have raised questions about the outlook.
Van de Wouw says, “With general cargo demand in the doldrums in recent years, the surge in e-commerce has been the saviour of the air cargo market performance. If this now takes a significant hit, if that happens, it will have a profound effect on airfreight rates around the world.”
He says that e-commerce players and general cargo shippers are buying time instead of capacity to avoid commitments which might bring added financial risks.
“From the conversations we are hearing, some shippers are clearly looking for ways to minimise the impact of US tariffs, while others will be anticipating lower airfreight rates if e-commerce volumes show a sustained dip,” he says.
Another complication is the proposed US port call fees on Chinese built ships, which could disrupt ocean schedules, driving up container freight rates and prompting a shift from sea to air.
The uncertainties caused by President Trump’s administration and international responses to US tariffs are affecting the air cargo market with airlines reassessing their freighter strategies and looking to move routes towards Southeast Asia or add transatlantic capacity.
Freight forwarders are delaying Block Space Agreement negotiations with airlines as they want demand and price clarity.
Some shippers are postponing annual contract negotiations until Q2 and opting for shorter-term agreements in the first half of the year.
Van de Wouw says, “This is a situation completely outside of the control of the air cargo market and there’s a great deal of noise, which is adding to stakeholders’ anxiety. The issue is no one knows what the end game is and what’s going to happen from a regulatory perspective, and how this will impact consumer confidence.”