The airfreight market appears to hold steady for now, but forwarders and logistics experts warn of brewing turbulence as ecommerce giants pivot toward sea freight and geopolitical uncertainties threaten to upend demand. While spot rates and volumes remain stable, the long-term outlook hints at challenges for airlines and forwarders navigating a rapidly evolving global trade landscape.
Current Calm Masks Underlying Volatility
Data from WorldACD and TAC Index shows minimal fluctuations in week-over-week airfreight rates, with the Baltic Air Freight Index edging up 2.3% in mid-March. However, industry insiders caution against complacency. "The market could flip overnight depending on U.S. tariff policies," warned a Shanghai-based forwarder, highlighting the fragile dependency on geopolitical decisions.
Ecommerce platforms, once a pillar of air cargo demand, are now exploring cost-efficient alternatives. "They’re preparing to shift bulk shipments to sea, storing goods in overseas hubs for last-minute air deliveries," the forwarder explained. This strategic pivot could erode long-term tonnage reliability for airlines, pressuring rates as ecommerce volumes migrate to ocean freight.
Regional Divergence and Capacity Realignments
While Asia-Pacific to U.S. and Europe routes show mixed signals, carriers are already adjusting networks. Scan Global Logistics noted airlines are reallocating capacity from softening Asia-U.S. lanes to Asia-Europe routes. Lufthansa Cargo and Air France-KLM Cargo are boosting freighter services to Hong Kong this summer, even as Cathay Pacific reports a 13% year-on-year volume surge in its home market.
Regional disparities are stark: China-to-Europe spot rates fell 2% in March, marking a fifth consecutive weekly decline, while China-to-U.S. rates jumped 15%—a contrast to plunging rates from Japan and Vietnam. "The market to Europe isn’t strong, but it’s not collapsing either," observed the Shanghai forwarder, underscoring the uneven recovery.
Rates Near Peak? Analysts Weigh In
Despite recent rate hikes, the forwarder suggested airfreight prices may have peaked. "March rates are still 25% below 2023 levels. Unless Easter drives a minor spike, there’s little fuel for further increases amid a sluggish global economy," they said. Scan Global echoed this sentiment, predicting "modest rate declines" in 2025 as capacity stabilizes.
Yet adaptability remains the industry’s lifeline. "Challenges are constant, but forwarders and shippers always find a way," the Shanghai source added. Cathay’s Lavinia Lau emphasized flexibility, stating the carrier will "adjust networks to capture demand shifts," particularly for high-value electronics shipments.
The Road Ahead: A Delicate Balancing Act
As airlines brace for potential contract renegotiations and ecommerce’s seaward drift, the air cargo sector faces a precarious equilibrium. Tonnage rebounds in Asia-Pacific—up 13% to Europe and 10% to the U.S.—offer short-term relief, but experts urge vigilance. With de-globalization trends and trade policy wildcards in play, the industry’s resilience will hinge on its ability to pivot—and fast—when the next storm hits.
