Air Cargo Rates Slide as Peak Season Fails to Appear

Global air cargo spot rates averaged $3.12 per kilogram in July, up 28% year over year but down 6% on June, according to Xeneta. It was the second consecutive month of slowing growth, after 41% in May and 38% in June.

Demand grew 4% year over year, half the 8% recorded in June. Capacity supply grew 1%. The dynamic load factor — utilisation measured across volume, weight and available capacity — rose two points to 61%.

The clearest signal in the data is not a number at all. Xeneta's Chief Airfreight Officer Niall van de Wouw said that across all the conversations his team has had with shippers, exactly one mentioned peak season charters.

The corridor nobody covered

The sharpest movement in July was out of Asia into Europe, and it barely registered in the coverage.

China to Western Europe spot rates fell 22% month on month to $4.15 per kilogram. Northeast Asia to Europe fell 13%; Southeast Asia to Europe 9%. For context, the same period in each of the previous two years produced low single-digit declines.

The timing is hard to ignore. On July 1 the European Union removed its €150 duty-free threshold for low-value imports and replaced it with a flat €3 duty per item. Xeneta notes market reports of freighter capacity already being withdrawn from China–Europe e-commerce services.

A separate pressure sits alongside it: the EU fined AliExpress €550 million for failing to prevent sales of illegal, unsafe and counterfeit goods. Whether that dents Chinese e-commerce demand into Europe is an open question, and Xeneta raises it as one.

This is the second time in eighteen months that a de minimis change has reshaped a major air corridor. The pattern is now established well enough to plan around rather than react to.

What is holding rates up

Two things, and they are pulling on different lanes.

AI-related shipments continue to underpin the transpacific. Spot rates from Northeast and Southeast Asia to North America sit 33% above late-February levels — elevated, but easing from the 41% and 42% recorded at the end of June.

The Middle East conflict is the other. Premiums on corridors reshaped by it have barely unwound: in the last week of July, rates into the Middle East were 84% above late-February levels from South Asia, 47% from Southeast Asia, and 62% from Europe.

The transatlantic went the other way entirely. Summer passenger schedules put plenty of belly capacity into the market and Europe to North America spot rates fell 27% below late-February levels.

Van de Wouw expects the decline to continue but slowly, with the Iran war and jet fuel volatility meaning rates come down in small steps rather than the jumps shippers absorbed on the way up. Airlines, he said, will be "fighting tooth and nail" to slow the descent.

What it means for forwarders

The asymmetry is the negotiating problem. Rates rose in jumps and are falling in steps. That gap is where airline margin lives, and it means a spot market trending down does not translate into proportionate relief on your buy. If you are indexing contracts, check whether the index you use captures the descent at the same resolution it captured the climb.

China–Europe is where the buying leverage is right now. A 22% single-month fall against a two-year pattern of low single digits is a market repricing, not a seasonal dip. Capacity is being withdrawn, which will eventually put a floor under it — so the window is now rather than in the fourth quarter.

Withdrawn freighters do not disappear. Aircraft coming off China–Europe e-commerce services get redeployed. The obvious destinations are the transpacific and the Middle East corridors, both still carrying large premiums. If that redeployment happens at scale, those premiums compress faster than the headline trend suggests — worth watching before committing to Q4 blocked space at current levels.

Watch load factor, not rate. At 61% and rising, utilisation is the variable that tells you whether airlines can hold the line. Rates are the outcome; load factor is the mechanism, and it moves first.

The absence of charter conversations is the forward indicator. Peak season charters get booked months ahead. One mention across an entire shipper community in August says something about November that no rate index can say yet.