Air cargo rates saw a significant shift in February, with transatlantic spot rates rising despite broader market declines. According to Xeneta data, Europe-to-US spot rates increased 7% month-on-month, reaching $2.46 per kg, while registering a 23% year-on-year growth. In contrast, rates on the Northeast Asia-to-US corridor fell 14%, reflecting strategic carrier adjustments and shifting capacity dynamics.
Capacity Constraints and Carrier Realignments
The rise in transatlantic air cargo rates is largely driven by a capacity pull phenomenon, rather than a surge in demand or inventory build-up ahead of potential US tariff hikes. Two major factors have contributed to this shift:
1. Winter Belly Capacity Reductions: Airlines traditionally cut belly hold cargo space on passenger flights during the winter months, with February representing a seasonal low before capacity rebounds in March.
2. Freighter Deployment to Asia: Carriers have increasingly redirected dedicated freighter capacity from transatlantic routes to more profitable Asian markets, capitalizing on the e-commerce boom in the region.
This capacity squeeze has resulted in a dynamic load factor of around 80 per cent on the Europe-US corridor, maintaining rate levels similar to peak season pricing and strengthening the negotiating power of freight sellers.
Adding to the volatile market conditions is the potential imposition of new US tariffs, particularly under the Trump administration’s proposed “reciprocal” tariff measures. If implemented with little notice, such tariffs could leave shippers with limited ability to adjust logistics strategies, reducing transatlantic freight demand and further complicating contract negotiations.
Global Trade Shifts and Potential Rate Corrections
The current air cargo landscape is also being shaped by broader global trade shifts:
Transpacific Demand Slowdown: The post-holiday decline in e-commerce shipments, Lunar New Year factory closures, and potential policy changes—such as the removal of de minimis exemptions—have softened demand for Asia-US air freight. If Transpacific capacity loosens, it could moderate rate growth across other corridors, including transatlantic routes.
Red Sea Shipping Disruptions: A potential ceasefire between Israel and Hamas could facilitate the large-scale return of container ships to the Red Sea, easing disruptions in ocean freight. If this happens, shippers may shift cargo back to sea transport, reducing reliance on air freight as an alternative mode.
Implications for Shippers and Forwarders
With air cargo rates increasingly influenced by capacity reallocation and geopolitical factors, shippers must reassess their contract strategies. Rigid agreements without contingency clauses could result in missed cost-saving opportunities or unexpected rate hikes. Given the highly dynamic nature of global trade flows, securing flexible logistics partnerships and monitoring regional disruptions will be crucial in navigating future air freight pricing trends.
