-
Global air cargo demand may have risen by 6% in May 2025, but airfreight spot rates fell for the first time in a year owing to continued market uncertainties
-
By mid-May, pressure on the market eased somewhat as the US-China 90-day tariff truce began after the escalating retaliatory tariffs since April
-
The global air cargo spot rate fell four percent year-on-year in May to $2.44 per kg – the first such decline since April 2024
Global air cargo demand may have risen by 6% in May 2025, but airfreight spot rates fell for the first time in a year owing to continued market uncertainties, according to a Xeneta media release.
By mid-May, pressure on the market eased somewhat as the US-China 90-day tariff truce began after the escalating retaliatory tariffs since April.
The US lowered its additional tariffs on China from 145% to 30%, while China responded by cutting its tariffs on the US to 10%.
However, this welcome development came too late to reverse a softening in freight rates, Xeneta said.
The global air cargo spot rate fell 4% year-on-year in May to $2.44 per kg — the first such decline since April 2024. This could partly be attributed to nearly 20% year-on-year declines in jet fuel costs.
Niall van de Wouw, Xeneta’s chief airfreight officer, said: “Market fundamentals are holding up, but the drop in rates is likely a reflection of declining sentiment and concerns, particularly among airlines, over what will happen once more stability returns to international trade and there is less of a push for the security of airfreight.”
He added that whatever worse trade conditions take away from overall trade, this uncertainty gives a bit back to airfreight.
This climate is reducing trade and airfreight is getting a temporary piggyback on this uncertainty through an increase in ‘emergency shipments’ but that will not continue.
According to Van de Wouw, it is difficult to relate the growth in demand in May to increased e-commerce or increasing trade at a time when companies overall are becoming more conservative.
The slower growth in airfreight volumes and rates over the last five to six months reflects growing sentiment “that it doesn’t look good for trade,” he said.
For now, the climate might be positive on certain lanes to airfreight demand, but there will be a time when there’s an agreement on tariffs.
As such, the Xeneta executive said he doesn’t expect the end result to promote trade and will, therefore, hamper airfreight.
He also said more visibility and more clarity in the market will not benefit airfreight.
There may have been very short upticks in rates, but in the overall trend in recent months shows rates on a downward trajectory, and there is room for more decline for a longer period.
Airlines will try to hold onto their volumes in this uncertain environment and may be willing to “pay a little bit for that security.”
Fear of missing out like what happened in 2023 may return. This is because when balance changes even slightly, its impact could be bigger than expected.
Thus, when flights become less full, airlines may hasten rate negotiations at a global level.
Xeneta cited data stating that worldwide demand was only one percent higher month-on-month in May, shaken by the previous month’s de minimis announcement by the US.
Some calm has returned to the market after the US lowered tariffs on Chinese and Hong Kong low-value e-commerce shipments to 54% or a flat fee of $100 for parcel shipments.
Cross-border e-commerce giants, like Temu and Shein, however, are expected to face the general 30% tariffs as they traditionally use commercial airlines for international air freight before using local postal networks for last mile deliveries.
They may, therefore, still have a competitive advantage if the incremental taxes are +40-50% as per Xeneta’s prior analysis.
For the air cargo industry, a lot is riding on the outcome. In 2024, e-commerce volumes accounted for about 50% of China to US airfreight volume.
Meanwhile, the speed of changes to the trading environment presents another hurdle the airfreight industry is being forced to overcome
Said Van de Wouw: “It’s very frustrating when the plans you’ve made become completely obsolete a few weeks down the line because things change again, but that’s the current reality. Trade is not benefitting right now, airfreight is. Supply chains are a mess and with all this disruption, we’re seeing goods moving by airfreight that typically wouldn’t be flown. That’s due to the uncertainty.”
The airfreight market must, therefore, be prepared for more surprises. The market may yet still feel the full force of consumer sentiment amidst rising prices.
By the week ending June 1, China to US spot rates rose 14% to $4.31 per kg, up from their low point in the week ending May 11 prior to the reduction in tariffs.
Spot rates on this lane have now recovered above those from China to Europe, which stood at $4.11 per kg. Despite the recent uptick, however, China to US seasonal rates continue to trend downwards from their early April peak, signaling ongoing caution in the mid-term market outlook.
Prior to the implementation of the de minimis tariffs into the US, China customs reported that low-value and e-commerce shipments from China to the US surged 30% year-on-year in April, outperforming a modest 6six percent growth of the first quarter. However, the 30% surge was behind China’s overall cross-border e-commerce sales, which climbed 45% year-on-year in April. This indicates China’s cross-border e-commerce sales managed to divert elsewhere.
Although the majority of trades experienced seasonal month-on-month declines and ebbing volumes following frontloading, rates still held above last year’s figures.
As the 90-day tariff truce nears its end, on July 9 for most countries and August 13 for China, a short-term surge in cargo demand is likely.
The ocean container shipping market may shed some light on what is to come for airfreight, due to its longer lead times from point-of-order to final delivery. From June 1, 40ft container freight rates from China to the US West Coast jumped to more than $6,000 per despite a considerable reduction in blank sailing by carriers.
On top of this is the uncertainty caused by US Court of International Trade’s ruling that the tariffs imposed by President Trump were unlawful.
“One thing is clear; the airfreight market will get through this. We just don’t know how long it will take. Industry professionals are going to need a lot of energy to work in this environment,” said Van de Wouw, adding that in the current climate, it’s important to think longer-term and to protect relationships “because the challenges being faced today will pass.”
