Introduction
As the e-commerce boom slows down, freight forwarders are delaying the signing of BSA agreements. This raises the question—will air freight prices continue to decline?
Industry analysts suggest that the uncertainty in the e-commerce market is starting to affect air freight prices. Both shippers and freight forwarders are waiting to see how airlines manage capacity before committing to long-term agreements.
Airlines Adjust Capacity
Currently, airlines are evaluating their strategies for operating all-cargo flights during the summer. Xeneta predicts that many airlines will shift air freight capacity from China to Southeast Asia or to transatlantic routes. Freight forwarders are postponing BSA agreements, and shippers are opting for short-term contracts rather than entering into annual negotiations due to the unclear market outlook.
Tac Index supports this view, noting that freight forwarders are reluctant to over-commit on certain routes and are redirecting cargo to alternative routes or switching to sea freight. This shift could lead to short-term capacity surpluses in some regions, but as new demand corridors, such as Southeast Asia to North America, emerge, other regions may face capacity shortages.
Freightos has observed cancellations of all-cargo flights and a shift of cargo to sea freight.
Price Drops and E-Commerce Slowdown
All three companies agree that the decline in e-commerce demand, especially from China to the U.S., is impacting air freight prices. Xeneta data shows that in February, spot rates for shipments from Shanghai to the U.S. fell by 29% month-on-month, down to $3.23 per kilogram, while rates to Europe only decreased by 2%, to $3.86 per kilogram. This price drop could be an early sign of the impact of U.S. government tariff policies on air freight.
Tac Index also reports that the air freight index from China to North America dropped by 10.54% in February, indicating weakened e-commerce demand. With online retailers turning to sea freight consolidation or domestic delivery within the U.S., the impact of U.S. tariffs on B2C shipments is becoming apparent. Airlines with excess transpacific capacity are looking to redeploy their aircraft, potentially shifting focus to Southeast Asia or transatlantic routes.
E-Commerce Market Uncertainty
Niall van de Wouw, Chief Air Freight Officer at Xeneta, explains: “When e-commerce surged, massive export demand clogged the Hong Kong and South China markets. This led to a shift in cargo to Shanghai, but due to higher costs, Shanghai’s appeal has decreased. If e-commerce volumes decline, South China’s market capacity will increase, and Shanghai will likely be impacted first, as we saw in February.”
Van de Wouw warns that if the e-commerce market continues to struggle, it will have a profound impact on global air freight pricing.
Xeneta data shows a 5% drop in global air freight spot rates, while Freightos Air Index reports that air freight prices for shipments between China and the U.S. have fallen below $5 per kilogram, down from around $6 per kilogram a year ago, signaling a slowdown in demand. However, prices remain relatively high compared to long-term averages, indicating that there has not yet been a significant drop in cargo volumes or capacity release.
Future Trends and Market Risks
Xeneta also cautions that if e-commerce volumes decline sharply, it may misjudge the forecasted 4.6% growth in the air freight market for 2025, leading to a ripple effect on other markets. For example, if more freight forwarders and shippers shift to routes from Vietnam to the U.S. to mitigate the tariff impact on direct shipments from China, this could influence pricing trends.
Tac Index highlights that the current volatility in the air freight market reflects deeper structural issues. Delays in the production of new all-cargo aircraft and shifting trade policies are forcing airlines and freight forwarders to reconsider their capacity plans.
A Delicate Balance for Air Cargo
The air cargo industry is in a delicate balance, facing both an overcapacity situation and the potential for future shortages. Airlines and freight forwarders are acutely aware that a change in tariff policies could alter trade lanes overnight.
The U.S. government’s new tariffs on goods from Canada and Mexico, along with the temporary removal of the “de minimis” exemption for Chinese e-commerce shipments, have caused volatility in traditionally strong trade routes. While the slowdown in Chinese e-commerce demand has eased transpacific capacity, potential retaliatory measures and further tariff adjustments have made the reallocation of capacity more cautious.
Global Air Freight Market Outlook
Ti’s latest air freight market report points out that, as of early 2025, the global air cargo industry is facing a complex situation with significant challenges, including fleet expansion delays, airlines prioritizing passenger flights, supply chain disruptions, and shifting trade policies. Geopolitical tensions, U.S. tariff adjustments, and the planned removal of the “de minimis” exemption are reshaping procurement strategies and prompting retailers to rethink their supply chain and nearshoring strategies.
Conclusion
In addition to the China-U.S. route, other routes are also seeing changes. For example, air freight rates from Northeast Asia to Europe increased by 10% year-on-year but decreased by 2% month-on-month. Rates from Northeast Asia to the U.S. dropped by 17% month-on-month to $3.79 per kilogram. However, the transatlantic route remains strong, with month-on-month increases in spot rates from Europe to Latin America and North America, partly due to the decline in bellyhold capacity in passenger flights.
Overall, the air freight market is facing uncertainty, and future pricing trends will be influenced by several factors. Airlines and freight forwarders need to stay agile and adjust their strategies as the market continues to evolve.