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KLM reshapes cargo handling as AI demand fuels growth

KLM plans to consolidate cargo handling at Schiphol to accommodate additional freight without hiring more staff, as AI supply chains and disruption to ocean shipping strengthen parent Air France-KLM's cargo business. The changes form part of a wider restructuring, announced today, aimed at improving KLM's finances and its ability to fund investment. Freight carried on passenger aircraft and freighters will be handled in KLM's own warehouse at Schiphol, said the airline, adding that the consolidation would help attract more transfer freight and prepare for a new cargo terminal, scheduled for completion in 2035. "The increased cargo volumes will ultimately be handled without hiring additional employees," KLM said. It plans to achieve this through "simpler processes, greater automation and deploying employees across different activities". It also intends to expand services for customers requiring additional support, although it gave no further detail. The announcement follows conversations at last week's TIACA Air Cargo Forum in Miami, where The Loadstar heard that AI infrastructure shipments were contributing to transit cargo flows through Amsterdam. Air France-KLM's third-quarter results provided evidence of the wider demand trend. Group cargo revenue increased 25.2% year on year, to €677m ($760m), while cargo traffic revenue rose 24.9%, to €566m. The group attributed the growth to sea-to-air modal shift amid disruption around the Suez Canal and Strait of Hormuz, alongside AI-related demand. "The surge in air freight demand driven by AI-related supply chains tightened global market conditions," it said. This helped the group win additional volumes and full-freighter charter business, supporting yields. KLM's cargo traffic, measured in revenue tonne-km, rose 15.7% against capacity growth of 4.5%. Its cargo load factor increased 5.2 percentage points, to 53.9%. Across Air France-KLM, tonnage rose 5%, to 236,000 tonnes. Revenue per available tonne-km increased 21.9% at constant currency, with demand outpacing capacity growth. Scheduled and unscheduled maintenance constrained freighter availability. Schiphol's latest monthly figures show September cargo volumes of 127,750 tonnes, up 8% year on year, with growth of 10% over the first nine months. Freighters accounted for 54% of September tonnage, and belly cargo 46%. Despite cargo's performance, KLM said its overall profitability remained insufficient to support investment. Third-quarter adjusted operating profit rose to €458m, from a restated €352m a year earlier. "Fuel prices continue to put pressure on our results, our cost base remains too high," said KLM CEO Marjan Rintel. The Dutch carrier is seeking a further €1bn improvement in annual earnings, taking its total target to €1.4bn, and at least an 8% structural productivity increase by 2028. The wider programme involves around 5,000 positions whose work has been, or will be, reorganised, including transfers to external providers and the parent group. Productivity improvements are expected to result in approximately 1,000 fewer positions at KLM. The airline expects to limit the impact through natural attrition, voluntary arrangements, and internal transfers.

Air cargo demand continues to grow but peak surge looking unlikely

Air cargo demand growth remained strong, but the chance of there being a further end-of-year surge seems to be fading, according to data provider Xeneta. The data firm's latest figures show that in October air cargo demand increased by 6% year on year while capacity was flat. As a result of demand growing faster than supply, the cargo load factor increased by two percentage points to 63%. Meanwhile, average spot rates were up 29% compared with last year at $3.11 per kg as carriers failed to add capacity to the growing market and fuel prices drove up the cost of air cargo operations. While demand is on a run of seven months of consecutive growth, Xeneta says it doesn't seem like there will be a further surge in volumes during the air cargo Christmas peak season. "Market conditions showed few signs of a sudden increase in capacity pressure, a surge in rates above the levels already seen across the year, or freight charter prices 'hitting the roof' that would signal a late peak in volumes," said Xeneta's chief airfreight officer, Niall van de Wouw. The transpacific has been this year's growth leader as AI-related shipments continue to fill aircraft. Xeneta figures show that Asia Pacific to North America volumes were up 15% in October. The demand growth fed through to freight rate increases. Southeast Asia to North America spot rates rose 3% month on month to $6.34 per kg, while Northeast Asia to North America prices were up 4% to $6.21 per kg. However, Xeneta said that the largest rate increase was on the transatlantic westbound corridor, where Europe to North America spot rates rose 10% to $2.31 per kg as airlines "shifted to their winter schedules". "Tighter capacity on this corridor is consequently pushing up airline rates being quoted to forwarders in recent tenders," Xeneta said. Rates from Northeast Asia to Europe increased 4% month on month in October to $4.97 per kg and Southeast Asia to Europe was up 3% to $4.35 per kg. However, Xeneta warned that Asia to Europe e-commerce volumes were 61% down year on year in the third quarter as a result of the European Union's €3 charge for packages that was added on 1 July. Meanwhile, exports from China to Europe fell by 29%, which was in part down to a tripling of exports to Russia, Xeneta said. "Freighter capacity has also moved," the data provider explained. "Direct freighter capacity between Asia and Europe fell again in October, on top of the capacity lost on routings via the Middle East." Outlook Looking ahead, Xeneta warned that some Asia-Europe air cargo volumes would shift back to ocean as shipping line transits through the Suez Canal continue to recover. "Scheduled container shipping capacity crossing the Red Sea reached around half of its pre-crisis level in October, according to Xeneta ocean data," Xeneta said. "Just over half of Asia-Europe capacity is now routed via the Suez Canal in at least one direction, with around a third sailing through both ways. "Air's share of European Import (EU) import tonnage from Asia rose from 1.1% in 2023 to 1.7% in 2024, at the height of the Red Sea crisis, as ocean freight schedule reliability from the Far East to North Europe fell from 28% to 9.3%. "When reliability recovered to 20% in 2025, air's share fell back to 1.2%. In the first eight months of 2026, it edged up to 1.3%, after the closure of the Strait of Hormuz in February led carriers to shelve their planned return to the Suez Canal." Xeneta expects cargo that moved to air for reliability rather than speed to start returning to ocean once schedule reliability shows a sustained recovery, most likely from the second quarter of 2027. "Until then, air will likely keep the cargo it has," it added. Next year, Xeneta's baseline is for airfreight rates to decline overall. "In the past couple of years, it has not been the level of demand that caused the uptick in rates; it has been the availability of capacity, says van de Wouw. "If the Middle East situation recovers, there will be a rebalancing of demand and supply, and rates will then become lower. But things will happen. We don't know what or where, but this is the lesson the market has learned. "We can't call these 'Black Swan' events anymore because they are too frequent. This makes contract negotiations challenging for everyone."

Continued congestion at ports puts pressure on intra-Asia box rates

Congestion at several ports continues to put upward pressure on intra-Asia container freight rates, despite improving conditions at major Chinese gateways and key transhipment hubs. The result is the Drewry Intra-Asia Container Index (IACI) is up by $46, to $1,504 per 40ft. Spot rates from Greater China to North-east, South-east and South Asia were mostly stable during the week, as major ports, including those in China and Singapore, managed to absorb congestion. However, smaller South-east Asian ports continued to struggle with vessel delays and operational constraints, keeping rates elevated on several tradelanes. Rates from Shanghai to Ho Chi Minh City, Jakarta, and Laem Chabang remained high and continued to rise. At the end of October, rates from Jakarta to Shanghai were up 9% from the previous week, to $81 per 40ft. The Shanghai Containerised Freight Index on Friday showed the Shanghai-South-east Asia rate up 2% from 30 October, to $1,164 per teu. Jakarta's primary port, Tanjung Priok, is struggling to cope with vessel bunching, because sudden, unscheduled multi-ship arrivals instantly overwhelm bottlenecked roads and container depots that are already at full capacity. One forwarder at Taiwan's Dimerco told The Loadstar Jakarta's landside logistics had not caught up with improvements in terminal capacity. In August, Indonesia state-owned terminal operator Pelindo preliminarily launched Terminal 2 Petikemas. However, construction of New Priok Eastern Access, a new road to improve access, only started in July, and will take 20 months to finish. The forwarder said: "Slow turnaround makes shipping lines reluctant to absorb the costs of repositioning empty containers. This local equipment shortage drives up the prices for available containers." At Ho Chi Minh City, average vessel waiting times have increased from eight to 22 hours over the past fortnight, reflecting worsening congestion at the Vietnamese port. Rates from Shanghai remained unchanged, at $44 per 40ft. In contrast, improving conditions at the major ports resulted in modest rate reductions on some routes. Rates from Shanghai to Singapore fell 3%, to $1,889 per 40ft, while those to Tanjung Pelepas declined 2%, to $2,053 per 40ft. Adding capacity to the Straits-Indonesia trade, Pacific International Lines (PIL) is scheduled to launch its new JKS service today. The fortnightly service will deploy two vessels of between 1,900 and 2,600 teu, calling at Singapore, Laem Chabang and Jakarta.