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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."

Hong Kong reviews river fees as mainland ports lure cargo away

Hong Kong is reviewing permit fees charged to river trade vessels as it seeks to maintain its port's competitiveness amid growing competition from mainland Chinese terminals in Guangzhou and Shenzhen. The secretary for transport and logistics, Chan Mei-po, announced the review in a written reply to the Legislative Council on Wednesday. China-flagged vessels carry containers between ports in the Pearl River Delta and Hong Kong, where cargo may be transferred to ocean-going vessels for onward shipment. Mainland Chinese ports offer incentives to attract inland waterway vessels carrying cargo, promising financial subsidies and exemptions from mandatory pilotage requirements. Hong Kong operates a multiple-entry permit scheme, allowing operators to make up to 10 port entries within a month for a fee equivalent to five single-entries - the "buy five, get five free" system. Ms Chan said: "The Action Plan on Maritime and Port Development Strategy proposes various measures to strengthen Hong Kong's position as a regional transhipment hub, including reviewing the permit fees charged to river trade vessels in order to maintain the competitiveness and attractiveness of the port to the industry. We have completed a preliminary review and are now discussing the matter with relevant departments, with the details to be released in due course." Laden container movements between Hong Kong and mainland China account for more than 40% of the territory's annual laden container throughput. But statistics show a decline in river cargo vessel arrivals and associated container volumes since 2023. The numbers cover vessels mainly berthing at Kwai Tsing Container Terminals. In 2023, there were 4,344 arrivals, handling 1.63m teu. By 2025, this had fallen to 3,519 arrivals and 1.52m teu. In the first seven months of 2026, there were 2,101 arrivals, handling 878,000 teu. Decades ago, Hong Kong was among the world's three busiest container ports. but mainland ports have overtaken the territory as Chinese exports surged and their port infrastructure was upgraded. Hong Kong handled 12.99m teu in 2025, down 5.1% year on year.

'Carrier selection matters' when it comes to getting your goods on time

The Asia-North America tradelane is facing the highest ocean freight disruption risk over the coming weeks. Reduced carrier capacity and growing difficulty securing bookings threaten shipment reliability, according to WiseTech Global. The company's November Ocean Freight Risk Outlook, released today covering weeks 45-48, rates the Asia-North America and Asia-Europe trades as high-risk overall, with Europe-North America assessed as medium risk. It explains that on the transpacific, planned carrier capacity is expected to tighten in the second half of November, driven by reduced supply rather than stronger demand. The demand-to-supply ratio is forecast to reach 128% in week 47, indicating significant capacity constraint. Booking security risk is also expected to climb to 71% by week 48, well above its historical average of 41%, suggesting growing difficulty securing space on preferred sailings. At the same time, service reliability remains weak, with monthly on-time performance slipping, from 26.9% in September to 25.6% in October. Although the latest weekly figure had improved to 27.3%, delays of eight days or more remained the largest arrival outcome. WiseTech also highlighted continuing berthing delays and renewed weather disruption across East Asia, alongside potential for industrial action, as further threats to vessel schedules. "In the lead-up to the end of the year, Asia-North America is where we're seeing the most risk," said Jon Charles, senior product manager at WiseTech Global. "Multiple factors are contributing, including reduced planned carrier capacity, rather than stronger demand, pushing the demand-to-supply ratio to 128% in week 47. What is significant is the combination of tighter capacity and elevated booking acceptance risk. "That's the strongest risk signal we look for, because it suggests tighter capacity is already changing booking request outcomes," he explained. According to WiseTech, the outlook for Asia-Europe is different. The demand-to-supply ratio is forecast to fall from 100% in week 45 to 84% by week 47, and to 73% in week 48, indicating easing capacity pressure as the month progresses. Booking security risk is expected to remain below its historical average of 35%, declining from 23% in week 45, to 20% in weeks 46-47, before rising slightly to 23% in week 48. However, this improving capacity picture contrasts with persistently weak service performance, with on-time arrivals continuing to deteriorate. Last month, just 9.3% of shipments on the Asia-Europe trade arrived at the destination port on or before the carrier's promised arrival date, down from 9.9% in September. The latest weekly performance was just 6.5% on time, while 39.1% of arrivals saw delays of eight days or more. Shipment transit time reliability also fell across both Asian tradelanes in October, reaching 21% on Asia-North America, down six percentage points month on month, and 35% on Asia-Europe, a five-point decline. Europe-North America presents a comparatively more stable capacity picture, with planned carrier space remaining above forecast demand, and booking acceptance risk below its historical average. However, on-time performance fell from 39.2% in September to 34.8% in October, while the latest weekly result dropped to 24.6%. Transit-time reliability also weakened, falling three percentage points to 46%. Industrial action at European ports presents an additional potential risk to schedules across both Europe-related tradelanes. However, Mr Charles underscored: "Across all three tradelanes, carrier reliability varies substantially, so carrier selection matters in managing lead-time and on-time arrival risk."