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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."

Adani Ports bidding for Europe's tank terminals - the test is whether it pays for returns or size

Adani Ports raised its guidance on growth that increasingly comes from outside India; walked away from Associated British Ports; has reportedly made a binding offer of about $3.3bn for European terminal operator EVOS; and has set up a company in Oman as the Port of Salalah prepares to change operator - with the US case against its founder closed, a credit rating equal to India's sovereign and shares that have beaten a falling Indian market by 32 points this ...

Infrastructure can't cope with pace of pan-American air trade growth

Airport cargo infrastructure, as well as established ways of handling logistics, are being challenged by growing traffic. Airfreight capacity between Latin America and Canada is on the rise, courtesy of Air Canada (AC). Last month, the airline resumed service to Santiago and Lima, serving the Chilean capital with four weekly nonstop flights each from Montreal and Toronto with B787-9 aircraft - the only carrier with direct flights on these routes. AC's return to the Peruvian market, twice weekly out of Toronto and Montreal with B787-9s, ended a three-year hiatus. The airline also deployed the aircraft type on its route to Bogota, marking an increase in capacity from the A330 previously used. Elsewhere in the region, AC firmed up its presence in Guatemala. Nonstop flights with A330s between Montreal and Guatemala City, launched in October 2025 on a seasonal basis, have been extended to year-round operation. Indeed, Latin America is seeing a steady influx of international carriers, partly drawn by open skies policies in Argentina and Ecuador. According to one report, Ethiopian Airlines is considering cargo flights to Buenos Aires, utilising traffic rights that include cabotage. Emirates, which has established itself as a major presence in the region, stepped up its Buenos Aires freighter operation to seven a week this year. It registered 18% growth in exports from the region for the January-September period. In the first half of this year, cargo volumes out of Latin America grew 3.6%, according to IATA. And statistics from the Latin American and Caribbean Air Transport Association (ALTA) show the momentum continued through July, led by Brazil and Colombia with annual growth of 9.8% and 8.4% respectively. The pace increased in August, with tonnages up 11.8% out of Brazil and Colombia. In percentage terms, Argentina was the leader in August, showing 17% growth in volume. While cause for celebration, these numbers are also producing some headaches. ALTA CEO Peter Cerda, warned that this growth was on a collision course with capacity constraints. He stated that 54% of the airports in the region were already showing signs of saturation. Future growth will depend to a large extent on the ability of governments and airport authorities to accelerate infrastructure investment, he stressed. Among the airports that need expansion and modernisation to be able to absorb growth, he highlighted Sao Paulo's Guarulhos, alongside Bogota, Lima, and Santiago. On a positive note, airport operator Servicios Aeroportuarios Andinos (SAASA), which recently started constructing its second cargo terminal at Madrid's Adolfo Suarez Airport, has signalled plans to expand further in Latin America, looking at Argentina, Chile, and Colombia for ramp and cargo services. At Lima's Jorge Chavez Airport, SAASA has spent more than $1m to ramp up import and export capabilities, and management is looking at doubling its capacity by 2030. Currently, operations at Buenos Aires Ezeiza Airport are hampered by infrastructure improvement work. The rehabilitation of its second runway involves work on the intersection with the main runwayuntil 11 November, which reduces its length from 3,300 metres to 1,850. This restricts operations of widebodies, a predicament that has prompted a number of carriers, including Atlas Air, American, and Lufthansa, to suspend Buenos Aires flights for the duration of the work. According to Rotate, capacity at Ezeiza has been cut by some 80%. Port updates from Hillebrand-Gori show an indefinite trucker strike at Chile's San Antonio port over rising fuel costs and toll expansions since 29 October. Of greater concern is the road connecting Mendoza in Argentina to Chilean ports, which has seen repeated and lengthy closures this season, resulting in severe delays. Otherwise, port operations in Latin America have been stable, according to Maersk. However, in the carrier's market update for October Alicia De La Guardia, head of digital marketing and digital sales, warned that landside operations were at a crossroads, with traffic growth stretching capacity and the established way of doing business. Mordor Intelligence projects South America's freight and logistics market to expand, from $270.18bn this year to $348.78bn by 2031. And Ms De La Guardia pointed to a study by McKinsey, which concluded that growth would depend on stronger infrastructure, additional trade corridors, and more integrated supply chains. This required investment in road infrastructure as well as a change in business practices, she argued. The prevalent way of solving problems on the back of relationships - knowing somebody who can fix a problem - will no longer be adequate. "Relationship-driven exception management can work well when volumes ae low, routes are familiar, and only a few scenarios need attention," she said. "But relying on this way of supply chain management breaks down under pressure - when market conditions change."