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Expeditors sees air cargo volumes and revenues rise in Q3

Expeditors International has reported a continued surge in air cargo volumes and revenues as a result of hyperscaler demand and rising freight rates. The US forwarder said that air cargo volumes were up 13% year on year in the third quarter of the year, with an 8% improvement in July, a 13% increase in August and 19% increase in September. Meanwhile, air revenues were also on the rise, increasing by 51.4% year on year during the quarter to $1.5bn. Revenues were boosted by higher volumes and also higher airfreight rates, the company said. Expeditors said that airfreight demand remained strong during the quarter, driven primarily by continued growth in South Asia, where export tonnage increased most notably. "Hyperscaler demand, which also includes shipments from Tier 1 and Tier 2 suppliers supporting AI infrastructure, was a significant driver of volume growth, while air capacity remains constrained by limited fleet expansion and ongoing new aircraft delivery delays," the company added. "Capacity was also impacted by aircraft redeployments that affected Asia-Europe e-commerce, stemming from European Union regulations meant to curb the flow of de minimis imports. "At the same time, China-US e-commerce tonnage has nearly recovered to what it was prior to the US termination of de minimis shipments in May 2025. Adding geopolitical events to this mix, airfreight rates remained elevated during the quarter, with demand outpacing available capacity." While airfreight revenues and volumes were up, the company also noted an increase in air operating costs, which grew by 52% to $1.2bn. Air Cargo News calculations show that the company's airfreight operating margin has actually declined marginally from 24.8% in the third quarter of last year to 24.3% this year. Airfreight service operating profits (airfreight service revenues minus operating expenses) reached $375m against $253m last year. The higher operating costs likely stem from higher carrier rates as demand growth has outstripped capacity additions and fuel prices have grown significantly as a result of the conflict in the Middle East. The latest IATA/Platts fuel price monitor figures show that jet fuel costs are up by more than 112% compared with last year.

Port of Long Beach set to handle record 10m teu this year

The Californian port of Long Beach is predicted to handle more than 10m teu this year, for the first time. "It's been a peak year," Port of Long Beach CEO Noel Hacegaba told The Loadstar on the sidelines of the World Ports Conference in London this week. "This could well be the first 10m teu year for us." His comments followed a record-breaking September, when throughput hit 997,177 teu, its busiest month ever, surpassing the previous record set in October 2024. In the first nine months of the year, Long Beach has moved just under 7.8m, up 3.9% compared with the same period last year. Dr Hacegaba said the very strong growth in transpacific volumes had been due to a combination of shippers front-loading imports to avoid the threatened USTR 301 port fees on Chinese-owned and -operated vessels, concerns about the viability of the Panama Canal as El Nino emerged, and fuel costs. "There's no question a lot of front-loading has been going on, and the recent decision to postpone these [port] fees has moved the goalposts - and we now expect another round of front-loading before the new 9 January deadline. "Then you have worries about the Panama Canal, which has seen cargo diverted to the US west coast, and that's coming on top of shipping lines increasing fuel costs," he said. The cargo surge had led to MSC deploying some of its largest ships, of 24,000 teu capacity, on its standalone transpacific Sentosa service, which calls at Long Beach's Total Terminal International (TTI) facility "Normally the ships on this service are smaller, but we have handled some of their largest ships, with 100% discharging and 100% loading - this is a glimpse of our future," Dr Hacegaba said. According to Xeneta's eeSea liner database, the usual average capacity of a Sentosa service vessel is 18,500 teu, with its largest at 19,500 teu. However, during the peak demand period of August, September, October, the carrier deployed two 24,000 teu vessels on the string, MSC Nela and MSC Arina. "It's also notable that 50% of TTI's inbound boxes leave the port by train," he added. On the threat of industrial action at Long Beach and neighbouring Los Angeles, Dr Hacegaba said: "We are closely monitoring the negotiations between ILWU Local 26 and the Pacific Maritime Association, and we remain hopeful both sides will reach an agreement soon. "While the affected watchmen provide security within individual terminals, port-wide security provided by the Harbor Patrol and the Long Beach Police Department continues uninterrupted during negotiations. "Although Port of Long Beach is not a party to the negotiations, we want to assure our customers that we remain committed to moving cargo through our port safely and reliably," he said. Meanwhile, the forthcoming closure of the Vincent Thomas Bridge in the San Pedro area for refurbishment works - due 7 November and lasting for 16 months - is forecast to disrupt hinterland cargo movements, and has led the port and its terminal operators to offer hauliers additional gate hour openings on Friday evenings and Saturdays for a six-week period. It's part of a pilot programme "that could be extended and is among the numerous measures Long Beach and its partners have developed to reduce the impacts of the bridge closure on people and cargo", explained Dr Hacegaba.

Lufthansa Cargo rides airfreight pricing power to stronger yields

Lufthansa Cargo increased its base yields by 14% year on year in the third quarter, with strong demand and constrained capacity supporting pricing power, even as Middle Eastern airlines restored services. Overall yields rose 22%, as the carrier also successfully passed-on higher fuel costs. Adjusted EBIT more than tripled, to €162m ($182), with margin reaching 15.6%, up from 6% a year ago. Lufthansa Group CEO Carsten Spohr told analysts on a conference call in Frankfurt yesterday that the strong performance came during what is usually the seasonally weakest quarter for airfreight. "The strong performance reflects a very robust demand environment. Capacity increased by 5%, driven by double-digit growth in belly capacity, mainly due to the now fully integrated belly capacity of [Italian airline] ITA. Chargeable weight increased by 7% and, as a result, load factors increased by more than three percentage points. At the same time, pricing remained very strong," he said. One forwarder told The Loadstar the drivers of cargo carriers' pricing power, and the implications of returning Middle East capacity, differed between the major east-west trades, explaining: "Capacity is extremely tight on the Far East-North America tradelane - where obviously the return of Middle East capacity is not an issue - driven by phenomenal demand from the hyperscaler boom and which continues to pump up rates." Mr Spohr also highlighted the strength of Asian demand and Lufthansa Cargo's growing exposure to transpacific flows. He said: "Demand remains particularly strong in Asia-Pacific, with India standing out as a key growth market. Transpacific flows are becoming increasingly important for us, even though we're on the other side of the world. "Currently, demand is driven by express deliveries on the one hand and by high-margin verticals on the other. These include semiconductors and IT equipment, but also pharma and automotive. "More broadly, Lufthansa Cargo continues to benefit from current supply chain disruptions around the world, but has also structurally improved its positioning by focusing on those markets and products that matter most in the air freight business and create the highest yields and value." In a more detailed review of Lufthansa Cargo's Q3 performance, the group said strong market demand had continued "in the context of the significantly changed market environment due to the conflict in the Middle East and the corresponding reduction in competitors' capacities in the region". Reduced market capacity and sharply higher fuel costs had led to a significant increase in yields compared with previous quarters. Global revenue increased 26%, "with broad-based regional growth", while ex-Asia yields were "robust, despite de minimis pressure". Revenue from temperature-controlled freight rose 33% year on year. Turning to the outlook, group CFO Till Streichert told analysts Lufthansa Cargo's year-to-date earnings had reached €361m, with further upside expected for the full year. "Adjusted EBIT of Lufthansa Cargo is likely to comfortably surpass €500m in full-year 2026, with possibly even more positive dynamics. While this upside potential is very likely to materialise, a high degree of uncertainty still remains, as visibility in the air freight business is usually limited to about two weeks booking in advance." On whether current pricing power would endure as Middle Eastern capacity returned, the forwarder pointed to signs of easing pressure on Asia-Europe. "Emirates, Etihad, and Qatar Airways are maintaining substantially more normal operations, providing improved access to the region, and restoring a good deal of the capacity lost during the initial disruption earlier this year. There have been signs of stability in Asia-Europe rates of late. OK, they're more than 10% higher year on year at the moment, but well short of the levels we saw earlier this year. "However, escalation in hostilities between Saudi Arabia and the Houthis, and renewed concerns over a resumption of the US-Iran war, mean Gulf carriers are again wondering what lies around the corner."