Global air cargo rates continued to climb in May, although industry analysts say the pace of increases is beginning to slow as capacity gradually returns to the market.
According to freight market intelligence firm Xeneta, global air cargo spot rates averaged $3.40/kg in May, up 41% year-on-year. Demand remained resilient, increasing by 4%, while available capacity recovered to 1% above last year's level. The market had been under pressure since the escalation of conflict in the Middle East disrupted key air cargo corridors, reduced available capacity and pushed up fuel costs, Xeneta said, adding that there were signs that conditions were beginning to stabilise despite continued volatility.
"Shippers clearly have a sense of 'here we go again' in terms of rate volatility, but they are adjusting and buying time by temporarily accepting the surcharges that come with extending existing capacity contracts," Xeneta chief airfreight officer Niall van de Wouw said.
Many shippers had delayed longer-term contract negotiations while waiting for clearer indications that the market was normalising, the company said. Capacity on routes most affected by the Middle East conflict has gradually improved, reducing some of the supply pressures that drove rates sharply higher earlier in the year.
Reuters reported that ongoing talks between the United States and Iran had raised expectations that a formal agreement could be signed later this week, although shipping companies remained cautious about resuming normal operations.
Despite the improvement in capacity, Xeneta said pricing remained above historical norms, with demand continuing to outpace supply in several key trade lanes. Dynamic load factor, the company's measure of capacity utilisation, rose to 61% during May.
