Air cargo faces prolonged challenges but opportunities remain
The air freight market is entering a period of sustained pressure, with rising demand, limited aircraft availability, and regulatory constraints creating a significant capacity crunch.
While this year’s peak season has been quieter than anticipated, the steady rise in air cargo rates highlights a supply-demand imbalance that is unlikely to ease in the near future.
Rising rates signal enduring demand
Despite muted peak season activity, key export hubs such as Hong Kong and Shanghai have recorded significant increases in spot rates, driven by strong demand and restricted capacity. In October alone, rates from Hong Kong rose by over 8% month-on-month, while Shanghai saw a surge of more than 12%. Year-on-year, Shanghai’s rates have climbed by over 22%, reflecting the robust export demand from Asia. Other markets, including Vietnam, Thailand, and India, have also experienced sustained rate growth.
This steady rise in rates reflects a firm foundation of demand, particularly for goods tied to inventory replenishment and preparation for the festive season. However, long-term capacity shortages are likely to place further upward pressure on rates, challenging businesses reliant on air freight.
Long-term constraints loom large
The future of air cargo capacity is fraught with challenges. Production delays for new freighter aircraft, such as the Airbus A350 freighter and Boeing 777-8 freighter, have pushed delivery timelines further back, with the first A350 freighter now expected in late 2026. Conversion programmes for existing aircraft have also faced setbacks due to limited feedstock availability.
Adding to the pressure, new emissions regulations from the International Civil Aviation Organization (ICAO) will come into effect in 2028, restricting the production of certain aircraft types. These factors will collectively tighten capacity growth, intensifying competition for available freighter space and contributing to market volatility.
China’s pivotal role in air cargo expansion
As a manufacturing powerhouse and eCommerce leader, China will play a critical role in shaping the air cargo market. To maintain its competitive edge amid geopolitical challenges, the country will need to significantly expand its domestic freighter fleet, particularly in the wide-body category.
According to Airbus, China will account for nearly 30% of all new and converted freighters entering the global fleet over the next 20 years. Between 2024 and 2043, Chinese carriers are expected to operate 690 of the 2,470 freighters joining the global fleet, underscoring the country’s strategic importance in air freight.
The air freight industry faces a challenging decade of constrained capacity and rate volatility.
However, businesses can navigate these challenges safely, because Logicall secure long-term agreements with leading carriers to guarantee space and dependable services.
Our bespoke solutions are designed to meet the unique needs of your cargo, combining competitive rates with tailored service options to help you meet your deadlines and budgets.
For expert advice, customised pricing, and tailored support, DM Lewis Atkinson today to discuss your requirements and find the right air freight solution for your business.