WorldACD: Air Freight Demand Falls in a Volatile Week

WorldACD’s new report shows that global air freight demand fell slightly in the first week of July, but freight rates increased, reflecting a volatile market driven by policy and regional factors.

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Global air freight demand fell by around -3% in the first week of July, mainly due to a drop in volumes from North America related to the US Independence Day holiday. However, global average freight rates increased by around +2% week-on-week, driven by increases from all major origins around the world, except North America. There was little sign of a final surge in exports to the US ahead of the key tariff deadline of July 9 – which was later postponed to August 1 – although traffic may have also been affected by ‘4th of July’ celebrations in the US.

According to the latest weekly figures and analysis from WorldACD Market Data, the -3% decline in global volumes in week 27 (June 30-July 6) included a -11% decline from North American origins, along with declines from Asia-Pacific (-3%), Europe (-2%) and Central & South America (CSA, -2%). The +2% increase in the global average freight rate to $2.48/kg week-on-week brought prices up +1% year-on-year, based on a combination of spot and contract rates across the market. This increase was led by a +3% increase from Asia-Pacific origins, based on the more than 500,000 weekly transactions covered by WorldACD data. Global spot rates rose +4% week-on-week to $2.65/kg – very close to year-on-year levels, although it is worth noting that the US dollar is now around -7% weaker than a year ago against the other major currencies in the US Dollar Index (DXY).

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Global air freight demand fell around -3% in the first week of July due to a decline in volumes from North America. By comparison, volumes from China and Hong Kong to Europe continued to rise, reaching their highest level this year in June and +15% above June 2024 levels. And the average spot rate from China and Hong Kong to Europe held steady at $3.97/kg, similar to last month’s level and the year-to-date average, but down -3% year-on-year.
In US$ terms, week 27 was the first week since week 17 that global average rates were higher than the corresponding week last year, with Africa (+11% y/y) and Europe (+7% y/y) recording the largest y/y increases. Outbound rates from Asia-Pacific and North America were also flat y/y. Average rates from the Middle East & South Asia (MESA) in week 27 were -9% lower than the inflated levels of the same period last year, but this could soon change in the context of the latest Houthi attacks on vessels in the Red Sea.

Global air freight demand fell by around -3% in the first week of July due to a decline in volumes from North America. After three consecutive weeks of weekly increases, freight tonnage from China and Hong Kong to the US fell (-2%) week-on-week, bringing it down to -4% year-on-year. But spot rates for that market rose +4% week-on-week, although they remained significantly lower (-17%) than year-on-year levels. Similarly, after three weeks of modest recovery, volumes from the entire Asia-Pacific region to the US returned to a downward trend (-3% week-on-week) in week 27, with sharp declines from Indonesia (-18%), Japan (-9%), Malaysia (-9%) and Vietnam (-7%). But spot rates from Asia-Pacific to the US rose +3% week-on-week, including particularly strong increases from Singapore (+10%) and Hong Kong (+7%). Compared to the previous week, Asia-Pacific to Europe volumes in week 27 increased by 2%, most notably from Malaysia to Europe (+13%) and from Vietnam (+12%). Spot rates in the Asia-Pacific to Europe market also increased overall compared to the previous week, most notably from Taiwan to Europe (+9%).

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These patterns reflect a number of factors, including the diversion of air cargo capacity and volumes from the Sino-US market to the Sino-European and other markets, particularly for e-commerce markets that have been most affected by changes to the ‘de minimis’ duty-free rule. It also includes shipments being sent early to meet various tariff deadlines.

There has been talk of a spike in spot rates from Europe to Canada in recent days this week. WorldACD analysis indicates that there has been a spike in air freight volumes from Europe to Canada in week 27, with volumes up around +10% compared to the average of the previous three weeks, although there is no evidence of a significant increase in rates at the time of writing. However, spot rates from Europe to Mexico increased significantly in week 27, up over +30% from the previous week, to an average of over US$4.20/kg.

The Trump administration’s decision to further delay the implementation of higher ‘reciprocal’ tariffs until 1 August, and the announcement of new tariffs for key trading partners such as Japan and South Korea, promise to bring further disruption to international markets and could lead to further attempts to ‘build up’ early air cargo inventories in the coming weeks. In the medium term, the shift of cargo capacity from the Pacific to other markets looks set to continue, as exporters seek alternative and more stable markets for their cargoes. And in the longer term, a US decision to completely eliminate ‘de minimis’ duty-free rules for goods from all countries would likely have significant consequences for the air cargo industry and its future growth – at least for US markets.

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