Supply Chain Action Points
Read this first — the conclusion, and the moves to make:
- Split your book by 15 August into volume that can wait and volume that cannot, send the flexible part to spot and put the committed part on a contract with a named flight, so a falling average cannot cost you an uplift.
- Renew Europe-lane contracts before 31 August rather than waiting for further declines, on the assumption that the 20% Hong Kong tonnage hole closes within four to six weeks.
- Track the Middle East and South Asia capacity deficit weekly and treat a move below 10% as the signal to renegotiate, not a move in the global average.
- For any lane running under a 65% load factor, ask for space rather than price at renewal; a 49 cent gap between the $3.13 average and $3.62 spot is a booking-date problem, not a market problem.
- Book a review on the first Monday of each month at 09:00 to read the new timetable against your confirmed allotments, and escalate any flight that disappeared from the schedule within 24 hours.
WorldACD data for the week ending July 5 shows worldwide average air-cargo rates falling 1% week on week to $3.13 per kg, with spot rates down 2% to $3.62 per kg. Xeneta's June read put global spot rates at $3.40 per kg, 38% above a year earlier, as demand grew 7% year on year against 3% capacity growth and load factors hit 62%.
The Analysis
Monday morning, a little after nine, the week's capacity drops into the booking system. That is the hour the market actually moves, not the Friday when the index is printed. Last week the worldwide average came off 1% to $3.13 a kilo and spot slipped 2% to $3.62. The week before, the average was down 2%.
Three quiet weeks in a row, and everybody has decided the market is cooling. What actually happened is that a batch of flights came back. WorldACD has total capacity slightly above where it stood before the Middle East disruption, and the capacity deficit to and from the Middle East and South Asia has narrowed to 10%, from roughly 30% in early June. Meanwhile Xeneta's June read still has global spot at $3.40 a kilo, 38% above a year earlier, with demand up 7% against capacity growth of 3% and the dynamic load factor up three points to 62%.
A one percent move is not a direction. It is the sound of aeroplanes being put back on a timetable, and timetables have dates on them. That is what you should be reading this week, not the rate.
Start with what the three weeks of small declines actually mean. One percent, then two percent before it, on a market that spent the first half going the other way. Freightos has the index peaking in late May at the height of the disruption and then easing steadily through June and into July, but still well above where it started the year. That is not a market breaking. That is a market finding a higher floor and settling on it. The distinction matters enormously, because a market that is falling rewards waiting and a market that has found a floor punishes it.
The reason it found a floor is mechanical. Twelve percent of global capacity vanished on 28 February and it did not come back evenly. It has come back through the Gulf and through South Asia first, which is why the deficit on those lanes went from 30% to 10% in about five weeks. It has not come back on the trans-Pacific at anything like the same rate, and it has not come back into the belly space that express parcels use. So the global average, which is a weighted blend of everything, registers relief. Your lane may have received none of it.
Look at three lanes sitting under the same headline. The Gulf and South Asia lanes are genuinely healing, capacity is returning, the premium that the disruption created is fading. Hong Kong to Europe is going the other way: tonnage fell 12% week on week after the EU removed its €150 de minimis threshold on 1 July, and about 20% over three weeks, putting it back to where it was at the end of March. Taiwan to Europe is up around 20% over the same stretch, on AI-related computer equipment. Three lanes, three completely different markets, one average that says minus one percent.
Who feels what, in practical terms. If you ship under a tonne a week you live on spot, so you see the easing first and you cannot do anything with it, because a 2% move on $3.62 does not survive one week of poor booking. If you ship between two and ten tonnes a week, your exposure is the renewal window: you are about to price the fourth quarter off a number that is falling 1% a week and will probably stop falling in August. If you hold block space, you already have the relief, and you also have the allotment that the returning capacity got added to. The gap between the $3.13 all-in average and the $3.62 spot is 49 cents, about 16% of spot. That gap is not a market signal. It is a measurement of who signed when.
Here is the number I keep coming back to. The dynamic load factor is 62%, up three points. In a genuinely sold-out air freight market that number lives in the high seventies. Sixty-two means there is still physical space on aeroplanes. Demand growing 7% against capacity growing 3% is real tightening, and it moved the load factor, but it has not emptied the aircraft. Which tells you something uncomfortable: the rate is being held up by the mix of what is on board, not by a shortage of square metres. AI hardware and high-value electronics are paying for the floor. Your carton is riding on their ticket, and you are being charged as if the aircraft were full when it is not.
That is the piece the coverage skips. Everybody is treating the global average as a weather report, when it is really an average of lanes pulling in opposite directions. The Gulf returning capacity is adding tonnes at a lower yield, which drags the average down while telling you nothing about your booking. And on the Europe lane, the 20% hole in Hong Kong tonnage is doing the work of a capacity injection, for free, by accident, because a policy change removed a fifth of the parcels from the aircraft in three weeks. Space on Europe lanes feels loose right now for a reason that has nothing to do with supply, and everything to do with a rule that took effect at midnight on 1 July. If some of that volume reappears as consolidated bulk freight, as the data already hints it might, that space closes again inside four to six weeks and nobody will have seen it coming.
The clock on this is not the same on every lane, which is the part planners get wrong. Gulf and South Asia lanes are feeling the relief now, this week, in confirmed bookings. Europe lanes are living off a temporary hole and will tighten from mid-August if the parcel volume returns in consolidated form. Trans-Pacific express is where nothing has changed and where the fourth quarter is being decided in the next three weeks. One market, three different clocks.
Do a small calculation. Take a shipper moving 2,000 kilos a week. Xeneta's $3.40 spot is 38% above last year, which puts the year-ago level at about $2.46, a derived figure rather than a separately published one. The difference is 94 cents a kilo, so 2,000 kilos a week is $1,880 a week, and across 52 weeks about $97,760 a year. That is the size of the gap you are trying to close, and it is roughly three times what a 1% weekly decline gives back.
The useful move this month is not to chase the decline. It is to separate your volume into the part that can wait and the part that cannot, and price them differently. The part that can wait goes to spot and benefits from a falling market. The part that cannot wait gets a contract with a floor and a named flight, because you are not buying a rate, you are buying the certainty that your Wednesday uplift exists. Most shippers do the opposite: they put everything on one contract, then discover at the peak that the contract has a rate and no space.
The trap is a subtle one. A 1% weekly decline feels like permission to delay. Delay the renewal by four weeks, and you will sign in August at whatever the market is then, on a lane where the capacity that came back went into somebody else's allotment in July. The rate will look fine. The space will not be there. Watch the schedule change, not the price change, and do your Europe planning on the assumption that the current looseness has an expiry date rather than a trend line.
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